Does a public utility’s use of on-bill billing for non-commodity goods and services while declining to offer the same privilege to electric generation suppliers violate the anti-discrimination provisions of the Public Utility Code?
Interstate Gas Supply, Inc. v. Pa. Pub. Util. Comm’n, 298 A.3d 1181 (Pa. Cmwlth. 2024), allocatur granted Mar. 5, 2024, appeal docket 10 MAP 2024
In this case, the Pennsylvania Supreme Court will consider whether an electric distribution company’s (EDC) use of on-bill billing services for their own non-commodity products and services while denying the same service to electric generation suppliers (EGSs) violates Section 1502 of the Public Utility Code and/or Section 2804(6) of the Electricity Generation Customer Choice and Competition Act.
Certain EDCs provided billing services for their own non-commodity products, such as surge protection and line repair programs, by including charges for these services on their monthly utility bills to customers. The EDCs refused to allow EGSs charge for their comparable non-commodity products and services on the monthly customer utility bills. A group of EGSs filed a complaint with the Pennsylvania Public Utility Commission (PUC) alleging that the EDCs’ selective provision of on-bill billing services constituted unreasonable discrimination under Section 1502 of the Public Utility Code and Section 2804(6) of the Electricity Generation Customer Choice and Competition Act. Section 1502 of the Public Utility Code provides that:
No public utility shall, as to service, make or grant any unreasonable preference or advantage to any person, corporation, or municipal corporation, or subject any person, corporation, or municipal corporation to any unreasonable prejudice or disadvantage. No public utility shall establish or maintain any unreasonable difference as to service, either as between localities or as between classes of service, but this section does not prohibit the establishment of reasonable classifications of service.
66 Pa. C.S. § 1502. The Code defines “service” as including “any and all acts done, rendered, or performed, and any and all things furnished or supplied . . . by public utilities . . . in the performance of their duties . . . to their patrons . . . and the public[.]” 66 Pa. C.S. § 102. Section 2804(6) of the Competition Act, 66 Pa. C.S. § 2804(6), provides:
(6) Consistent with the provision of section 2806, the commission shall require that a public utility that owns or operates jurisdictional transmission and distribution facilities shall provide transmission and distribution service to all retail electric customers in their service territory and to electric cooperative corporations and electric generation suppliers, affiliated or nonaffiliated, on rates, terms of access and conditions that are comparable to the utility’s own use of its system.
66 Pa. C.S. § 2804(6).
The PUC’s Administrative Law Judge (ALJ) ruled in favor of the EGSs, finding that the EDCs’ practices were unreasonably discriminatory. However, the PUC reversed this decision, concluding that the EDCs’ actions were not discriminatory. The EGSs appealed to Commonwealth Court, arguing that Section 1502 prohibits an EDC from providing a service to itself, in this case on-bill billing for non-commodity goods and services, while refusing to offer that same service to third parties. In addition, the EGSs argued that the PUC’s interpretation of Section 1502 arbitrarily departs from its decision in Columbia Gas of Pennsylvania, Inc., Docket No. R-20182647577 (filed Jan. 16, 2020), in which the PUC held, in the context of natural gas companies and natural gas suppliers, that discriminatory preferential treatment occurs where a utility provides an entity “a clear benefit” and “business advantage” by having a non-commodity service included on the utility’s bill. The EGSs further contended that the PUC committed an error of law by interpreting Section 2804(6) of the Competition Act, 66 Pa. C.S. § 2804(6), as only barring EDCs from discriminating against electric generation suppliers regarding electrical transmission and distribution-related services and facilities, and not billing service.
The Commonwealth Court affirmed the PUC, holding that the EDCs were permitted to provide themselves with on-bill billing for non-commodity goods and services while declining to offer same privilege to electric generation suppliers. Commonwealth Court found that the statute barring discrimination in service addressed services that public utilities offered to other entities, not services that public utilities made available for their own use, reasoning that:
the takeaway from the plain language of these statutes is that EDCs are not legally prohibited from providing themselves with on-bill billing for non-commodity goods and services while declining to offer the same privilege to third parties. Section 1502 of the Public Utility Code explicitly states that “[n]o public utility shall, as to service, make or grant any unreasonable preference or advantage to any person, corporation, or municipal corporation, or subject any person, corporation, or municipal corporation to any unreasonable prejudice or disadvantage.” 66 Pa. C.S. § 1502. The phrase “make or grant any unreasonable preference or advantage to any person, corporation, or municipal corporation” establishes that this statute addresses the services public utilities offer to other entities, not about those which public utilities make available for their own use; as such, it would be illogical and extra-textual to read Section 1502 as also barring public utilities from providing themselves with different service offerings than those they provide to third parties.
