Court Opinion

ID: 9956497
Source: CourtListenerOpinion
Date Created: 2024-04-02 14:12:11.734764+00
Date Added: 2024-06-11T08:17:34.002758
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

The Tenant Union                    :
Representative Network,             :
                                    :
                         Petitioner :
                                    :
         v.                         : No. 10 C.D. 2023
                                    : Argued: November 6, 2023
Pennsylvania Public Utility         :
Commission,                         :
                                    :
                         Respondent :

BEFORE:      HONORABLE PATRICIA A. McCULLOUGH, Judge
             HONORABLE MICHAEL H. WOJCIK, Judge
             HONORABLE MARY HANNAH LEAVITT, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE WOJCIK                                           FILED: April 2, 2024

             The Tenant Union Representative Network (TURN) petitions for
review of the December 8, 2022 order of the Pennsylvania Public Utility
Commission (PUC) denying the Exceptions to the Administrative Law Judge’s
(ALJ) Initial Decision; adopting the ALJ’s Initial Decision, without modification;
and dismissing TURN’s Formal Complaint (Complaint). TURN argues that the
PUC erred or abused its discretion by failing to enforce its prior orders; failing to
apply contract principles when interpreting a settlement agreement; concluding that
TURN failed to meet its burden of proof of showing unreasonable service; excusing
a public utility’s nonperformance; and disregarding substantial evidence. Upon
review, we affirm.

                                        I. Background
                PECO Energy Company (PECO) is a public utility that provides both
electric and natural gas distribution services to customers in southeastern
Pennsylvania. PECO provides a Customer Assistance Program (CAP) to help low-
income customers afford utility service as required by the Public Utility Code
(Code).1 See 66 Pa. C.S. §§1403, 1410.1, 2203, 2207(b), 2802(10), 2804(9). A CAP
is part of each utility’s Universal Service and Energy Conversation Plan (USECP)
aimed to help its residential low-income customers maintain gas and electric
services. 66 Pa. C.S. §§2202 and 2803 (definitions of “universal service and energy
conservation”);2 see 52 Pa. Code §§54.73, 54.74, 62.3, and 62.4 (relating to universal
service and energy conservation program goals and plans).

       1
           66 Pa. C.S. §§101-3316.

       2
        Section 2202 of the Code, pertaining to natural gas service, defines “universal service and
energy conservation” as follows:

                Policies, practices and services that help residential low-income
                retail gas customers and other residential retail gas customers
                experiencing temporary emergencies, as defined by the commission,
                to maintain natural gas supply and distribution services. The term
                includes retail gas customer assistance programs, termination of
                service protections and consumer protection policies and services
                that help residential low-income customers and other residential
                customers experiencing temporary emergencies to reduce or
                manage energy consumption in a cost-effective manner, such as the
                low-income usage reduction programs and consumer education.

66 Pa. C.S. §2202. Section 2803 of the Code, pertaining to electric service, similarly defines the
term as:
(Footnote continued on next page…)
                                                2
              On February 28, 2012, PECO submitted its proposed USECP for the
years 2013 through 2015 (2013-2015 USECP), which it amended on October 15,
2012, to the PUC for review and approval. The development of a USECP is a
complex process. The PUC’s guidelines on CAPs direct that utilities should file a
CAP proposal with the PUC before implementing, revising, or expanding a CAP to
allow for staff review, comments, discovery, and revisions prior to PUC approval.
See 52 Pa. Code §69.263(c). The PUC’s regulations require periodic evaluation and
re-evaluation of CAP designs to ensure that the programs are effective in terms of
assisting low-income customers and in terms of cost effectiveness. See 52 Pa. Code
§54.76 (evaluation reporting requirements); 52 Pa. Code §62.6 (requiring an
independent third-party evaluation of USECPs at least every six years). When
reviewing a utility’s USECP, the PUC seeks to balance the interests of the low-
income customers who benefit from these programs with the interests of the non-
CAP customers who pay for them by ensuring the programs are operated in a cost-
effective and efficient manner. PUC Opinion, 12/8/22, at 19-20; see 52 Pa. Code
§§54.73, 62.3. The PUC routinely seeks input from stakeholders in the USECP
proceeding. See 52 Pa. Code §69.263.

              Policies, protections and services that help low-income customers to
              maintain electric service. The term includes customer assistance
              programs, termination of service protection and policies and
              services that help low-income customers to reduce or manage
              energy consumption in a cost-effective manner, such as the low-
              income usage reduction programs, application of renewable
              resources and consumer education.

66 Pa. C.S. §2803.
                                               3
               PECO, TURN,3 the Pennsylvania Office of Consumer Advocate
(OCA), and the Coalition for Affordable Utility Services and Energy Efficiency in
Pennsylvania (CAUSE-PA) participated as parties in the 2013-2015 USECP
proceeding. On March 20, 2015, following extensive settlement discussions, the
parties filed a Joint Petition for Settlement, which included the “PECO CAP
Mediation Settlement Term Sheet” (2015 Settlement Agreement).                   The 2015
Settlement Agreement proposed to change the design of PECO’s CAP from a seven-
tier rate program to a Fixed Credit Option Percentage of Income Program (FCO).
Under the FCO, CAP customers would receive credit based on their energy usage in
the prior year, household income, and allowable “energy burden,” which is a
maximum percentage of the customer’s income that is considered to be an affordable
energy bill.
               The 2015 Settlement Agreement included “Table 1,” which identified
the then-applicable maximum energy burden percentages for three household
income tiers:

  [Federal Poverty         Electric Non-         Electric Heating     Electric with Gas
    Level (FPL)]              Heating                                     Heating
      0-50%                     5%                     13%                   13%
     51-100%                    6%                     16%                   16%
     101-150%                   7%                     17%                   17%
Reproduced Record (R.R.) at 973a (footnotes omitted). With respect to Table 1, and
of particular import here, the 2015 Settlement Agreement included Footnote 3,
which provides:

