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First Quarter

Rural Telephone Co. Coalition v. PUC, Pa. Telephone Assn v. PUC

No. 6 C.D. 2007 & No. 7 C.D. 2007 (filed January 24, 2008), 941 A.2d 751 (Pa. Cmwlth. 2008); 2008 Pa. LEXIS 34
The Commonwealth Court affirmed the decision of the PUC that approved the application of Core Communications, Inc. (Core) to amend its certificate of public convenience and denied the protest of the Rural Telephone Company Coalition (Coalition) and The Pennsylvania Telephone Association (Association) (collectively, Petitioners). Core sought to amend its certificate to begin to offer, render, furnish or supply telecommunication services as a facilities-based competitive local exchange carrier in certain service territories throughout Pennsylvania.

On appeal, Petitioners claimed that the Commissions decision was not supported by substantial evidence and contained errors of law. Petitioners also claimed that the Commission erred by finding Core fit to provide CLEC service. The Court held that service to a limited group is still service to the public and, thus, Cores transmission path service qualifies as service for the public, citing to Waltman v. Pa. PUC , 596 A.2d 1221 (Pa. Cmwlth. 1991). The Court also ruled that substantial evidence supported the Commissions determinations that Core was a facilities-based carrier given its $1.6 million in assets and switching facilities in Pennsylvania and that Core provides local exchange service given that the calls originate and terminate within a LATA. Finally, the Court found that the record supports the Commissions determination that Core is technically, financially, and managerially fit to expand its telecommunications services and rejected Petitioners argument that Core is legally unfit.

Mercury Trucking, Inc. v. PUC

No. 248 M.D. 2007 (Pa. Cmwlth. 2008) (filed March 7, 2008)
In an unreported memorandum opinion, Commonwealth Court denied the Commissions preliminary objections to Mercury Trucking, Incs (Mercury) petition for review of its annual assessment for the fiscal year July 1, 2005 through June 30, 2006. In its objections, the Commission argued that 66 Pa. C.S. 510(b) precludes Mercury from challenging its assessment because it failed to timely file its statement of revenue. The Commonwealth Court disagreed with Commission, holding that a public utility has the right to challenge its revenue assessment under Section 510(d) of the Code. The Court further found that Mercury complied with the requirements of Section 510(c) of the Code by filing its objection to the assessment and paying the assessed amount. Therefore, Mercury was authorized to file an action in the Commonwealth Courts original jurisdiction within 2 years of the Commissions assessments.

Second Quarter

Emporium Water Company v. Pa. PUC

No. 976 C.D. 2007, (Pa. Cmwlth. 2008) (filed June 4, 2008)
In an unreported memorandum opinion, Commonwealth Court affirmed the PUC’s Order disallowing Emporium Water Company’s (Emporium) use of a hypothetical capital structure and requiring Emporium to use its actual capital structure. In its objections, Emporium argued that the PUC should have allowed it to use a hypothetical capital structure in calculating its rate of return. Emporium also argued that the PUC violated the managerial discretion doctrine by placing conditions Emporium’s use of part-time employees. The Commonwealth Court disagreed with Emporium on both issues, holding that the PUC’s decision was supported by substantial evidence, did not conflict with the law, and was rationally derived from the application of the law to the facts of the case. The Commonwealth Court further held that the PUC has sole discretion in deciding whether a hypothetical capital structure should be used. The Court also found that the PUC did not violate the utility management discretion doctrine in placing a condition on Emporium’s use of part-time employees because the PUC simply asked for verification that Emporium actually made the salary payments it requested.