Slip op. at 11 (emphasis in original). The court further observed that it was unclear how public utilities’ refusal to provide suppliers with on-bill billing would subject any entity to unreasonable prejudice, given that suppliers operated under same regime in which none had ability to have their goods and services billed in such manner. Commonwealth Court concluded that its reading was supported by the language of Section 2804(6), opining that:
This reading is supported by the language used in Section 2804(6) of the Competition Act, which explicitly states that “the commission shall require that a public utility that owns or operates jurisdictional [electric] transmission and distribution facilities shall provide … all retail electric customers in their service territory and … electric cooperative corporations and electric generation suppliers, affiliated or nonaffiliated,” with the same level of electric transmission and distribution services that the EDCs offer themselves. Id. § 2804(6). Such a targeted directive would be unnecessary if Section 1502 broadly barred public utilities from refusing to offer electric generation suppliers the same level and kind of services with which public utilities provide themselves. See 1 Pa. C.S. § 1932 (“(a) Statutes or parts of statutes are in pari materia when they relate to the same persons or things or to the same class of persons or things. (b) Statutes in pari materia shall be construed together, if possible, as one statute.”).
Slip op. at 11-12. The court determined that Section 2804(6) did not bar discrimination regarding non-commodity goods and services, reasoning that “Section 2807(c) of the Competition Act makes clear that on-bill billing for third-party services is not a mandatory burden imposed upon EDCs.” Slip op. at 12. Accordingly, the court concluded that “Section 1502 of the Public Utility Code only applies regarding equality of services offered to different third parties (rather than regarding services with which public utilities provide themselves), and Section 2804(6) of the Competition Act does not itself bar discrimination regarding non-commodity goods and services.” Slip op. at 12.
Dissenting, President Judge Cohn Jubelirer, joined by Judge McCullough, found that “the EDCs action in providing a benefit to themselves keeps their competitors, the EGSs, ‘from having the same advantages . . . in providing convenience to customers’ and constitutes discrimination in violation of Section 1502 of the Code.” Dissenting Opinion at RCJ-4 – RCJ-5. The dissent reasoned that to hold otherwise would be “inconsistent with the Commission’s decision in Columbia Gas, which held that discriminatory preferential treatment occurs where a utility provides an entity ‘a clear benefit’ and ‘business advantage’ by having a non-commodity service included on the utility’s bill.” Dissent op. at RCJ-3. Therefore the dissent would conclude that:
…if the EDCs provide on-bill billing services to themselves, thereby obtaining a benefit and business advantage associated with issuing their customers a convenient, single bill, they must provide the same services to the EGSs. If the EDCs do not offer the same services to the EGSs, they run afoul of the Code’s anti-discrimination provisions found in Sections 1502 and 2804(6).
Dissent op. at RCJ-5.
The Pennsylvania Supreme Court granted allocatur to consider:
Contrary to the plain language and intent of … Section 1502 [of the Public Utility Code], 66 Pa. C.S. § 1502—which prohibits a public utility from granting any advantage to any person or corporation, or subjecting any person or corporation to a disadvantage—and Section 2804(6) [of the Competition Act], 66 Pa. C.S. § 2804(6)—which requires monopoly [e]lectric [d]istribution [c]ompanies like [Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, and West Penn Power Company] (“EDCs”) to provide distribution service to [e]lectric [g]eneration [s]uppliers (“EGSs”) like [P]etitioners on “rates, terms of access and conditions that are comparable to the utility’s own use of its system”—did the Commonwealth Court err as a matter of law by upholding the [Public Utility Commission’s (PUC)] interpretation of those sections to allow [the EDCs] to include charges for its own “side” products and services on its utility bills but exclude charges for the same or similar products offered by [P]etitioners, where the PUC long ago held billing to be a part of public utility distribution service?