               The table is based upon the ranges found at 52 Pa. Code
               §69.265(2)(i)(A). In each case, the energy burden listed

       3
        TURN is a 30-year-old Pennsylvania nonprofit corporation, dedicated to advancing and
defending the rights of tenants and homeless people. Reproduced Record (R.R.) at 834a.
                                             4
              in the table is the maximum allowable energy burden for
              that poverty level. If the [PUC] changes the energy
              burden ranges set forth in its Policy Statement, PECO will
              utilize the new maximum allowable energy burden for
              each poverty level.
Id. at 972a (emphasis added). The meaning of Footnote 3, particularly, whether it is
self-executing, is the center of this litigation.
              The 2015 Settlement Agreement also outlined procedures for
evaluating the effectiveness of the FCO in achieving affordability. Specifically,
PECO agreed to operate the FCO program for two years, collect data from those two
years of operations, have an independent evaluator, Applied Public Policy Research
Institute for Study and Evaluation (APPRISE), assess the program using that data,
and submit the evaluation report (APPRISE Evaluation) to the PUC and the parties
to the 2015 Settlement Agreement by June 2019. See R.R. 461a-62a; 836a; 979a.
              The Joint Petition for Settlement was assigned to an ALJ for review and
decision. Each party separately submitted Statements in Support of the 2015
Settlement Agreement. R.R. at 964a. Notably, none of the Statements in Support
included discussion of Footnote 3. ALJ Initial Decision, 4/9/21, Finding of Fact
(F.F.) No. 12; R.R. 835a; see also PUC Opinion, 12/8/22, at 26; R.R. at 367a-78a,
1005a-20a.
              On June 11, 2015, the ALJ issued a Recommended Decision, approving
the 2015 Settlement Agreement without modification.            ALJ Recommended
Decision, 6/11/15, at 1-36; R.R. at 1037a-72a. On July 8, 2015, the PUC entered an
Order adopting the ALJ’s Recommended Decision (PUC Settlement Order). PUC
Settlement Order, 7/8/15, at 1-2; R.R. at 1073a-74a. Following PUC approval of the
2015 Settlement Agreement, PECO incorporated the CAP FCO into its USECP for
2016-2018 (2016-2018 USECP), which the PUC also approved. See PUC 2016-

                                             5
2018 USECP Approval Order, 8/11/16, at 73-74; R.R. at 1188a-89a. In October
2016, PECO launched the CAP FCO program.
                 On June 28, 2019, PECO filed the APPRISE Evaluation, which showed
that during calendar years 2017 and 2018, approximately 80% of customers with
household income at or below 50% of the FPL received unaffordable bills under the
FCO and would continue to receive unaffordable bills. As a result of the APPRISE
Evaluation, PECO launched an investigation into the causes of the unaffordable bills
received by customers at or below 50% of the FPL. It then began to develop, in
consultation with the other settling parties, preliminary recommendations to improve
the FCO.
                 Meanwhile, by Final Policy Statement and Order dated November 5,
2019 (2019 Final CAP Policy Statement), the PUC adopted amendments to its CAP
Policy Statement. Notably, the PUC revised its energy burdens by reducing the
maximum allowable energy burden thresholds for low-income households as
follows:

           FPL              Electric Non-       Electric Heating   Electric with Gas
                               Heating                                 Heating
      0-50%                      2%                  6%                   6%
     51-100%                     4%                  10%                  10%
     101-150%                    4%                  10%                  10%
PUC Opinion, 12/8/22, at 5. The 2019 Final CAP Policy Statement was published
in the Pennsylvania Bulletin on March 21, 2020. 50 Pa. B. 1652 (2020).
                 Days later, on March 26, 2020, PECO filed a letter notifying the PUC
that it would file a single USECP update to its proposed 2019-2024 USECP to
address both the 2019 Final CAP Policy Statement and the ineffectiveness of the
FCO in achieving affordability. PECO advised that this update would incorporate

                                            6
the PUC’s new maximum energy burdens and redesign the CAP. See PUC Opinion,
12/8/22, at 30; see also R.R. 462a-63a, 466a-69a; 838a; 1612a-14a.
            PECO then held a series of calls with stakeholders, including TURN
and CAUSE-PA, in which PECO presented its analysis and proposed different
alternatives for revising its CAP.    Some alternatives retained the CAP FCO
framework, while others involved a transition to a percentage of income payment
plan (PIPP). PECO projected that each alternative would increase annual universal
service costs by $11 million to $15 million. PECO’s analysis also showed that
simply incorporating the revised energy burdens into the FCO would not make
energy bills more affordable but would significantly increase the costs of universal
service programs to be recovered from all non-CAP customers. PECO ultimately
decided to discontinue the FCO model in favor of the PIPP model in which CAP
customers would receive a credit based on their annual income and a modified
version of the PUC’s updated energy burdens. R.R. at 468a-69a, 476a-91a; 839a.
PECO continued to operate the FCO under the terms of its 2016-2018 USECP and
the energy burdens set forth in Table 1 of the 2015 Settlement Agreement, not the
revised energy burdens in 2019 Final CAP Policy Statement. On September 25,
2020, PECO filed a petition to amend its proposed 2019-2024 USECP to permit the
use of the new energy burdens as part of the CAP FCO during the transition from
the FCO to PIPP. Id. at 1471a-611a. By order dated June 16, 2022, the PUC
approved PECO’s amended 2019-2024 USECP and the transition to PIPP.
            Although TURN and CAUSE-PA both supported the transition to the
PIPP model, they contended that Footnote 3 of the 2015 Settlement Agreement was
self-executing and required PECO to immediately apply the new energy burdens

