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Pennsylvania ALJ Would Deny Municipalities' Petition For Declaratory Order That Opt-out Aggregation Does Not Constitute Slamming, In Initial Decision
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A Pennsylvania PUC ALJ in an initial decision would deny a petition from the Boroughs of Camp Hill, Carlisle, Hatboro, Lansdowne, Media, Narberth, State College, and Swarthmore which had asked the PUC to hold, via a declaratory judgment, that the opt-out nature of their proposed municipal aggregation will not constitute "slamming" and will not violate Public Utility Code Section 2807(d)(1).
See background on the Boroughs' petition here:
Pennsylvania Municipalities Claim Authority To Implement Opt-out Municipal Aggregations
Pennsylvania Municipalities Amend Petition For Authority To Implement Opt-out Municipal Aggregations
Originally, the Boroughs had sought that the PUC "acknowledge[]" the Boroughs' claimed authority to operate an opt-out aggregation, with the Boroughs claiming "explicit power" under the state's Borough Code
However, the Boroughs later withdrew this specific request, but still sought a finding from the PUC that opt-out CCAs do not constitute slamming, and a finding that the Boroughs themselves are not required to be licensed as electric generation suppliers (EGSs) in order to adopt an opt-out aggregation
As more fully described by the stories linked above, the Boroughs said that Pennsylvania courts have held that both the Boroughs and the PUC bear responsibility under the state's Environmental Rights Amendment [ERA] to exercise their authority under their respective legal mandates to ensure that Pennsylvania’s citizens have a right to enjoy clean air, clean water, and preservation of environmental values. The Boroughs said that their opt-out CCAs, which would have renewable energy, are authorized as part of the Boroughs fulfilling their duties under the ERA
In determining, in an initial decision, that the Boroughs' petition shall be dismissed and that the Boroughs' associated motions for favorable judgment shall be denied, the ALJ would find that, among other things, the Boroughs' petition seeks to create new law, which may not be done via a declaratory judgment.
Additionally, while the Boroughs said that the PUC is compelled to act under the state's Environmental Rights Amendment (ERA) (as the Boroughs argue that their adoption of opt-out CCAs with renewable energy is required under the Boroughs' own obligations under the ERA to preserve the environment), the ALJ would conclude that an independent state agency's ability to take action under the ERA is narrow, and that the PUC lacks authority under the ERA in this case
Parties may file exceptions to the ALJ's initial decision prior to final agency action by the PUC on the matter
Regarding declaratory judgments, the ALJ said, "The essential purpose of declaratory judgment is to resolve a controversy
based on existing rights, status or legal relations. That is, declaratory judgment is like
'judicial searchlights, switched on at the behest of a litigant to illuminate an existing
legal right, status or other relation.'"
"Declaratory judgment proceedings cannot be used
to make new law," the ALJ said
"In
this case, I find the relief requested by the Boroughs far exceeds merely interpreting a
statutory provision or regulation, but asks for Commission approval for a program that is
in conflict with the Public Utility Code and not contemplated by the Commission’s
current statutory mandate. Therefore, the Boroughs’ Petition is dismissed," the ALJ said
As previously reported, the PUC previously held, in addressing a proposed opt-out municipal aggregation from FirstEnergy Solutions, that the PUC's 2006 approval of an opt-out aggregation program under the PUC's own oversight and based on a utility service area (not municipality), in the Pike County service area, was done on an "emergency" basis, due to a confluence of events which led to rate shock under the Pike default service procurement in 2006
Citing the PUC's decision in the FirstEnergy Solutions case, which distinguished the FirstEnergy Solutions CCA from the Pike-area program, the ALJ noted that the PUC previously said, "In its Pike County decision, the
Commission did not endorse opt-out programs as a general
rule, rather the Commission approved such a program to deal
with an emergency situation with appropriate consumer
protections within the context of the situation."