Third Quarter

Pa PUC,et al. v. Dr. Samuel Bodman, Dept. of Energy

Civil Action Nos. 1:CV-07-2002, 1:CV-08-0091, 1:CV-08-0093 (filed August 21, 2008) 
The Commission and several other plaintiffs filed civil complaints in the federal district court under 42 U.S.C. §§ 7192 and 7151 alleging that the Department of Energy’s (DOE) designation of the Mid-Atlantic National Interest Electric Transmission Corridor (NIETC) under Section 1221 of the Energy Policy Act of 2005 (EPAct of 2005) is: (1) intrusive on state siting authority; (2) overly broad and inconsistent with congressional intent; and (3) failed to adequately identify congestion levels and sources and lacks findings of fact. The Commission filed this complaint, in part, as a precaution due to the uncertainty regarding jurisdiction. The relevant statutory provisions alleged in the complaint require that challenges to DOE orders be filed in federal district court. Alternatively, Section 1221 of the EPAct (codified as Section 216 of the Federal Power Act) vests appeals of DOE NIETC designations in the courts of appeal.

The Commission also filed an appeal of the DOE NIETC designation in the Court of Appeals for the 2nd Circuit. A number of other states and environmental organizations similarly filed appeals in various circuits which appeals have now been consolidated in the 9th Circuit.

DOE filed a Motion to Dismiss largely predicated on the EPAct provision vesting jurisdiction over appeals of NIETC designations in the courts of appeal. The Middle District Court granted DOE’s Motion to Dismiss. The court ruled that jurisdiction to challenge the DOE designations lies in the court of appeals under 16 U.S. C. § 825l, that jurisdiction is not conferred upon the district court under section 317 of the Federal Power Act, and even if there is some uncertainty regarding jurisdiction, case law provides that “where it is unclear whether review jurisdiction is in the district court of the court of appeal the ambiguity is resolved in factor of the latter”, citing General Electric v. DOE, 764 F.2d 896 (D.C. Cir. 1985). The Commission has appealed the dismissal to the 3rd Circuit. The Commission and DOE subsequently entered into and filed a Joint Motion to Stay the 3rd Circuit appeal pending resolution of the consolidated appeals in the 9th Circuit which is expected in late 2009 or early 2010.

Fourth Quarter

North Lebanon Twp. v. Pa. P.U.C.

No. 2141 C.D. 2007 (filed October 9, 2008), 962 A.2d 1237 (Pa.Cmwlth. 2008).
In an unreported memorandum opinion, the Commonwealth Court vacated and remanded in part and otherwise affirmedthe Commission’s order that a rail crossing should not be abolished and that the municipalities, rather than the railroad, should pay for the future costs of maintaining the new gates and lights at the crossing. The Norfolk Southern Railway Company and three municipalities, North Lebanon Township, the City of Lebanon, and LebanonCounty, filed cross appeals of the Commission’s order.

The Commonwealth Court held that the evidence was sufficient to support the Commission decision to not abolish the railroad crossing; the Commission appropriately considered public safety when denying the application of Norfolk Southern to abolish the railroad crossing; and the Commission properly ordered the municipalities to bear future costs associated with the railroad crossing. The Commonwealth Court, however, also held that the Commission was required to determine whether the Lebanon County Metropolitan Planning Organization qualified as a “municipal corporation” under the Public Utility Code before allocating costs among the municipalities, and therefore vacated the allocation of costs and remanded the issue to the Commission.

Met Ed Industrial Users Group, Metropolitan Edison Co., Pa. Electric Co. and Office of Consumer Advocate v. Pa. PUC

Nos. 587, 700 and 701 C.D. 2007, 960 A.2d 189 (Pa. Cmwlth. 2008)(filed June 4, 2008)
The Commonwealth Court affirmed the Commission’s decision in regard to the Section 1308(d) general rate increase request and petition for approval of rate transition plan that sought to increase the electric distribution and generation rates charged by Metropolitan Edison Company (Met Ed) and Pennsylvania Electric Company (Penelec). The Commission denied the companies’ request for an exception to the existing generation rate cap and merger debt interest but, on other rate issues, decided in the companies’ favor in awarding general rate increases of $58.5 to Met Ed and $50.2 to Penelec. On appeal, the Commission’s order was challenged by the companies on the generation rate cap issue and merger debt interest, and by the Office of Consumer Advocate (OCA) regarding the allowance of congestion costs, certain deferred transmission costs, and rate structure treatment of universal service costs.

