Pennsylvania PUC Says Electric Utilities May Use On-Bill Billing For Their Own Non-Regulated Services Without Offering Same Service To Retail Suppliers

Disparate Treatment Doesn't Amount To Discrimination, PUC Says, Reversing Initial Decision

PUC Rules Suppliers' Statutory Right To "Direct Access" To Utility System Does Not Extend To Billing Systems

August 26, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Pennsylvania PUC has reversed an initial decision from an ALJ and has found that the use of "on-bill billing" by the FirstEnergy Pennsylvania electric utilities for their own non-commodity goods and services, while not offering the same on-bill billing service for the non-commodity goods and services offered by retail suppliers, is not unreasonably discriminatory in violation of the Public Utility Code, 66 Pa. C.S. §§ 101, et seq.

The PUC stated that, "we conclude that the EDCs' billing practice of offering 'on-bill billing' for its own non-commodity services is subject to the Commission's jurisdiction, and conforms with Section 1502 of the Code, 66 Pa. C.S. § 1502, which prohibits discrimination in the provision of service. We note that the EDCs' billing practices remain subject to all applicable consumer protection regulations, and specifically, 52 Pa. Code § 56.83(3), which directs that a customer's service may not be terminated for nonpayment of non-basic charges."

In an initial decision, an ALJ would have sustained a complaint filed by retail suppliers (EGSs) which had alleged that the FirstEnergy EDCs' provision of 'on-bill billing' for the benefit of the EDCs' own customers, and not to the EGSs' customers, demonstrates that the EDCs do not provide the EGSs with rates, terms of access, and conditions that are comparable to the EDCs' own use of the EDCs' system.

The PUC distinguished the instant proceeding involving the FirstEnergy EDCs from a recent case involving Columbia Gas. As previously reported, the PUC found that Columbia's use of on-bill billing for non-regulated services, provided by third parties contracted by Columbia, while denying such opportunity to retail suppliers, was discriminatory (see background on the Columbia case here)

In the instant case, the PUC noted that, at the FirstEnergy EDCs, the non-regulated services are provided by the utilities themselves, not a third party

In reversing the ALJ's initial decision, the PUC said, "the ALJ concluded, based upon the general definition of 'discrimination,' and a reading of the applicable statutory language under Sections 1502 and 2804(6) of the Code, 66 Pa. C.S. §§ 1502 and 2804(6), that the EDCs' 'on-bill billing' practice was discriminatory, as against the complaining EGSs. We disagree with that conclusion under the facts of this Complaint."

The PUC said, "In applying the language of Section 1502, the ALJ relied, first, upon the general definition of 'discrimination,' which the ALJ read to encompass any preference or advantage afforded any entity, including a preference or advantage granted by the utility to itself. Based on this broad reading of the definition of 'discrimination,' the ALJ reasoned that discrimination in service under Section 1502 may be established by a utility affording itself an advantage or preferential treatment over any other without regard to 'merit.' The ALJ further concluded that, in applying the Commission's prior decision in Columbia, there was no material distinction to the facts in Columbia and the present case. We disagree."

"We agree with the arguments presented by the EDCs in their Exceptions that, in the present case, to find a violation of the Section 1502 prohibition on discrimination in service, the EGSs would be required to show that the EDCs provide the billing services in question to a third party (i.e., a party other than the EDCs themselves) while refusing to provide the same service to the EGSs. Consequently, we further agree with the EDCs' arguments that the holding in Columbia is materially distinguishable from the circumstances in the present case. Finally, we also agree with the EDCs' arguments raised on Exceptions that the provisions of Section 2804(6) are inapplicable to the present case," the PUC said

The PUC further stated that, "[W]e find that, as the EDCs argued before the ALJ and noted in their Exceptions, the facts in the present case and Columbia are distinguishable in several material respects. In Columbia, the company's practice of providing 'on-bill billing' for non-commodity goods and service to two third parties (two former Columbia affiliates), where Columbia refused to offer the same billing service to other third parties, was found to be in violation of Section 1502's prohibition on discrimination in service. The material fact in Columbia was that Columbia treated other third parties differently than the third-party former affiliates of Columbia. In the present case, the EDCs are not providing 'on-bill billing' of non-commodity goods and service to any third party. In this case, the EDCs provide their own customers 'on-bill billing' of non-commodity goods and services offered by the EDCs themselves."

"Further, Columbia dealt with the question arising under Sections 1502 and 2203(4) of the Code. Section 2203(4) is language regarding the applicable standards for restructuring of natural gas utility industry. In the present case, Section 2804(6), although also prohibiting discrimination in service like the language under Section 2203(4), does not contain language identical to that of Section 2203(4). Section 2804(6) contains additional language which narrows the application of that section. In addition, in the present case, the language of Section 2804(6) pertains to the separate Act regarding restructuring of the electric industry and is read in the context of that Act. It is also worthy to note the distinction between Section 2804(6) and the Act, which pertain to implementation of electric competition, and Section 2203(4) which pertains to implementation of natural gas competition. Natural gas transmission and distribution and electric transmission and distribution concern distinct commodities, requiring distinct considerations for the implementation of competition for each," the PUC said

