ALJs: PUC Cannot Regulate Retail Supplier "Pricing," But Does Have Authority to Order Refunds, Compare Pricing to Disclosure Statement

Two Pennsylvania ALJs, in orders on preliminary objections to complaints filed by the Pennsylvania Attorney General and Office of Consumer Advocate against several retail suppliers, would affirm that the PUC lacks jurisdiction to regulate electric generation supplier "pricing," but does have the authority to compel refunds, and, implicitly, may judge pricing against a supplier's disclosure statement.

One of the alleged violations made by the AG and OCA against several retail suppliers was that the variable rates charged by suppliers were not reflective of the cost to serve residential customers based on PJM spot market pricing.

The ALJs, however, in separate orders in cases involving Blue Pilot Energy, Pennsylvania Gas & Electric, IDT Energy, and Respond Power, said that the PUC cannot consider such pricing arguments by themselves.

"The Commission ... lacks jurisdiction to hear any such arguments. The concept of 'cost to serve,' for example, is irrelevant to EGS pricing," the ALJs said.

"[T]he Commission does not have authority to regulate an EGS’s rates ... because EGSs are not included in the definition of public utilities subject to Commission regulation as defined by the Public Utility Code, except in limited purposes as described in Sections 2809 and 2810. 66 Pa.C.S. §§ 102, 2809 (requirements for electric generation suppliers), 2810 (revenue-neutral reconciliation)," the ALJs said.

The ALJs contrasted the absolute pricing arguments originally made by complainants with complainants' later answers (to motions to dismiss the complaints based on lack of jurisdiction) that their allegations are actually that the EGS pricing did not conform to the disclosure statement, thereby violating PUC marketing rules, and that charging non-conforming prices violated PUC billing and quality of service rules.

The ALJs implied that the PUC may examine EGS pricing under these avenues (e.g., to ensure conformance to a disclosure statement), but noted that the specific pricing count of the complaints brought by the AG/OCA did not originally address such arguments (though they were peppered throughout the complaint under other counts).

The ALJs also found that the PUC is empowered to compel EGSs to provide refunds.

"Section 1312 [of the Public Utility Code] gives the Commission jurisdiction to order [an EGS] to issue refunds. To hold otherwise would be contrary to the public interest. To the extent that the Commission would not be allowed to direct EGSs ... to issue refunds to its customers under Section 1312 when, after notice and an opportunity to be heard, refunds are deemed appropriate, it would likewise lose its ability to regulate EGSs for other purposes essential to the public interest, such as ensuring adherence to the Commission’s telemarketing regulations, as discussed above, and issuing civil penalties," the ALJs said.

In contrast, the ALJs said that the PUC lacked authority to order "restitution" or "monetary damages." The ALJs noted that restitution, unlike a refund, is an equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been, had the breach not occurred.

The ALJs also concluded that the PUC lacks statutory authority to enforce the Unfair Trade Practices/Consumer Protection Law (UTP/CPL) and the Telemarketer Registration Act (TRA), which falls to other state agencies. However, the ALJs affirmed that the PUC may enforce its own marketing and telemarketing regulations.

Docket C-2014-2427657 et. al.