PUC Rules on Whether It Can Interpret Terms & Conditions of Retail Supplier Contract, Set Rate (FirstEnergy Solutions Polar Vortex Pass-Through)

The Pennsylvania PUC has ruled on whether it can interpret the terms and conditions of a contract between an electric generation supplier (EGS) and a customer to determine whether a breach has occurred, or set the rates an EGS can charge.

The question arose in two separate proceedings regarding FirstEnergy Solutions' polar vortex pass-through surcharge, one filed by the Office of Small Business Advocate, and another filed by the FES Industrial & Customer Coalition.

In a joint motion from Chairman Robert Powelson and Vice Chairman John Coleman adopted by the PUC, the Commissioners said that, "A review of the Public Utility Code and related case law makes it clear that Commission jurisdiction does not extend to interpreting the terms and conditions of a contract between an EGS and a customer to determine whether a breach has occurred, or setting the rates an EGS can charge."

"Instead, the Commission can only ensure that an EGS is abiding by the standards of conduct and disclosure, the marketing and sales Regulations, the contract expiration/change-of-terms notice requirements and that the rate billed by an EGS was calculated in accordance with those materials," the adopted motion said.

Having reached this conclusion, the PUC declined to issue a declaratory order sought by OSBA regarding the permissibility of the polar vortex pass-through charge. While OSBA also made various claims regarding the marketing of the FES contracts in question, over which the Commission could have jurisdiction, those issues were not raised in OSBA's initial petition, and only raised on briefing. The PUC therefore said it would be inappropriate to consider such claims, citing due process concerns, while also noting such fact-specific claims would not be well-addressed in a petition for declaratory order.

However, the complaint from the FES Industrial & Customer Coalition timely raised issues beyond contract interpretation, including allegations that FES's actions violated Section 2807(d)(2) of the Public Utility Code and Section 54.43(1) of the Commission's Regulations. Under these sections, FES is required to provide adequate and accurate information to customers, including commercial and industrial customers, regarding its services.

The FES ICCC also raises the issue of whether FES has violated Section 54.43(f) of the Commission's Regulations under which FES is responsible for any fraudulent or deceptive billing acts.

Given these questions are within the Commission's jurisdiction, the PUC declined to stay the FES ICCC proceedings pending action by a civil court of competent jurisdiction, and instead referred the matter to an ALJ for further proceedings.