"Clearly the facts in Columbia and the present case are distinguishable in several material respects. Therefore, we conclude that the ALJ erred in applying the holding in Columbia to the present case to find that the EDCs' billing practice was in violation of both Section 1502 and 2804(6) of the Code. To the contrary, we conclude that the EDCs' billing practice comports with Section 1502's prohibition on discrimination in service and has no implications under Section 2804(6)," the PUC said

"Inherent in Section 1502's prohibition on discrimination in provision of service is a utility's provision of service to another. Discrimination arises only where the provision of service creates an unreasonable disparity between the parties to which the service may be provided. We note that, without regard to the merits of the ALJ's application of the general definition of 'discrimination,' we disagree with the ALJ's conclusion that the parameters for finding discrimination in service under Section 1502, albeit broad, are so broad as to prohibit a utility from affording itself a preference or advantage in the provision of billing services," the PUC said

"We read nothing in the language of Section 1502 or the decision in Columbia to require a utility to provide to a third party the identical services the utility itself provides. Rather, as applied in Columbia, Section 1502 requires that where a utility provides utility service to another, the same service must be provided in a nondiscriminatory, or not unreasonably discriminatory manner to other parties," the PUC said

"Further, to the extent the ALJ concluded that Sections 1502 and 2804(6) establish identical prohibitions on discrimination in service, we disagree. Section 1502 establishes a general prohibition on discrimination is service for all utilities. In contrast, Section 2804(6) establishes a prohibition on discrimination in service which is tailored to the legislature's intentions regarding implementation of electric competition practices under the Act," the PUC said

The PUC said, "The ALJ read Section 2804(6) to require that a utility treat all other parties as it treats itself pertaining to any provision of 'service,' which the ALJ read to include billing. The ALJ reasoned, that the prohibition on discrimination under both Section 1502 and 2804(6), require that a company treat all other parties as it does itself, pertaining to billing practices. Therefore, the ALJ concluded, if the EDCs provide on-bill billing for themselves, the EDCs are bound to do so for the EGSs. However, we find that the ALJ erred, to the extent that the ALJ misread the provision of Section 2804(6) that a company 'treat others as it does itself' to extend to all aspects of service, including billing. Rather, the EDCs' duty to 'treat others as itself' under Section 2804(6) extends more narrowly to the provision of 'transmission and distribution services and facilities.' In contrast, under Section 1502, billing is encompassed by the term 'service' as the term is broadly defined and used in Section 1502. However, billing is not the subject of the 2804(6) which is expressly limited to the narrower category of services and facilities (i.e., transmission and distribution service and facilities)."

The PUC said, "Read in context, the prohibition on discrimination in service under Section 2804(6) creates a heightened duty on the part of the EDCs to provide transmission and distribution service to EGSs in a nondiscriminatory manner, in a manner comparable to its own access to its transmission and distribution facilities, for purposes of delivering electric service from any generator to an end-use customer. In this regard, unlike Section 1502, Section 2804(6) does create a duty on the part of the EDCs to treat the EGSs as the EDCs would treat themselves, but this heightened duty is only applicable to the facilities necessary for transmission and distribution of electric service to the end-use customer."

The PUC said, "We note that, under the Act, the application of Section 2804(6) is restricted to the EGSs' 'transmission and distribution facilities,' which does not include billing facilities/services. Section 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.'"

The PUC said, "Under the Act, the language of Section 2804(6) prohibiting discrimination in provision of transmission and distribution service, mirrors the prohibition on discrimination in service described by the EGSs' right of 'direct access,' as set forth in Section 2803. Our understanding, that the prohibition on discrimination under Section 2804(6) requiring that the utility provide rates, terms of access and conditions comparable to its own use of its transmission and distribution system is limited to the narrower class of transmission and distribution facilities necessary for the transport of electricity, is corroborated by the Act's definition of 'direct access' under Section 2803."

The PUC said, "Under Section 2803 of the Act (pertaining to definitions), the right of the EGSs and consumers to access the EDCs’ transmission and distribution systems and the duty of the EDCs to provide access comparable to, specifically, the EDCs’ own use of its transmission and distribution system is defined as 'direct access.'"

The PUC noted that Section 2803 specifically defines "direct access" as: "The right of electric generation suppliers and end-use customers to utilize and interconnect with the electric transmission and distribution system on a nondiscriminatory basis at rates, terms and conditions of service comparable to the transmission and distribution companies' own use of the system to transport electricity from any generator of electricity to any end-use customer."

"Clearly, the definition of 'direct access' describes the EGSs' specific right to nondiscriminatory access to the EDCs' transmission and distribution system to transport electricity from any generator of electricity to any end-use customer. The EGSs' right of direct access then, is limited to the transmission and distribution facilities necessary to transport electricity, and does not encompass billing services and facilities, which are not necessary to/for the transport of electricity. Therefore, based upon our reading of the language of Section 2804(6) in the context of the Act, we conclude that Section 2804(6) does not encompass a right of the direct access by the EGSs' to the EDCs' billing service and facilities," the PUC said.

"Since we conclude that the EDCs' practice of 'on-bill billing' does not violate either Section 1502 or 2804(6) of the Code, the EDCs' practice of 'on-bill billing' for the non-commodity goods and services they themselves provide is permissible," the PUC said.

C-2019-3013805 et al.

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