                                         7
with the FCO without any additional PUC review process or approval. PECO
disagreed.
             On August 25, 2020, TURN filed its Complaint against PECO asserting
that PECO violated the terms of the 2015 Settlement Agreement. Specifically,
TURN claimed that PECO failed to (1) implement the lower energy burden
thresholds adopted by the PUC in the 2019 Final CAP Policy Statement, or (2)
recalculate the CAP benefit for participating customers. According to TURN,
Footnote 3 of the 2015 Settlement Agreement was self-executing and required
PECO to immediately and automatically implement the revised energy burdens in
the FCO calculations without further review or approval by the PUC.
             TURN’s Complaint was assigned to an ALJ for review and decision.
OCA and CAUSE-PA intervened. Upon consideration of the evidence and the
parties’ briefs, on April 9, 2021, the ALJ issued her Initial Decision. ALJ Initial
Decision, 4/9/21, at 1-24; R.R. at 829a-53a. The ALJ found that the language of
Footnote 3 to the 2015 Settlement Agreement did not require PECO to (1)
automatically implement the revised energy burden thresholds from the PUC’s 2019
Final CAP Policy Statement, or (2) recalculate the CAP benefit for the affected
customers. The ALJ explained that, in order for TURN’s interpretation of Footnote
3 to be reasonable, the following words would need to be added:

             If the Commission changes the energy burden ranges set
             forth in its Policy Statement, immediately, upon entry of
             a final order of the [PUC] revising the Policy Statement,
             PECO will utilize the new maximum allowable energy
             burden for each poverty level, without seeking further
             approval by the [PUC].
ALJ Initial Decision, 4/9/21, at 20 (emphasis in original); R.R. at 849a.
Furthermore, the ALJ found that no persuasive extrinsic evidence supported

                                        8
TURN’s interpretation. As such, the ALJ determined that PECO had met its burden
of establishing that it had complied with the terms of the 2015 Settlement
Agreement, the PUC Orders approving the terms of the Settlement Agreement, and
the terms of its tariff. Further, the ALJ determined that TURN failed to meet its
burden of proving that PECO provided unreasonable service in the administration of
the 2016-2018 USECP. Accordingly, the ALJ recommended the dismissal of
TURN’s Complaint. ALJ Initial Decision, 4/9/21, at 24; R.R. at 853a.
            In response, TURN and CAUSE-PA filed Exceptions to the ALJ’s
Initial Decision to which PECO and the OCA replied. By decision dated December
8, 2022, the PUC denied the Exceptions filed by TURN and CAUSE-PA; adopted,
without modification, the ALJ’s Initial Decision; and dismissed TURN’s Complaint.
PUC Opinion, 12/8/22, at 7, 42-43. The PUC similarly concluded that (1) Footnote
3 did not require PECO to automatically adopt the revised energy burdens from the
2019 Final CAP Policy Statement or recalculate CAP customers’ bills; (2) PECO
demonstrated substantial compliance with the terms of the 2015 Settlement
Agreement; and (3) TURN did not meet its burden of proving that PECO violated
the terms of the 2015 Settlement Agreement.
            In support, the PUC found that adjustments to CAPs without PUC
review are neither advisable nor expressly contemplated by the PUC’s regulations,
noting that “the extensive review and stakeholder collaboration process undertaken
regarding USECP plans dictates otherwise.” PUC Opinion, 12/8/22, at 7. The PUC
also noted that its June 16, 2022 Order, approving PECO’s amended 2019-2024
USECP and transition from FCO to PIPP, identified substantial efforts PECO
undertook to adjust its 2016-2018 USECP to address the impact on its lowest income
customers. In addition, the PUC found that the 2015 Settlement Agreement and

                                        9
PECO’s 2016-2018 USECP reflect PECO’s ongoing efforts to address the energy
needs of its lowest income consumers. PUC Opinion, 12/8/22, at 7.
            In reviewing PECO’s compliance with the terms of the 2015 Settlement
Agreement, the PUC considered the language of the 2015 Settlement Agreement and
2016-2018 USECP. Since the overarching goal of the 2015 Settlement Agreement
was to implement a CAP that improved bill affordability, the PUC considered the
documented issues with unaffordable bills under PECO’s FCO model. The PUC
also considered “the various overlapping PUC processes and directives which
resulted in PECO having arguably competing obligations.” PUC Opinion, 12/8/22,
at 17.
            Critically, the PUC found that the plain language of Footnote 3 did not
establish a timeframe for PECO to implement the revised energy burden thresholds.
The PUC agreed with the ALJ’s rationale that TURN’s interpretation of Footnote 3
would require additional words to be inserted into Footnote 3 to identify a set time
in which PECO had to implement the updated energy burdens, without seeking PUC
approval. PUC Opinion, 12/8/22, at 22. As to the parties’ intent, the PUC rejected
TURN’s claim that Footnote 3 was central to its agreement because TURN’s own
Statement in Support of the 2015 Settlement Agreement made no mention of
Footnote 3 or its self-executing interpretation. PUC Opinion, 12/8/22, at 26; see
R.R. at 367a-78a.
            The PUC further found that PECO substantially complied with the 2015
Settlement Agreement by taking affirmative steps to improve customer bill
affordability. The PUC explained that PECO:

            • proposed a new CAP and made filings following the
            PUC’s 2019 Final CAP Policy Statement;

                                        10
             • worked in a transparent manner to improve bill
             affordability for all CAP customers after receiving the
             APPRISE Evaluation; and

             • complied with the PUC’s directives by filing its
             Amended USECP to both replace the CAP FCO and PIPP
             and incorporate several of the PUC’s revised energy
             burdens.
PUC Opinion, 12/8/22, at 30.
             The PUC also found that PECO substantially complied with its 2016-
2018 USECP, based on the same reasons noted above supporting the PUC’s
conclusion that PECO had complied with the terms of the 2015 Settlement
Agreement.    PUC Opinion, 12/8/22, at 32.         Having determined that PECO
substantially complied with the terms of both the 2015 Settlement Agreement and
its 2016-2018 USECP, the PUC further concluded that TURN did not meet its
burden of establishing that PECO rendered “unreasonable service” in violation of
Section 1501 of the Code, 66 Pa. C.S. §1501. Id. at 33.
             Finally, the PUC rejected TURN’s allegation that the ALJ erred by not
directing PECO to retroactively recalculate CAP bill credits for CAP customers.
The PUC concluded that relief in the form of bill credits was not warranted since the
PUC found that (1) Footnote 3 did not require PECO to immediately adopt the
revised maximum energy burden thresholds, and (2) PECO complied with the terms
of both the 2015 Settlement Agreement and its 2016-2018 USECP. PUC Opinion,
12/8/22, at 42. Accordingly, the PUC dismissed TURN’s Complaint. From this

