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PUC Affirms Ability To Review Retail Supplier Contracts For Compliance With "Plain Language" Requirement, Affirms Such Review Is Not An Impermissible Interpretation Of A Private Contract

PUC Lowers Proposed Civil Penalty On Retail Supplier


May 5, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

In an order on a complaint brought by a non-residential customer against Blue Pilot Energy, LLC, the Pennsylvania PUC affirmed that it has authority to review electric generation supplier (EGS) contracts for compliance with the plain language requirement of 52 Pa. Code § 54.43(1), as the PUC also lowered the civil penalty imposed on Blue Pilot Energy, LLC as compared to an ALJ's recommendation

Enrico Partners L.P., a non-residential customer, had filed a complaint against Blue Pilot Energy, LLC alleging that Blue Pilot's variable rates after an initial three-month period (March 2014 to May 2014) increased from 7.9¢/kWh, to 24.9¢/kWh in June 2014.

Enrico Partners alleged that this increase was inconsistent with Blue Pilot Energy's service agreement, which the ALJ, in adopting Blue Pilot's position, considered to be Blue Pilot's, "disclosure statement."

Enrico Partners cited language in the service agreement which stated, "Your variable rate will be based upon PJM wholesale market conditions," and alleged that the rate of 24.9¢/kWh was not reflective of PJM wholesale market conditions

The Blue Pilot service agreement also contained language stating, "At any time after 60 days of service, but not more frequently than monthly, we may increase or decrease your rate based upon several factors, including changes in wholesale energy market prices in the PJM Markets."

More specifically, the fifth sentence under paragraph three, Terms of Service, provides, "At any time after 60 days of service, but not more frequently than monthly, we may increase or decrease your rate based upon several factors, including changes in wholesale energy market prices in the PJM Markets," while the sixth sentence of the same paragraph reads, "Your variable rate will be based upon PJM wholesale market conditions."

In an initial decision, an ALJ had found that it was unclear whether the sixth sentence clarifies or elaborates upon the fifth sentence or if the sixth sentence replaces the fifth sentence. The ALJ found that there was uncertainty whether the paragraph provides two separate ways for changing rates. Specifically, the ALJ considered the sixth sentence to be unclear when read in conjunction with the preceding sentence. The ALJ also found that the rate charged to Enrico was not based upon PJM wholesale market conditions even though the sixth sentence stated that it would be based on those conditions. As such, the ALJ found the fifth and sixth sentences to be poorly written and that it would be reasonable for a consumer to be confused when reading the Service Agreement. Thus, the ALJ had found that Blue Pilot violated the plain language and common terms requirements under the PUC's regulations

Blue Pilot filed exceptions to the ALJ's initial decision, arguing that, among other things, the Commission lacked jurisdiction to interpret a contract between an EGS and its customer

The PUC denied this exception, affirming its prior precedent that reviewing a contract for purposes of compliance with various PUC marketing standards, such as the plain language standard, does not amount to interpretation of the terms of a private contract.

"[T]the authority of this Commission does extend to issues that are related to an EGS’ compliance with the Code and the Commission’s Regulations, including standards of conduct related to marketing and sales and disclosure materials provided to customers," the PUC affirmed

"On review of the record and the Initial Decision, we find that the ALJ appropriately confined his analysis to a determination of whether Enrico was, in fact, billed and the charges to Enrico were calculated, according to the disclosure document provided by Blue Pilot. This determination, however, was made problematic in light of the ambiguity in the wording of the Service Agreement. The wording in the Service Agreement identified several undisclosed factors on which the rate could vary, while at the same time, stated in unequivocal terms that the rate would be based on PJM wholesale market conditions. The ALJ concluded that Blue Pilot did not bill Enrico in accordance with the disclosure document provided. Consequently, it was on this basis that the ALJ found an overbilling had occurred. We agree with the approach and the conclusion of the ALJ in this regard," the PUC said

"On review of the record in this matter, we affirm the ALJ’s findings of a violation of the plain language obligations of Section 54.43(1) of our Regulations. Our conclusion expressly rejects the position of Blue Pilot as asserted in its Exceptions that the ALJ has, improperly, attempted to interpret a private contract ... [W]e also adopt the related determination that – as a result of the violation of the plain language requirements of our Regulations and Blue Pilot’s lack of evidence to refute the Complainant’s calculation – Enrico was overbilled in the amount of $27,168.48 and that this amount should be refunded to Enrico," the PUC said

The PUC also affirmed its prior precedent that it retains authority to direct a billing adjustment, such as a refund, where an EGS does not bill a customer in accordance with the customer's contract, and that such billing adjustment does not constitute regulation of an EGS's rate.

"[O]ne of the circumstances under which a billing adjustment may be necessary is where an EGS fails to bill a customer in accordance with its disclosure statement," the PUC noted, citing its authority under Section 501 of the Code, 66 Pa. C.S. § 501

The PUC did grant, in part, Blue Pilot's exceptions to the ALJ's recommended $2,000 civil penalty.

The PUC adopted instead a $1,000 civil penalty on Blue Pilot, stating that a reduction was warranted as there was no evidence that Blue Pilot acted intentionally by including ambiguous language in the disclosure statement

Docket C-2014-2432979

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