The ALJ further noted that, in such FirstEnergy Solutions decision, the PUC, "further held that since both EGSs and EDCs are subject to
Commission oversight and regulation and in the absence of legislative authority or unique
and emergency circumstances, 'approval of an opt-out municipal aggregation program
would be an improper and unnecessary abrogation of individual consumers’ rights
concerning electricity choice."
The ALJ would find that, "The Boroughs have not offered a compelling explanation why their Petition
is distinct from the [FirstEnergy Solutions] petitions..."
While the Boroughs have cited climate change and the ERA as justifying the Boroughs' sought relief, the ALJ states, "invoking the ERA does not require that the
Commission grant declaratory relief."
"There is nothing unique about the Boroughs.
Climate change is not a short-term problem, nor does the Boroughs’ proposal involve a
limited service territory. In Pike County, the service territory was faced with a relatively
short-term failure of the competitive market. The situation called for an 'out-of-the-box'
solution to address a specific, defined problem. The Commission was clear that the
solution was not meant to create a de facto regulatory scheme or substitute for legislation. Indeed, in Pike County the Commission determined that the design and purpose of the
program was not slamming," the ALJ said
"The General Assembly is aware of the challenge posed by maintaining and
improving the quality of the environment but has chosen to balance environmental
concerns by other means," the ALJ said
"[T]he General Assembly has already struck a balance of interests in
crafting a flexible default service framework that considers environmental interests,
including procurement of renewable energy. Moreover, the General Assembly has not
authorized the Commission to regulate municipal aggregations programs and has elected
not to amend Section 2807 of the Public Utility Code to permit opt-out municipal
aggregation," the ALJ said
The ALJ said, "The Boroughs dispute the effectiveness of these statutory provisions or
prefer a different framework for greater procurement of renewable energy than what the
General Assembly has required for default service in Act 129 and the AEPS Act.
However, the Pennsylvania Constitution does not mandate that the Commission permit
the Boroughs to operate CCAs to pursue those preferences."
The ALJ noted that an October 30, 2024, Rule to Show Cause memorialized the ALJ's instructions
to the Boroughs to demonstrate why their Petition should not be dismissed as an
inappropriate use of declaratory judgment. Specifically, the ALJ had instructed the Boroughs to
demonstrate why legislation or rulemaking was not a more appropriate mechanism to
address municipal aggregation rather than by declaratory judgment, a judicial procedure
The ALJ said: "The Boroughs’ response is dismissive: 'The Boroughs might seek
legislation, but nothing obligates them to.' The Boroughs go on to assert that their
memorandum demonstrates that 'the issues they raise are, in large part, capable of legal
clarification either on the face of the law, or with the benefit of facts of which the
Commission may take notice.'"
The ALJ observed that, "Commission approval of the Boroughs’ proposal is more likely to create
uncertainty regarding the competitive supply market, default service obligations, utility
customers’ rights to seek relief from the Commission, etc."
The ALJ said, "While the Boroughs’ proposal is well-motivated, the appropriate relief is not
achieved with a declaratory order, but by seeking an appropriate legislative process that
would provide consistent guidelines for all EGSs and EDCs that are regulated by the
Commission and provide consistent and reliable protections for consumers. Addressing
opt-out municipal aggregation on a case-by-case basis, which would certainly result if the
Commission granted the Boroughs’ Petition, risks imposing asymmetrical and
inconsistent policies across the Commonwealth which would directly impact utilities
operations and consumers ability to access safe and affordable utility services. The
Boroughs do not address, or even acknowledge, the broad impacts of this proceeding –
and whether those impacts are more properly handled through rulemaking or legislation."
Regarding the Boroughs' arguments concerning their authority under the ERA, the ALJ said, "simply invoking the ERA does not force the Commission to act in the
Boroughs’ favor, particularly when there is no statutory mandate to do so."