                                         11
decision, TURN filed the Petition for Review now before us.4 PECO, OCA, and
CAUSE-PA have intervened.5 All parties have filed briefs.6

                                          II. Issues
              TURN raises five issues for our review. First, TURN argues that the
PUC erred by failing to enforce its prior orders adopting the 2015 Settlement
Agreement. Second, TURN contends that the PUC erred by failing to apply contract
principles to interpret the 2015 Settlement Agreement, as required by Pennsylvania
law, when it concluded that Footnote 3 did not require PECO to automatically
implement the revised energy burdens in its 2019 Final CAP Policy Statement or
recalculate CAP customers’ benefits based on those revised energy burdens. Third,
TURN claims that the PUC erred by concluding that PECO met its burden of proof
while TURN did not. Fourth, TURN asserts that the PUC abused its discretion by
excusing PECO’s nonperformance of its specific obligation pursuant to Footnote 3
based on a finding that PECO “substantially complied” with other provisions of the
2015 Settlement Agreement. Finally, TURN contends that the PUC disregarded
competent evidence in holding that Footnote 3 was not central to TURN’s agreement

       4
         Our review is limited to determining whether (1) a constitutional violation or error in
PUC procedure has occurred; (2) the decision is in accordance with law; and (3) the necessary
findings of fact are supported by substantial evidence. Section 704 of Administrative Agency
Law, 2 Pa. C.S. §704; PECO Energy Co. v. Pennsylvania Public Utility Commission, 791 A.2d
1155, 1160 (Pa. 2002). On issues of law, “our standard of review is de novo, and our scope of
review is plenary.” Department of Environmental Protection v. Cumberland Coal Resources, LP,
102 A.3d 962, 970 (Pa. 2014).

       5
          CAUSE-PA aligns with TURN and adopts and incorporates the arguments made, and
relief requested, in TURN’s brief; PECO and OCA align with the PUC.

       6
        Although the parties each filed separate briefs, their arguments overlap. To avoid
redundancy, similar arguments are grouped together unless otherwise indicated.
                                              12
to the 2015 Settlement Agreement where the unrebutted testimony of its witness
established that Footnote 3 was material to TURN’s entry into the Settlement. We
address each issue in turn.

                                 III. Discussion
                         A. Enforcement of Prior Orders
                                 1. Contentions
                      a. TURN’s and CAUSE-PA’s Position
             First, TURN and CAUSE-PA argue that the PUC failed to enforce its
prior orders. Footnote 3 is included as a term in the 2015 Settlement Agreement, as
well as in Addendum B to PECO’s 2016-2018 USECP. The PUC approved Footnote
3 twice – once in the 2015 Settlement Order and again in the 2016-2018 USECP
Approval Order. According to TURN and CAUSE-PA, Footnote 3 is self-executing
and required PECO to automatically update the energy burdens in its CAP FCO
calculation upon the PUC’s adoption of the revised energy burdens in the 2019 Final
CAP Policy Statement. PECO failed to automatically implement those updated
energy burdens or recalculate CAP customers’ FCO credits. By excusing PECO’s
noncompliance, the PUC failed to enforce a key term of its prior orders. In addition,
CAUSE-PA posits that the PUC’s failure to enforce Footnote 3 will have broad and
negative repercussions on subsequent settlement provisions that come before the
PUC for approval.

                    b. PUC’s, PECO’s, and OCA’s Position:
             The PUC, PECO, and OCA respond that the PUC did not fail to enforce
its prior orders. Rather, the PUC interpreted Footnote 3 differently than TURN. The
PUC’s interpretation of its own orders is entitled to deference. According to the
PUC, Footnote 3 is not self-executing and does not require PECO to automatically

                                         13
implement the undated energy burdens. TURN’s interpretation runs contrary to
PUC policy and regulations because it would permit PECO to bypass the PUC
review and approval. The plain language of Footnote 3 reflects PECO’s obligation
to seek the PUC’s review and approval of any modifications to PECO’s CAP
pursuant to the 2019 Final CAP Policy Statement. As for CAUSE-PA’s negative
repercussion argument, this argument is based on the erroneous assertion that the
PUC modified the terms of the 2015 Settlement Agreement. The PUC simply
interpreted Footnote 3 differently than TURN and CAUSE-PA.

                                    2. Analysis
            The PUC has the authority to enforce its own orders. 66 Pa. C.S. §502.
The PUC “is peculiarly fitted to interpret its own orders” and a reviewing court
cannot overturn the PUC’s interpretation “unless the result is clearly erroneous,
arbitrary, and unsupported by evidence.” Pittsburgh-Johnstown-Altoona Express,
Inc. v. Pennsylvania Public Utility Commission, 554 A.2d 137, 144 (Pa. Cmwlth.
1989) (emphasis added).
            The question of whether the PUC failed to enforce its prior orders
depends on the interpretation of Footnote 3. Although Footnote 3 is incorporated in
the PUC’s orders, it was drafted, and agreed to, by the settling parties to the 2015
Settlement Agreement. The PUC did not modify this term. Although the PUC is
ordinarily accorded deference in the interpretation of its orders, we must interpret
Footnote 3 in accordance with the principles of contract construction, which we
address next. See Waggle v. Woodland Hills Association, Inc., 213 A.3d 397, 405-
06 (Pa. Cmwlth. 2019) (holding principles of interpretation of contracts are
appropriate for interpreting the language of settlement agreements).

