Court Opinion

ID: 9759525
Source: CourtListenerOpinion
Date Created: 2023-08-29 00:19:18.8633+00
Date Added: 2024-06-11T07:29:02.609774
License: Public Domain

DISSENTING OPINION BY
Judge SMITH-RIBNER.
I respectfully dissent from the majority’s decision to affirm the order of the Public Utility Commission (Commission) when it results in a direct violation of the rate-cap protections contained in Section 2804(4)(ii) of the Electricity Generation Customer Choice and Competition Act (Competition Act), 66 Pa.C.S. § 2804(4)(ii). The “Generation Avoidance Energy” (GAE) provision included in Duquesne Light Company’s “High Voltage Power Service” (HVPS) rate class, unaltered since its approval by the Commission in 1987, provides:
Generation Avoidance energy provides an option to customers who produce electricity for their own use by utilizing their own internal generating equipment. The customer may purchase energy in excess of that contracted for on this rate and avoid the increased use of alternate energy sources.
Prior to the start of each billing month, the customer must inquire as to the availability of generation avoidance energy for the billing month. When generation avoidance energy is available, the Company and the customer will mutually establish the demand threshold for generation avoidance energy. All kilowatt-hours in any 15 minute on-peak metered period that exceed the monthly stipulated demand level will be considered generation avoidance energy. Generation Avoidance energy will be billed at the average base rate price resulting from the charges calculated for the demand and energy under this rate.
Petition of Duquesne (Exhibit A); R.R. 18a.
The manner is which Duquesne and U.S. Steel have interpreted and applied the GAE provision for some fifteen years is not seriously contested. Each month, some agreed upon amount of electricity was provided to U.S. Steel at the lower GAE rate, so long as such energy was physically available and even if in supplying the energy Duquesne was obligated to purchase additional energy from another supplier. On a monthly basis, U.S. Steel provided Duquesne with the necessary information regarding its load requirements and the amount of its own generation available, thereby allowing for the establishment of a demand threshold over which U.S. Steel would be charged the lower GAE rate. It is evident from the record that the arrangement was in effect in December 1987 when the Commission approved the HVPS rate class, which included the GAE provision; in May 1998 when the Commission approved Du-quesne’s restructuring plan at which time the Commission included in its order a specific requirement that Duquesne maintain the GAE provision; in September 1999 when Duquesne and Orion entered into the generation supply agreement (POLR I Agreement) whereby Orion would provide service to all “non-shopping” Duquesne customers until January *7921, 2005; and in 2000 when Duquesne sold its generation facilities to Orion.
After selling its generation facilities, Du-quesne continued to supply GAE to U.S. Steel in accordance with the procedures established in 1987, billing U.S. Steel and paying Orion for that electricity at the lower GAE rate. This longstanding application of the GAE provision went unchallenged until May 2001 when, months after acquiring Duquesne’s generation facilities, Orion objected to supplying the lower-rate GAE to U.S. Steel and asserted that GAE was available at Orion’s sole discretion. Reliant later acquired Orion and reiterated the objection and has repeatedly stated that GAE will no longer be made available to U.S. Steel.
The Commission’s decision will require U.S. Steel to -pay a greater cost for the generation component of its electricity purchases while U.S. Steel is still paying Duquesne for its “transition or stranded costs” as defined in Section 2803 of the Competition Act, 66 Pa.C.S. § 2803, thus violating rate-cap protections in Section 2804(4)(ii) of the Competition Act.1 Section 2804(4)(ii) provides:
In addition to the rate cap set forth in subparagraph (i), for a period of nine years from the effective date of this chapter or until an electric distribution utility is no longer recovering its transition or stranded costs through a competitive transition charge or intangible transition charge and all customers of an electric distribution utility can choose an alternative provider of electric generation, whichever is shorter, the generation component of a utility’s charges to customers who purchase generation from the utility, including the competi-five transition charge and intangible transition charge, shall not exceed the generation component charged to the customers that has been approved by the commission for such service as of the effective date of this chapter.
Neither Reliant nor the Commission seriously disputes that if the Commission’s interpretation stands, GAE will cease to exist and the charge U.S. Steel pays for the generation component of its electricity purchases will “exceed.the generation component charged to the customer[] that has been approved by the commission for such service as of the effective date of this chapter.” Id.
The Commission’s suggestion that it has not invalidated the GAE provision and that GAE is still available if the parties can agree on the terms of their transactions is contradicted by Reliant’s unequivocal statement that GAE is not now available to U.S. Steel and will not be available to it in the future. The Commission’s interpretation of the GAE provision eviscerates the provision just as effectively as if the Commission had ordered the GAE provision excised from Duquesne’s tariff. To assert otherwise is to elevate form over substance. See Philadelphia Suburban Water Co. v. Pennsylvania Public Utility Commission, 808 A.2d 1044 (Pa.Cmwlth.2002). The real issue, in fact, is whether Section 2804 of the Competition Act prohibits such an outcome when the increase in charges for the generation component of electricity purchases is the result of the Commission’s newly formulated interpretation of an approved tariff provision. Finding nothing in Section 2804 or in any other section of the Competition Act that would exclude such a decision from the purview *793of Section 2804 rate-cap protections, on the facts here, I conclude that the Commission’s after-the-fact interpretation of the GAE provision violates the rate-cap protections.2 See Commonwealth v. Stanley, 498 Pa. 326, 446 A.2d 583 (1982) (clear statutory language must be read in accordance with its plain meaning and common usage).
In so concluding, I remain aware that the Commission’s interpretations of its governing statutes and regulatory pronouncements and the terms of lawfully approved tariffs are entitled to great deference. Aronson v. Pennsylvania Public Utility Commission, 740 A.2d 1208 (Pa.Cmwlth.1999). When the Commission disposes of an issue involving its special expertise and requiring the exercise of discretionary judgment, absent an error of law or total lack of supporting evidence, the Court will not substitute its judgment for that of the Commission. West Penn Power Co. v. Pennsylvania Public Utility Commission, 147 Pa.Cmwlth. 6, 607 A.2d 1132 (1992). I also recognize that, despite lengthy arguments to the contrary, nothing in the “plain language” of the GAE provision supports the interpretation advanced by the Commission. For example, the GAE provision contains no clause stating that Duquesne (now Reliant) may, in its sole discretion and for economic or any other reason at all, refuse to sell any electricity to U.S. Steel at the GAE rate.3 In view of the deference that this Court must afford the Commission’s tariff interpretations, I would defer to its interpretation of the GAE provision but for the rate-cap protections in Section 2804 of the Competition Act. However, in view of the Commission’s clear error of law in interpreting the GAE provision its order should be reversed.
In conclusion, I briefly respond to additional arguments raised by the Commission and noted by the majority. First, I do not find particularly persuasive the textual argument that, because the GAE provision refers to GAE as an “option” and because the provision requires the customer to inquire as to the availability of GAE and to consent to a “mutually agreeable demand threshold,” that the availability of GAE was meant to be solely within the supplier’s discretion. The “option” refers to the customer’s choice in purchasing GAE or in engaging in self-generation, not to the supplier’s choice of whether to sell GAE at all. Nor do the facts that GAE may not always be available or that the *794parties must agree on a demand threshold support the notion that the supplier has sole and unfettered discretion in deciding whether to provide GAE; those facts are more consistent with the long-standing interpretation by Duquesne and U.S. Steel that some level of GAE must be provided when supply is available on the energy market. Moreover, the fact that litigation might ensue over a supplier’s repeated and unreasonable refusal to agree to a monthly demand threshold does not support a conclusion that the supplier may in its sole discretion refuse to supply any GAE.
Second, it is misleading to characterize the manner in which Duquesne and U.S. Steel have implemented the GAE provision as being a somewhat surreptitious “private deal” between two parties that wished to evade the plain meaning of a tariff provision. I agree, as the majority notes, that a tariff must be applied consistent with its language and not according to any private understanding. Section 1303 of the Public Utility Code, 66 Pa.C.S. § 1303; see Byer v. Peoples Natural Gas Co., 251 Pa.Super. 75, 380 A.2d 383 (1977). As already observed, however, the understanding by Duquesne and U.S. Steel is consistent with language of the GAE provision. Additionally, the HYPS rate class and the GAE provision were intended to he of special benefit to U.S. Steel; the 1987 tariff amendment was approved by the Commission; aid Duquesne and U.S. Steel have followed the same interpretation of the provision for some fifteen years. The matter <f GAE was again brought to the Commission’s attention during Duquesne’s restructuring proceedings, and neither Duquesne, U.S. Steel nor any other source complained about the arrangement. During negotiations leading to the POLR I Agreement, Orion apparently did not question the manner in which GAE was to be supplied. Any suggestion or inference that Duquesne and U.S. Steel attempted to evade the correct interpretation of the tariff is contradicted by the record.
The Commission’s interpretation undis-putedly eliminates the GAE rate heretofore available to U.S. Steel, and it imper-missibly increases the charges that U.S. Steel must pay for generation supply during Duquesne’s restructuring transition period in direct contravention of the plain meaning of Section 2804(4)(ii) of the Competition Act. The Commission committed a reversible error of law in adopting Reliant’s interpretation of the GAE provision and in holding that Reliant, as the generation supplier, has the sole discretion to determine whether it will provide GAE to U.S. Steel in accordance with the obligations under Duquesne’s existing tariff and the POLR I Agreement.4 Accordingly, I dissent.
Judge COHN and Judge SIMPSON join in this dissenting opinion.

