Public Utilities

Justices Will Not Hear Case Over Electricity Supply Sources

, The Legal Intelligencer


power line
power line

The Pennsylvania Supreme Court has declined to take up a case over whether electricity distribution companies may purchase default electricity generation service for their customers from a single source.

The Commonwealth Court ruled in August that they can, despite statutory language that requires default service plans to include a "prudent mix" of spot market purchases, long-term contracts and short-term contracts.

The Supreme Court issued an order denying allocatur Dec. 31.

In Popowsky v. Public Utility Commission, an en banc panel ruled 5-2 to affirm the Pennsylvania Public Utility Commission's finding that requiring Pike County Light & Power Co. to purchase a fixed-price hedge contract for default electricity generation service could result in higher costs to consumers than purchasing service solely from the more volatile spot market.

Judge Renée Cohn Jubelirer, writing for the majority, said the case exposed "a latent ambiguity" in Section 2807(e)(3.2) of the Electricity Generation Customer Choice and Competition Act, which states that default service plans "'shall include a prudent mix'" of spot market purchases, short-term contracts and long-term contracts.

While the word "prudent" would seem to preclude the purchase of default service from more than one source, Jubelirer said, the word "mix" would seem to imply the opposite is true.

But the PUC, in determining that Pike may purchase its default service solely on the spot market, properly examined whether a mix of sources that was truly prudent could be achieved and found that, in this instance, it could not, according to Jubelirer.

"The PUC's application of Section 2807(e)(3.2) does not reflect that it has read the word 'mix' out of the term 'prudent mix,'" Jubelirer said. "Rather, the PUC properly considered the possibility of including short-term contracts and determined that to do so would not be prudent. We believe the PUC is correct that, in interpreting the term 'prudent mix,' the PUC must exercise some balance and discretion under the circumstances of the case in order for the 'mix' in question to be 'prudent.'"

Jubelirer was joined by Judges Bernard L. McGinley, Bonnie Brigance Leadbetter, Robert Simpson and Anne E. Covey.

But President Judge Dan Pellegrini dissented, saying he believes Section 2807(e)(3.2) clearly requires default service plans to include spot market purchases, short-term contracts and long-term contracts, and that the phrase "'shall include'" does not give the PUC the power to pick and choose.

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