                                        14
                             B. Contract Principles
                                1. Contentions
                      a. TURN’s and CAUSE-PA’s Position
             The PUC erred by failing to apply contract principles to interpret the
2015 Settlement Agreement when it held that Footnote 3 did not establish a duty for
PECO to immediately implement the revised energy burdens as adopted by the PUC
in its 2019 Final Cap Policy Statement and recalculate CAP customers’ FCO credits
based on them. Settlement agreements must be interpreted pursuant to contract
principles, with the goal of giving effect to the settling parties’ intentions. That
intent is clearly and unambiguously expressed in the language of Footnote 3, the
context of the 2015 Settlement Agreement, and the USECP process. Footnote 3
creates a condition precedent. It triggers an automatic change to PECO’s CAP when
an external event occurs – the PUC changes the energy burdens in its CAP Policy
Statement. There is no alternate reading that removes PECO’s obligation to act once
the condition precedent is met.

                      b. PUC’s, PECO’s, and OCA’s Position
             The PUC, PECO, and OCA reply that the PUC properly employed the
principles of contract interpretation in determining that Footnote 3 is not a self-
executing clause. The 2015 Settlement Agreement speaks for itself and cannot be
given a meaning other than that expressly stated therein. Footnote 3 is unambiguous.
Footnote 3 fixes no time in which PECO must act to recalculate the CAP benefit
based upon a PUC-approved revision to the existing energy burdens. TURN’s
interpretation is based on language that is simply not there, that is, language directing
PECO to immediately and automatically implement the revised energy burden
thresholds without seeking PUC approval. Furthermore, TURN’s interpretation runs
contrary to the PUC’s standard processes and procedures for reviewing and

                                           15
approving modifications to CAPs by completely bypassing the PUC’s oversight and
omitting any stakeholder input. The PUC’s oversight is necessary because the PUC
must balance the interests of customers who benefit from the programs with the
interests of customers who pay for those programs. Affordable utility bills to low-
income customers cannot come at an unreasonable cost to utility ratepayers,
including low-income customers who do not participate in universal service
programs. Finally, neither TURN nor CAUSE-PA provided any notice to the ALJ
or the PUC that it intended for Footnote 3 to be self-executing at the time of
settlement. For these reasons, the PUC properly concluded that Footnote 3 did not
require PECO to automatically implement the revised energy burdens and
recalculate CAP benefits without further PUC review and approval.

                                     2. Analysis
             A settlement agreement is a contract that must be interpreted in
accordance with the principles of contract construction. DeLuca v. Mountaintop
Area Joint Sanitary Authority, 234 A.3d 886, 898 (Pa. Cmwlth. 2020).             In
interpreting the meaning of a settlement agreement, “the document must ‘speak for
itself’ and cannot be given a meaning other than that expressly stated within the
agreement itself.” Oakmont Presbyterian Home v. Department of Public Welfare,
633 A.2d 1315, 1320 (Pa. Cmwlth. 1993). A court cannot rewrite a contract for the
parties. Steuart v. McChesney, 444 A.2d 659, 662 (Pa. 1982). A court can only
interpret the contract the parties made for themselves “without regard to its wisdom
or folly.” Id.
             As our Supreme Court explained:

             The fundamental rule in interpreting the meaning of a
             contract is to ascertain and give effect to the intent of the

                                          16
             parties. Specifically, the intent of the parties to a contract
             is to be regarded as embodied in the writing itself, and, as
             such, the entire agreement must be taken into account in
             determining contractual intent. Indeed, a reviewing court
             does not assume that contractual language is chosen
             carelessly, nor does it assume that the parties were
             ignorant of the meaning of the language they employed;
             thus, when a writing is clear and unequivocal, its meaning
             must be determined only by its terms. Related thereto,
             before a court will interpret a provision in a statute or in a
             contract in such a way as to lead to an absurdity or make
             the statute or contract ineffective to accomplish its
             purpose, it will endeavor to find an interpretation which
             will effectuate the reasonable result intended.
Binswanger of Pennsylvania, Inc. v. TSG Real Estate LLC, 217 A.3d 256, 262 (Pa.
2019) (internal citations and quotations omitted).
             “If, however, the contractual terms are ambiguous,” the courts may
“resort to extrinsic evidence to ascertain their meaning . . . .” Commonwealth by
Shapiro v. UPMC, 208 A.3d 898, 909-10 (Pa. 2019) (citation and quotation omitted).
“A contract’s terms are considered ambiguous if they are subject to more than one
reasonable interpretation when applied to a particular set of facts.” Id. at 910
(citation and quotation omitted). The fact that the parties disagree on the proper
construction of a contract does not render it ambiguous. Pennsylvania State Police,
Bureau of Liquor Control Enforcement v. Big D Restaurants, LLC, 149 A.3d 890,
899 (Pa. Cmwlth. 2016).
             The focal point of our inquiry is Footnote 3 of the 2015 Settlement
Agreement, which provides:

             The table is based upon the ranges found at 52 Pa. Code
             §69.265(2)(i)(A). In each case, the energy burden listed
             in the table is the maximum allowable energy burden for
             that poverty level. If the [PUC] changes the energy
             burden ranges set forth in its Policy Statement, PECO will

                                          17
               utilize the new maximum allowable energy burden for
               each poverty level.
R.R. at 972a (emphasis added). The PUC properly employed the principles of
contract interpretation in determining that the language of Footnote 3 is
unambiguous based on its plain language. Although Footnote 3 contains a condition
precedent, meaning an event must occur – the PUC’s adoption of revised energy
burdens – before PECO is obligated to act, it does not specify a timeframe for PECO
to act. Where time of performance is not specified in an agreement, the law is well
settled that a reasonable time is implied. Field v. Golden Triangle Broadcasting,
Inc., 305 A.2d 689, 694 (Pa. 1973); Lefkowitz v. Hummel Furniture Company,
122 A.2d 802, 804 (Pa. 1956); L.C.S. Colliery, Inc. v. Globe Coal Co., 84 A.2d 776,
782 (Pa. 1952); Marshall Construction Co. v. Forsyth, 57 A.2d 902, 902 (Pa. 1948);
Hutchinson v. Pennsylvania State Employes’ Retirement Board, 738 A.2d 7, 16 (Pa.
Cmwlth. 1999); see also Frechie v. Boyd, 100 Pa. Super. 553, 557 (1930);
Restatement (Second) of Contracts §204. Because the 2015 Settlement Agreement
did not fix a time or include language of immediacy for PECO to implement the new
energy burdens, PECO was required to input the new energy burdens within a
reasonable time.
               Furthermore, TURN’s interpretation of an automatic adjustment
without affording the PUC an opportunity for review and approval is a departure
from the PUC’s standard operating procedure for modifications to a utility’s CAP.
See 52 Pa. Code §69.263(c).7 The 2019 Final CAP Policy Statement itself directs

