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Pennsylvania ALJ: Retail Supplier's Costs/Expenses Relevant To Complaint Case (Subject to Discovery); Profits and Revenues Are Not

March 5, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Due to the wording of its disclosure statement, the costs, expenses, and billings of Blue Pilot Energy, LLC are relevant to a complaint brought against the supplier by the Pennsylvania Office of Consumer Advocate, and therefore are permissible subjects for discovery, a Pennsylvania ALJ said in a procedural order.

As part of discovery, the OCA has issued an interrogatory to Blue Pilot Energy seeking, "in detail the records compiled or maintained by Respondent which concern, refer or relate to costs, expenses, profits, losses, revenues and billing for Respondent’s Pennsylvania operations."

Blue Pilot objected to the interrogatory on several grounds.

The ALJ said that, with respect to costs, expenses, and billing, the interrogatory is permissible and shall be answered, because Blue Pilot's disclosure statement references "costs" as a driver of the company's rates.

Specifically, the ALJ noted that the disclosure statement states that weather fluctuations or market conditions, "may result in Blue Pilot incurring unusual costs when supplying electricity service, which may be passed through as a temporary assessment on your bill."

"As a result, information regarding Blue Pilot’s costs is directly relevant to whether the Company has billed in accordance with its Disclosure Statement," the ALJ said.

The OCA interrogatories, "may lead to the admissibility of evidence regarding that issue with regard to Blue Pilot’s costs because the Disclosure Statement specifically says that Blue Pilot may pass through to bills unusual costs," the ALJ said.

"It is, therefore, within the scope of discovery to examine what Blue Pilot’s costs have been to see if the prices Blue Pilot charged conforms with the Disclosure Statement. Similarly, the Joint Complainants’ request for 'expenses' is also likely to lead to admissible evidence to the extent that 'expenses' equate with 'costs.' The Joint Complainants’ request for 'billing' information is also likely to lead to admissible evidence to the extent that the price Blue Pilot billed its customer conforms to the Disclosure Statement. Therefore, information regarding costs, expenses and billing are relevant to this proceeding," the ALJ said

"As noted above, Blue Pilot’s Disclosure Statement indicates that one factor upon which its variable rates are based are 'unusual costs when supplying electricity service' and that such costs may be passed through as a temporary assessment on bills. It is impossible to determine what costs may be 'unusual' without knowing which costs are 'usual,'" the ALJ said.

Blue Pilot had argued that the cost information was irrelevant given that the PUC lacks ratemaking authority over competitive suppliers. The ALJ rejected this argument because, "the Joint Complainants do not seek this information in these interrogatories in an attempt to determine the specific price Blue Pilot should be charging or to argue that its formula for determining prices should be changed. Nor are the Joint Complainants seeking to impose traditional ratemaking authority over the rates charged by Blue Pilot. The Joint Complainants seek the information in interrogatories VI-1 and VI-7 to ensure that Blue Pilot is charging prices that conform to the Disclosure Statement."

In contrast, the ALJ found that Blue Pilot’s profits, losses and revenues are not likely to lead to the discovery of admissible evidence because profits, losses and revenue are not referenced in the Disclosure Statement or otherwise relevant to an issue raised in the OCA complaint.

"Nowhere in Blue Pilot’s Disclosure Statement, for example, is there a reference to the Company’s profits, losses and revenues being used to determine the variable rate and, therefore, Blue Pilot’s profits, losses and revenues are not relevant to ensure that the billed prices conform to the Disclosure Statement," the ALJ said.

Blue Pilot will not be required to answer the interrogatories as they relate to profits, losses and revenues

Case C-2014-2427655

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