As to generation rate caps, the court ruled that substantial evidence supported the Commission’s decision to deny the requested lifting of the generation rate caps for Med Ed and Penelec. The court noted OCA testimony explaining that the utilities could have, but did not, negotiate long-term contracts with its affiliate suppliers, thus “betting that the market price of power would not exceed the rate cap before the rate cap expired. The court also affirmed the Commission’s denial of merger debt interest, based on City of York (1972).

As to the customer issues, the court affirmed the Commission determination that “congestion costs” may be deemed part of transmission costs and, thus, not subject to the generation rate cap. The court noted that because the definition of transmission and distribution costs in Section 2803 includes all costs “directly or indirectly incurred to provide transmission and distribution services to retail customers”, the Commission did no err in concluding that congestion costs belong in the TSC Rider as transmission costs. As to the 2006 deferred transmission costs, the court agreed that the allowance of these deferred costs was lawful under the 3-pronge test set forth in Popowsky II (2004): the costs did not arise from inaccurate projections, the deferred costs were non-recurring and extraordinary, and the utilities made the claim at the first reasonable opportunity. Finally, in regard to the universal service fund rider, the court affirmed the Commission decision to limit the rider only to the residential class and rejected the OCA claim that the term “nonbypassable” in Section 2804(9) required all customer classes to pay.

Maria Costanza t/a Costanza’s Chauffeur Service v. P.U.C.

No. 585 C.D. 2008 (Pa.Cmwlth. 2008) (filed November 12, 2008)
In an unreported memorandum opinion, the Commonwealth Court affirmed the Commission’s dismissal of an untimely answer. The Commission had issued an order sustaining an unanswered complaint against Costanza that imposed civil penalties. Costanza thereafter filed an untimely answer; the answer was filed three months late. The Commission then issued a second order dismissing Costanza’s untimely answer on the grounds that the answer was untimely and Costanza offered no defense for the delay. Costanza appealed, asserting that the Commission’s order improperly dismissed Costanza’s answer because Costanza was going through bankruptcy at the time of the complaint and could not afford an attorney to immediately pursue the matter.

The Commonwealth Court held that the Commission properly dismissed the answer since the burden was on Costanza to establish reasonable grounds for the delay, and she did not do so. In dicta, the Court stated that even if Costanza had indicated her financial difficulties in the answer as the reason why her answer was untimely, it would not have established reasonable grounds for delay. The Court stated that Costanza is an individual and was therefore not required to be represented by counsel; she could have filed an answer on her own behalf without the expense of engaging counsel.

Insurance Corp. of New York v. Richard Antrom, et al.

No. 543 EDA 2008 (filed December 3, 2008), WL 5614200 (Pa.Super. 2008).
In a non-precedential decision, the Superior Court reversed and remanded with instructions the entry of summary judgment in favor of the insurer, Insurance Company of New York. The lower court held that since the taxicab which hit Antrom was not listed on the insurance policy, the insurer was not liable to provide coverage.

On appeal, the Commission filed and amicus brief that asserted that Love-Diggs v. Tirath , 911 A.2d 539 (Pa.Super. 2006) (Love-Diggs) controlled. Love-Diggs holds that an insurer is liable to provide coverage for taxicabs which are not listed on the policy because the insurer is required under the Pennsylvania Public Utility Code to filed Forms E and F with the Commission, and that these endorsement constitute an amendment of the underlying insurance polices so as to provide the extent of coverage required under the Commission’s regulations. Forms E and F together obligate insurers to provide coverage to taxicabs not listed on insurance policies. The Superior Court held that Love-Diggs was precisely on point and controlling, and therefore reversed the entry of summary judgment in favor of the insurer and remanded with instructions that the trial court to enter summary judgment in favor of the Pennsylvania Financial Responsibility Assigned Claims Plan and against the insurer.

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