Pa. ALJ: PUC Lacks Jurisdiction Over Retail Suppliers Regarding Alleged "Unreasonable" Electric Rates

Since the Pennsylvania PUC Commission may not regulate the rates charged by electric generation suppliers, the Commission has no jurisdiction over EGSs to the extent that a complainant contends that an EGS has charged it an "unreasonable, unjust or illegal" rate for electric generation service, an ALJ concludes in an initial decision regarding a customer complaint against Blue Pilot Energy, LLC.

The allegations in the complaint are substantively that after an initial three-month period, Blue Pilot's rate increased from about 8¢ to 39.99¢. An ALJ's initial decision would grant summary dismissal in favor of Blue Pilot as no violations of PUC code or law are alleged or sustained.

The ALJ first addresses the PUC's jurisdiction over EGS pricing.

"Turning first to the complaint's apparent request that the Commission direct the Respondent [Blue Pilot] to provide either a refund or credit to the Complainant, the Commission lacks the authority to order the Respondent to provide either a refund or credit to the Complainant. The Commission may not regulate the rates that the Respondent charged the Complainant for electric generation service since it is not a public utility except for the limited purposes of 66 Pa.C.S. §§ 2809 and 2810. Therefore, the Commission has no jurisdiction over the Respondent to the extent that the Complainant contends that the Respondent has charged it an unreasonable, unjust or illegal rate for electric generation service. Since the Commission lacks the authority to regulate rates charged for electric generation service, it lacks the authority to order a refund or credit to the Complainant," the ALJ said.

This conclusion is notable in light of the fact that much of the recent complaints from the Attorney General against five electric suppliers are premised on high rates.

To be fair, the AG complaints do not allege that the high rates are in violation of the PUC code solely because of their amount, but because the EGSs allegedly marketed the rates as being "competitive."

However, the AG apparently concedes that default service rates cannot be the only benchmark against which the "competitiveness" of EGS rates is measured, since in its complaints it included an analysis finding that EGS rates based on PJM spot prices should not have exceeded 23¢.

This is where we find relevance in the ALJ's recitation of long-standing PUC policy regarding EGS rates. While the AG's "competitive rate" allegations are rooted in areas over which the PUC does have jurisdiction over EGSs (marketing, disclosure, etc.), at their heart, the allegations must evaluate the EGS prices against some benchmark to determine if they are "competitive." We are anxious to see how the PUC will address this matter given its long-standing policy of disclaiming jurisdiction over EGS rates.

Turning back to the specific customer complaint against Blue Pilot that is subject to the initial decision, the ALJ notes that the disclosure statement and agreement indicated that the initial price would be for a period of 90 days.

"After ninety days the disclosure statement and agreement provides that the price could vary on a month to month basis due to several factors, including the cost of wholesale electric market prices. The disclosure statement and agreement contains no cap on the amount by which the rate could increase," the ALJ said, concluding that the 39¢ rate was therefore not in violation of any disclosure statement received by the customer.

"The complaint does not state that the Respondent breached its agreement with the Complainant by selling it electric generation supply on terms other than those set forth in the disclosure statement and agreement. The Complaint simply fails to allege that the Respondent engaged in any fraudulent, deceptive or unlawful marketing or billing acts, " the ALJ notes

"There are no allegations of any fraudulent, deceptive or other unlawful marketing or billing acts performed by the Respondent or its employees," the ALJ concludes, in granting Blue Pilot's motion for summary dismissal in the initial decision.

C-2014-2413732