Pennsylvania PUC Denies Reconsideration Of $1 Million Fine Imposed On Retail Supplier

July 12, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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The Pennsylvania PUC denied reconsideration of its July 2018 order which, among other things, imposed a $1 million fine on Blue Pilot Energy, LLC

See our prior story for background on the proceeding and allegations which led to the fine

Generally, the PUC found that Blue Pilot Energy's petition for reconsideration did not meet the standards under Duick and did not raise any new or novel arguments or any considerations which appear to have been overlooked by the Commission

Among other things, Blue Pilot Energy had under reconsideration argued that the PUC's fine was grossly disproportionate and unconstitutionally excessive

As previously reported (see story here), the Pennsylvania Supreme Court recently addressed a separate case concerning claims from another retail supplier (HIKO) that a fine was unconstitutionally excessive. However, in such other case, the Supreme Court adjudicated the appeal based on procedural grounds, and did not directly resolve the broader issue of what constitutes an unconstitutionally excessive fine

"Because the Court in the HIKO Appeal found that the EGS Appellant in that proceeding did not adequately preserve the issue concerning allegations that the fine imposed by the Commission was unconstitutionally excessive, the issue was not directly resolved under the facts of that litigation. Thus, we do not find any appellate guidance from the HIKO Appeal which would support reconsideration requested by Blue Pilot under the standards of Duick that we shall apply in this Petition," the PUC said

The PUC said that the proportionality issue was squarely addressed in its original order

"Pursuant to our regulations found at 52 Pa.Code § 69.1201, derived from Joseph A. Rosi v. Bell-Atlantic-Pennsylvania, Inc. and Sprint Communications Company, L.P., Docket No. C-00992409 (Order entered March 16, 2000) (Rosi factors), we duly evaluated and considered those factors to determine whether the fine for violating a Commission order, regulation or statute is appropriate in this proceeding. Blue Pilot expressly articulated its objection to the civil penalty recommended by the presiding ALJs in the Initial Decision in its Exceptions to the July 19 Order. Blue Pilot, in Exceptions, argued, inter alia, that the 'proportionality' test of the limits of the constitutionality of a civil penalty and/or fine was violated in this matter. Blue Pilot further cited to the proceedings in HIKO and other administrative proceedings in which the Commission imposed civil penalties in support of its position that the fines in its case was disproportionate to its conduct," the PUC said

The PUC noted that, in fact, it reduced the level of the fine recommended by the ALJ on proportionality grounds, specifically taking into consideration the exceptions of Blue Pilot

"As a corollary matter, we also reject Blue Pilot’s position that the methodology under which its penalty was computed violated its due process rights in that there was a lack of notice concerning the methodology and/or assessment of civil penalties for violations of Commission regulations promulgated pursuant to the Act. Section 54.42 of our regulations expressly provides notice to EGS companies licensed in the Commonwealth of the availability of civil penalties, fines and suspension or revocation of licenses for violation of Commission regulations and orders," the PUC said

The PUC also said in denying reconsideration that the origins of the case, a complaint from the Attorney General and Office of Consumer Advocate, is permissible

"In this matter, we have agreed with the presiding ALJ that the Joint Complainants have prosecuted a formal complaint against Blue Pilot asserting a quasi-sovereign interest. That interest is one which the Court has described, favorably, as a set of interests that the State has in the well-being of its populace. The interest, as noted in TAP does not lend itself to a simple or exact definition. We have, on application of the facts to the existing law, concluded that the Joint Complainants have adequately asserted a quasi-sovereign interest supporting their position to prosecute the complaint in this matter," the PUC said

The PUC also affirmed that the Commission may issue refunds for a supplier's deviation from the terms of a customer disclosure statement, citing its prior finding in Pa., et al., v. IDT Energy, Inc., Docket No. C-2014-2427657 (Order entered December 18, 2014) (IDT) in which the PUC concluded that Section 501 of the Public Utility Code, 66 Pa.C.S. § 501, provides the Commission with plenary authority to direct an EGS to, inter alia, rebill an end user upon an adequate record where it is found that the EGS intentionally billed contrary to its disclosure statements.

Docket C-2014-2427655

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