      7
          Section 69.263(c) of the PUC’s regulations governing CAP development provides:

               Before implementing, revising or expanding a CAP, a utility should
               file its CAP proposal with the [PUC] and serve copies on the Bureau
               of Consumer Services and on stakeholders from the utility’s most
(Footnote continued on next page…)
                                               18
the utility to file, for PUC approval, an addendum to its existing or proposed USECP
to modify the terms of its CAP. 50 Pa. B. at 1680. Those addendums would reflect
“anticipated timeframes for implementing changes to their USECPs predicated on
the amended CAP Policy Statement.” Id. Such a filing is necessary to afford all
interested parties due process—notice of the proposed changes and an opportunity
to be heard with respect to that proposal. See id. at 1652; see also Evans v.
Pennsylvania Public Utility Commission (Pa. Cmwlth., No. 421 and 422 C.D. 2020,
filed September 29, 2021) (en banc) (holding PUC’s expedited review process did
not afford interested parties with adequate notice and a meaningful opportunity to
be heard).8 Footnote 3 contains no express language deviating from the PUC’s
standard review and approval process.
              Upon review, we reject TURN’s interpretation of Footnote 3 because it
not only runs contrary to the principles of contract construction, but it ignores the
2019 Final CAP Policy Statement, circumvents the PUC’s normal CAP review and
approval processes, and would otherwise violate interested parties’ right to due
process. Thus, we conclude that the PUC did not err in its interpretation of
Footnote 3.

              recent USECP proceeding. This will allow for staff review,
              comments, discovery and revisions prior to [PUC] approval of
              design elements. This review is not for ratemaking purposes, and the
              rate consequences of any CAP will be addressed within the context
              of subsequent [PUC] rate proceedings as described in [Section]
              69.266 (relating to cost recovery).

52 Pa. Code §69.263(c).

       8
          Unreported memorandum opinions of this Court filed after January 15, 2008, may be
cited for their persuasive value pursuant to Rule 126(b) of the Pennsylvania Rules of Appellate
Procedure, Pa. R.A.P. 126(b), and Section 414(a) of the Court’s Internal Operating Procedures,
210 Pa. Code §69.414(a).
                                              19
                              C. Burden of Proof
                               1. Contentions
                     a. TURN’s and CAUSE-PA’s Position
            Next, TURN and CAUSE-PA argue that the PUC erred in concluding
that PECO met its burden of proof, while TURN failed to meet its burden.
Generally, a complainant seeking a determination from the PUC bears the burden of
proof. However, in cases where the utility is alleged to be violating a lawful
determination or order of the PUC, including orders approving settlement
agreements, the burden of proof lies with the utility to show compliance. Therefore,
PECO bore the burden to show compliance with the PUC orders while TURN bore
the burden of proving unreasonable service. PECO failed to show compliance with
the PUC’s 2015 Settlement Order and 2016-2018 USECP Approval Order requiring
PECO to automatically utilize the PUC’s revised energy burdens per the 2015
Settlement Agreement. Such failure demonstrates unreasonable service.

                    b. PUC’s, PECO’s, and OCA’s Position
            The PUC, PECO, and OCA respond that the PUC assigned the proper
burdens of proof and correctly concluded that PECO met its burden while TURN
did not. As discussed above, Footnote 3 does not require PECO to immediately or
automatically implement the revised energy burden thresholds from the PUC’s 2019
Final CAP Policy Statement or recalculate the CAP benefit for the affected
customers. As such, the PUC determined that PECO met its burden of establishing
that it substantially complied with the terms of the 2015 Settlement Agreement, the
2015 Settlement Order, the 2016-2018 USECP Approval Order, and the terms of the
tariff. TURN, as the complaining party, failed to satisfy its burden of proving
otherwise by a preponderance of the evidence.

                                        20
                                       2. Analysis
              Section 1501 of the Code provides:

              Every public utility shall furnish and maintain adequate,
              efficient, safe, and reasonable service and facilities, and
              shall make all such repairs, changes, alterations,
              substitutions, extensions, and improvements in or to such
              service and facilities as shall be necessary or proper for the
              accommodation, convenience, and safety of its patrons,
              employees, and the public.

66 Pa. C.S. §1501 (emphasis added). A party complaining that the service is not
reasonable bears the burden of proof. 66 Pa. C.S. §332(a); Povacz v. Pennsylvania
Public Utility Commission, 80 A.3d 975, 999-1000 (Pa. 2022); Samuel J. Lansberry,
Inc. v. Pennsylvania Public Utility Commission, 578 A.2d 600, 602 (Pa. Cmwlth.
1990). Such a showing must be by a preponderance of the evidence. Povacz;
Lansberry. A preponderance of the evidence is tantamount to a “more likely than
not” inquiry. Povacz, 80 A.3d at 1006. That is, a complainant’s evidence must be
“more convincing than, by even the smallest amount,” the evidence presented by the
respondent utility. Id. at 999 n.25.
              In cases where a utility is alleged to be violating a lawful determination
or order of the PUC, Section 315(b) of the Code provides that the burden of proof
lies with the utility to show that it is in compliance. 66 Pa. C.S. §315(b). Section
315(b) of the Code naturally extends to PUC orders approving settlement
agreements.
              In this case, PECO bore the burden of showing compliance with the
PUC’s orders, and TURN bore the burden of showing that PECO provided
unreasonable service. Upon review, the PUC applied the proper burdens. As to
whether those burdens were met, TURN argues that PECO did not meet its burden

                                           21
of proving compliance with Footnote 3. TURN also argues that it met its burden of
unreasonable service based on PECO’s failure to comply with Footnote 3. TURN’s
position rests entirely on the success of its interpretation of Footnote 3 -- that PECO
was required to immediately and automatically implement the revised energy
burdens without seeking further PUC review or approval. Having rejected TURN’s
interpretation of Footnote 3 above, we conclude that TURN’s assignments of error
regarding the burdens of proof likewise fail.