. Duquesne estimates that if GAE is eliminated, U.S. Steel will face increased costs to purchase electricity in the range of $7,000,000 to $9,000,000 per year, although not all of that increase would be attributable to an increase in the cost of the “generation component'' referred to in Section 2804(4)(ii) of the Competition Act.

. Contrary to the arguments raised by the Commission and by Reliant, the plain language of Section 2804 of the Competition Act demonstrates its applicability here. The introductory clause to Section 2804 provides: “The following interdependent standards shall govern the commission’s assessment and approval of each public utility’s restructuring plan, oversight of the transition process and regulation of the restructured electric utility industry....”

. The Commission and Reliant cannot support the assertion that the Commission was compelled to issue its decision in order to correct what was a clear violation of Du-quesne's lawfully approved tariff. For example, the Commission did not find that the tariff set a specific per-unit-price for the sale of GAE and that Duquesne and U.S. Steel had later agreed upon a lower per-unit-price, in direct contravention of the tariff provision. Instead, the Commission’s reliance on changed or hypothetical economic conditions in order to support its decision, evident in portions of its decision quoted by the majority, suggests that what the Commission has done is not merely to "interpret” a longstanding tariff provision but substantively to change that tariff in order to accommodate present economic and industry conditions. The Commission may have that authority, but it may not issue a decision which results in a violation of the Competition Act’s rate-cap protections or change tariff rates without following proper procedure.

. I agree fully with the conclusions reached by Commissioner Wilson, Jr., in his February 2003 dissent, i.e., that the central issue here concerns the obligations of energy suppliers to comply with an HVPS tariff that existed before and after enactment of the Competition Act and that the effect of the Commission's decision is to rewrite a valid tariff and to reverse its prior approval of a tariff in its restructuring order by imposing new conditions.