"The
Commission may only exercise the jurisdiction that the General Assembly has
delegated. The ERA cannot expand the statutory powers of an administrative agency," the ALJ said
"In short, while the Commission is obligated to consider the environmental impacts of
certain decisions, particularly related to siting decisions, it may only do so within the
confines of its authority," the ALJ said
"Because it is the Commonwealth, not individual agencies
or departments, that is the trustee of public natural
resources under the ERA, and the Commonwealth is bound
to perform a host of duties beyond implementation of the
ERA, the ERA must be understood in the context of the
structure of government and principles of separation of
powers. In most instances, the balance between environmental and other societal concerns is primarily struck by
the General Assembly, as the elected representatives of the
people, through legislative action. While executive branch
agencies and departments are, from time to time, put in the
position of striking the balance themselves, they do so only
after the General Assembly makes 'basic policy choices'
and imposes upon the agencies or departments 'the duty to
carry out the declared legislative policy in accordance with
the general provisions of the statute.' The second provision
of the ERA impels executive branch agencies and departments to act in support of conserving and maintaining
public natural resources, but it cannot operate on its own to 'expand the powers of a statutory agency.' Thus, courts
assessing the duties imposed upon executive branch
departments and agencies by the ERA must remain
cognizant of the balance the General Assembly has already
struck between environmental and societal concerns in an
agency or department's enabling act," the ALJ said
"Climate change is a complex problem which requires a balancing of many
societal, economic and environmental concerns. The responsibility for striking this
balance lies with the General Assembly, not with any single administrative agency. In
the absence of statutory authority to approve opt-out municipal aggregation as a means to
address climate change, the Pennsylvania Constitution does not by itself require the
Commission to approve the Boroughs’ petition," the ALJ said
"While the Boroughs may dispute that these [existing environmental]
statutes [such as AEPS] have achieved environmental goals to the degree that the Boroughs believe they
should, as a matter of law, the ERA does not place an independent mandate on the
Commission to act where the General Assembly has not," the ALJ said
The ALJ also said that the Boroughs' petition was infirm because it did not set forth undisputed facts, but rather presented issues which are fact-intensive by nature
The ALJ said, "The Boroughs’ motion does not clearly set out the undisputed facts from
their initial pleading and the opposing answers to that pleading, that support judgment in
their favor. Instead, the Boroughs contend the Commission may grant judgment in their
favor by taking 'official notice' of facts. The Boroughs also assert that the Commission
should only consider the facts that the Boroughs contend the Commission should
officially notice and disregard opposing facts asserted by the other parties in their
Answers to the Petition. The Boroughs do not set forth specific facts that they believe the
Commission should notice but cite and summarize a variety of state and federal reports12
and ask the Commission to take 'notice of these findings.'"
"[T]he Boroughs have the burden of specifically demonstrating which facts are not
in dispute. It is not the burden of the opposing parties to prove the facts alleged in their
answers to the petition; in a motion for judgment on the pleadings those facts are
presumed to be true," the ALJ said
"[T]he issues that the Boroughs contend are
appropriate for judgment on the pleadings are by their very nature fact intensive. The
facts that would support the conclusions that the Boroughs seek are strenuously disputed
by parties opposing the motion. Therefore, the Boroughs’ motion on issues regarding
potential harm to competition, the imposition on customers, and necessity of further
procedures on some of the details of the proposal is denied," the ALJ said
The ALJ concluded as follows: "In sum, declaratory judgment is discretionary, and the Commission will
only grant declaratory relief in clear cases where judgment will remove uncertainty
regarding the application or interpretation of Commission regulations. In the current law,
there is no uncertainty: neither EGSs nor EDCs may participate in opt-out municipal
aggregation because to do so violates the Public Utility Code and the Commission’s
regulations. In Pike County, the Commission concluded that the proposed program was
not slamming as defined by the Public Utility Code. In [FirstEnergy Solutions] Petition, which was similar
to the Boroughs’ proposal, the Commission was clear that opt-out municipal aggregation
constituted slamming. The Boroughs did not demonstrate that their proposed program
does not violate the Public Utility Code."
P-2024-3049623
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Opt-out Program Would, "Conflict With The Public Utility Code," ALJ Says
March 28, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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