                            D. Substantial Compliance
                                 1. Contentions
                      a. TURN’s and CAUSE-PA’s Position
             Next, TURN and CAUSE-PA assert that the PUC erred or abused its
discretion by excusing PECO’s nonperformance of a specific obligation pursuant to
Footnote 3 based on a finding that PECO “substantially complied” with other
provisions of the 2015 Settlement Agreement. Neither compliance with other terms,
nor implementation of a different program, excuses PECO’s nonperformance of
Footnote 3. PECO continued to overcharge CAP customers according to outdated
energy burdens in violation of its 2015 Settlement Agreement and the 2016-2018
USECP, and PUC orders adopting and incorporating the same. PECO completely
defied its obligation to immediately pass through lower energy burdens to its CAP
customers.   The PUC’s determination of substantial compliance is manifestly
unreasonable and constitutes an abuse of discretion. PECO’s compliance with other
terms of the 2015 Settlement Agreement is irrelevant.

                     b. PUC’s, PECO’s, and OCA’s Position
             The PUC, PECO, and OCA reassert that Footnote 3 did not require
PECO to automatically implement new energy burdens without PUC approval. The

                                          22
overarching goal of the 2015 Settlement Agreement was to implement a CAP that
improved bill affordability. PECO demonstrated substantial compliance with the
terms and goals of the 2015 Settlement Agreement, including Footnote 3, by taking
affirmative steps to improve customer bill affordability and apply the revised energy
burdens going forward. PECO proposed a new CAP following the PUC’s 2019 Final
CAP Policy Statement, worked in a transparent manner to improve bill affordability
for all CAP customers after receiving the APPRISE Evaluation, and complied with
PUC directives by filing an amended USECP to apply the revised energy burdens.
The PUC acknowledges that PECO confronted competing PUC directives regarding
CAPs when it was proposing changes to its FCO.

                                    2. Analysis
             Once again, TURN’s and CAUSE-PA’s position regarding PECO’s
noncompliance is premised entirely on their interpretation of Footnote 3, which we
have rejected. As discussed above, Footnote 3 did not impose a specific timeframe
for PECO to implement the revised energy burdens.           PECO was required to
implement the revised energy burdens in a reasonable time. PECO substantially
complied with the 2015 Settlement Agreement by taking affirmative steps to revise
its CAP to implement the revised energy burdens in a reasonable time.
             Specifically, on March 26, 2020, days after the PUC published the 2019
Final CAP Policy Statement in the Pennsylvania Bulletin, PECO sent a letter
notifying the PUC that PECO was currently in the process of addressing the failure
of its FCO to provide affordable energy bills as revealed by the APPRISE
Evaluation. R.R. at 1075a-76a. PECO reaffirmed its commitment to address the
affordability issues and incorporate the revised energy burdens. Id. at 1076a. In
April and May of 2020, PECO held a series of calls with stakeholders, including

                                         23
TURN, in which PECO stated its intention to stop using the FCO model and
implement PIPP. Id. at 193a, 267a. PECO’s analysis projected the implementation
of the new energy burdens in the FCO CAP would not improve bill affordability for
CAP customers but would significantly increase the amount of the universal service
program costs paid by all residential ratepayers. Id. at 476a-91a. By letter dated
June 30, 2020, PECO informed the PUC that it had been working closing with
stakeholders and intended to file an amended 2019-2024 USECP shortly. Id. On
July 8, 2020, PECO filed an amended 2019-2024 USECP, in which PECO proposed
to transition from the FCO to PIPP to address the affordability issues with the FCO
design. Id. at 194a, 267a. The amended 2019-2024 USECP incorporated many of
the recommendations the PUC adopted in the 2019 Final CAP Policy Statement,
including the revised energy burdens for customer groups in the 0%-50% and 51%-
100% FPL income range. Id. at 934a. PECO submitted the amended 2019-2024
USECP for PUC’s review and approval prior to implementing new energy burdens.
Id. at 195a, 267a. On September 25, 2020, PECO filed a petition to further amend
its proposed 2019-2024 USECP to permit the use of the new energy burdens during
the transition to the new proposed CAP. Id. at 1471a-611a. Upon review, the PUC’s
findings that PECO demonstrated substantial compliance with the terms and goals
of the 2015 Settlement Agreement including Footnote 3 are supported by substantial
evidence.

                            E. Substantial Evidence
                                1. Contentions
                     a. TURN’s and CAUSE-PA’s Position
            Finally, TURN and CAUSE-PA argue that the PUC’s determination
that Footnote 3 was not central to their entry into the 2015 Settlement Agreement is
not supported by substantial evidence.       TURN’s and CAUSE-PA’s witnesses
                                        24
testified that they understood that PECO’s CAP would automatically adjust if the
PUC changed the energy burdens, and that this was a material term for them. The
PUC capriciously disregarded this unrebutted evidence.

                    b. PUC’s, PECO’s, and OCA’s Position
            The PUC found that the testimony of TURN’s and CAUSE-PA’s
witnesses was unpersuasive. The witnesses testified as to their understanding over
five years after TURN and CAUSE-PA filed their Statements in Support of the 2015
Settlement Agreement. Neither TURN nor CAUSE-PA articulated its position
regarding Footnote 3 in any PUC proceeding prior to prosecuting TURN’s
Complaint. It was not arbitrary or capricious for the PUC to find this testimony
unpersuasive.

