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Court Revives Complaint Against Retail Supplier, Utility

Complaint Had Originally Alleged Potential Preferential Treatment By LDC To Affiliated Supplier

December 21, 2023

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Copyright 2010-23
Reporting by Paul Ring •

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The Appellate Court of Maryland has remanded to the Maryland PSC a complaint brought by the Maryland Office of People's Counsel against Washington Gas Light and affiliate WGL Energy, as the appellate court vacated the PSC's dismissal of the complaint

See background on the complaint here

OPC, in its initial complaint, raised concerns regarding language on WGL bills, unattributed to WGL or the retail supplier on the bill (in this case, WGL Energy), which promoted the use of natural gas as 'a clean energy' that is less emissions intensive and more environmentally beneficial than an all-electric home. A specific bill reviewed by OPC included WGL Energy charges on such bill

The language in question was: "Natural gas is a clean, efficient, and reliable energy. Converting an all electric home to natural gas is the equivalent of planting 2.75 acres of trees or driving 26,520 fewer miles each year. In addition, natural gas cost[s] 1/3 less than electric, which makes it a smart decision for the environment and your wallet."

OPC in its initial complaint said that it was unclear which entity was ultimately responsible for issuing the relevant WGL bills. However, OPC alleged that Washington Gas reported to OPC that the billing statements were unique to customers receiving gas supply from WGL Energy (WGL later corrected this characterization, noted below).

Based on this, OPC had alleged, "The inclusion of a marketing statement intended only for customers of Washington Gas’s affiliate supplier raises significant issues about Washington Gas’s billing policies, including whether it engages in joint marketing with its affiliates and whether it treats its affiliates preferentially, in violation of the utility code of conduct."

Less relevant to the retail market, OPC also alleged that the language describing natural gas as a clean fuel was deceptive and violated applicable code and law

In a prior motion to dismiss the case at the PSC, WGL Energy had contended that OPC’s complaint is based upon information that OPC either misunderstood, was incomplete, inaccurate, or untrue. WGL Energy noted that it has used the consolidated billing services of Washington Gas for 20 years. During that time, WGL Energy states, it, "had nothing to do with any decision to insert any environmental message on Washington Gas’ bills."

In a prior, separate motion to dismiss the case at the PSC, Washington Gas explained that it uses an identical bill message regardless of the retail supplier. In support of this claim, Washington Gas attached to its motion copies of many bills to customers of different suppliers that contained identical bill message language

As previously reported, the PSC dismissed the complaint.

With respect to the alleged potential inappropriate affiliate interaction raised by OPC, the PSC had said, "The record is clear that Washington Gas generated the utility-consolidated bills that gave rise to this complaint. Thus, WGL Energy should not have been a party to this Complaint and therefore the Commission dismisses the Complaint against WGL Energy. This also renders the claim of inappropriate affiliate interaction moot."

The PSC had said in its order that, "Washington Gas contends that OPC’s error arises from a miscommunication between OPC counsel and its own counsel in which OPC disclosed only the marketing language at issue and claimed that bills to WGL Energy customers contained the offending language, without providing additional context. Further, Washington Gas states that OPC neglected to provide a copy of the bill in question. Based on this limited information, Washington Gas’ 'Customer Service and Customer Choice' team assumed it was a 'supplier consolidated bill'. Washington Gas argues that if OPC shared the true nature of its inquiry as well as a copy of the bill, this misunderstanding could have been avoided. At a minimum, OPC would not have included WGL Energy in its complaint."

However, the appellate court found that the PSC erred in dismissing the complaint with respect to WGL Energy, as the court said that there remained facts in dispute over the entity responsible for the message

"Dismissal of claims against WGL Energy for violations of the utility code of conduct based on improper affiliation was an abuse of discretion [by the PSC]. The record demonstrates that there were still facts in dispute regarding the source of the marketing message, and therefore, dismissal was premature," the appellate court said

Specifically, the appellate court said that WGL had provided different explanations for the presence of the general gas marketing message

"Washington Gas responded with varying statements. In response to the complaint, Washington Gas said that, contrary to its initial response, it was responsible for the marketing statement, which it said was on every utility consolidated bill regardless of the customer’s retail supplier. After the OPC provided information to the contrary, Washington Gas explained, in response to the OPC’s request for a hearing, that the statements were included only on bills sent to 'autopay' customers," the appellate court said

The appellate court said, "We agree with appellants that dismissal of the OPC’s claims against WGL Energy was premature. Although Washington Gas submitted an affidavit stating that it 'does not have, and has never had, a joint marketing agreement with WGL Energy Services, Inc.,' and it conceded that the marketing statements on the bills 'were generated by and are the responsibility of Washington Gas,' Washington Gas provided three separate explanations regarding the issuance of the bills, two of which were proven inaccurate."

"Moreover, appellants also claim that the absence of a joint marketing agreement does not preclude improper affiliation, as the Gas Companies still could have worked together. Because the record demonstrates that there are still facts in dispute regarding the source of the marketing message, we hold that the Commission abused its discretion in dismissing the claims relating to WGL Energy at that stage of the proceedings," the appellate court said

As to the PSC's dismissal of OPC's complaint that the bill message language was deceptive (due to characterizing gas as clean), the appellate court found that the PSC erred in dismissing OPC's complaint against WGL on this issue. The appellate court said, "The Commission’s dismissal of the complaint for failure to state a claim without addressing the PUA [Public Utilities Article] was erroneous and/or arbitrary and capricious. The Commission found that dismissal was warranted because the complaint was an inappropriate forum to address broader issues related to natural gas. The complaint, however, did not require the Commission to resolve far-reaching environmental policy issues. Rather, it asked the Commission to consider whether three specific statements violated the PUA because the unqualified claims were deceptive. The Commission was not authorized to dismiss the complaint on the grounds that it involved broad issues that may affect other natural gas companies because the Commission may only dismiss a complaint for failure to state a claim."

The appellate court said that giving the PSC "unbridled discretion" to dismiss a complaint that the PSC has "no interest" in adjudicating, "would undermine the statutory mandate that the Commission hear complaints to ensure that utilities act in the public interest."

"[P]ursuant to COMAR, the Commission’s discretion to dismiss a complaint is limited to situations where it finds that the complaint fails to state a claim upon which relief can be granted," the appellate court said (and, as noted above, the appellate court said that the PSC erred in finding that the complaint did not state a claim for which relief could be granted)

The appellate court reversed the judgment of a circuit court and ordered that court to vacate the Commission’s orders and remand to the Commission for further proceedings.

A Washington Gas spokesperson provided the following statement concerning the matter:

"Washington Gas is reviewing the decision. The Company does not comment on ongoing litigation."

--- Statement from Washington Gas spokesperson

Maryland People’s Counsel David S. Lapp said, "Washington Gas customers need protection from deceptive green marketing and other violations of the public utility laws."

Lapp said, "The appellate court’s decision confirms the Commission’s obligation to entertain our complaints of unlawful conduct."

In the Matter of Maryland Office of People’s Counsel, et al., No. 2033


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