                                   2. Analysis
            The PUC is the ultimate finder of fact empowered to determine the
credibility of witnesses and to resolve conflicts in evidence. Greene Township
Board of Supervisors v. Pennsylvania Public Utility Commission, 642 A.2d 541 (Pa.
Cmwlth. 1994). When reviewing a decision of the PUC, an appellate court “should
neither substitute its judgment for that of the PUC when substantial evidence
supports the PUC’s decision on a matter within the PUC’s expertise, nor should it
indulge in the process of weighing evidence and resolving conflicting testimony.”
Lehigh Valley Transportation Services, Inc. v. Pennsylvania Public Utility
Commission, 56 A.3d 49, 56 (Pa. Cmwlth. 2012). Substantial evidence is “relevant
evidence which a reasonable mind would accept as adequate to support the
conclusion reached.” Township of Exeter v. Zoning Hearing Board of Exeter
Township, 962 A.2d 653, 659 (Pa. 2009) (citation and quotation omitted). The

                                       25
PUC’s findings are conclusive where they are supported by substantial evidence.
Hess v. Pennsylvania Public Utility Commission, 107 A.3d 246, 258 n.7 (Pa.
Cmwlth. 2014).
            “Review for capricious disregard of material, competent evidence is an
appropriate component of appellate consideration in every case in which such
question is properly brought before the court.” Leon E. Wintermyer, Inc. v. Workers’
Compensation Appeal Board (Marlowe), 812 A.2d 478, 487 (Pa. 2002). Capricious
disregard occurs only when the factfinder deliberately ignores relevant, competent
evidence. Id. Where substantial evidence supports the findings, and those findings
in turn support the conclusions, it should remain a rare instance where an appellate
court disturbs an adjudication based on capricious disregard. Id. We may conclude
that a factfinder capriciously disregarded competent evidence “when the
unsuccessful party below has presented ‘overwhelming evidence’ upon which the
adjudicator could have reached a contrary conclusion, and the adjudicator has not
satisfactorily addressed that evidence by resolving conflicts in the evidence or
making credibility determinations that are essential with regard to the evidence.”
Balshy v. Pennsylvania State Police, 988 A.2d 813, 835-36 (Pa. Cmwlth. 2010)
(citation and quotation omitted). “[W]here there is strong ‘critical’ evidence that
contradicts evidence supporting a contrary determination, the adjudicator must
provide an explanation as to how it made its determination.” Id. at 836.
            Here, TURN and CAUSE-PA direct this Court to evidence that they
claim supports their understanding of Footnote 3 and why it was material to their
entry into the 2015 Settlement Agreement. TURN’s witness Phil Lord, Executive
Director of TURN at the time TURN entered the 2015 Settlement Agreement,

                                        26
testified that Footnote 3 was material to TURN’s agreement. Specifically, Lord
testified:

                For TURN, a material term of the Settlement was the
                agreement that PECO’s CAP [] would automatically
                adjust if the [PUC] changed those energy burdens. As a
                result, TURN’s advocacy for lower energy burden targets,
                including in the [PUC]’s Energy Affordability proceeding,
                has relied upon this automatic incorporation of updated
                energy burdens into the PECO CAP Structure.
Id. at 386a. CAUSE-PA’s witness, Harry Gellar, similarly testified that Footnote 3
was “an essential element in arriving at [a] settlement compromise and was relied
upon by CAUSE-PA in order to address continuing unaffordability in the FCO
design . . . .” Id. at 553a.
                Although the testimony of Lord and Gellar was not rebutted, their
testimony was offered at the PUC proceedings on TURN’s Complaint -- more than
five years after TURN and CAUSE-PA filed their Statements in Support of the 2015
Settlement Agreement. There is no evidence that TURN or CAUSE-PA articulated
their expectation that Footnote 3 was self-executing or that the automatic adoption
of the revised energy burdens by PECO was central to their support of the 2015
Settlement Agreement prior to entering the 2015 Settlement Agreement. The PUC
attributed more evidentiary weight to the fact that TURN’s and CAUSE-PA’s
Statements in Support of the 2015 Settlement Agreement made no mention of the
importance or effect of Footnote 3.9 PUC Opinion, 12/8/22, at 26. In fact, TURN
concedes that it did not specifically cite to Footnote 3 in its Statement in Support. 10

       9
        Even if such notice was provided, the PUC had the authority to modify this provision to
maintain the PUC’s review and approval process.

       10
            TURN merely referenced the PUC’s CAP Policy Statement and stated:
(Footnote continued on next page…)
                                              27
TURN’s Brief at 23. Upon review, the PUC did not capriciously disregard this
evidence, but exercised its discretion in finding this testimony unpersuasive
considering the totality of the evidence.

                                        IV. Conclusion
              Accordingly, we affirm the PUC’s December 8, 2022 order.

                                            MICHAEL H. WOJCIK, Judge

Judge Wolf did not participate in the decision of this case.

              Although reference to such maximums may be referred to herein as
              targeting “affordability,” TURN . . . continue[s] to submit that the
              [PUC] should undertake revision and review of this CAP Policy
              Statement to reduce the maximum affordability standards in order
              to provide bills which are actually affordable to low-income
              families.

R.R. at 371a; see TURN’s Brief at 23.
                                              28
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

The Tenant Union                    :
Representative Network,             :
                                    :
                         Petitioner :
                                    :
         v.                         : No. 10 C.D. 2023
                                    :
Pennsylvania Public Utility         :
Commission,                         :
                                    :
                         Respondent :

                                 ORDER

           AND NOW, this 2nd day of April, 2024, the order of the Pennsylvania
Public Utility Commission, dated December 8, 2022, is AFFIRMED.

                                   __________________________________
                                   MICHAEL H. WOJCIK, Judge