2007 Summaries of PUC Court Decisions

First Quarter

Susquehanna Area Regional Airport Authority v. Pa. PUC

No. 945 C.D. 2006 ( Pa. Cmwlth. 2007) (filed January 23, 2007) appeal denied 923 A.2d 410, 2007 Pa. LEXIS 943
In an unreported memorandum opinion, the Commonwealth Court reversedthe Commission’s denial of Susquehanna Area Regional Airport Authority’s (SARAA) petition to intervene in a complaint proceeding initiated by Capital City Cab Service, Inc. (City Cab) against Salgals, Inc., t/a American Taxi (American Taxi). SARAA had entered into a licensing contract with American Taxi for sole authority to pickup passengers at the Harrisburg International Airport (HIA) terminal building. In a December 8, 2005 decision, the Commission determined that this contract was invalid. This decision was subsequently reversed by the Commonwealth Court. (See SARAA v. Pa. PUC, 911 A.2d 612 ( Pa. Cmwlth. 2006).) Prior to the Commonwealth Court’s reversal of the Commission’s decision, City Cab filed the instant complaint against American Taxi seeking an order directing American Taxi to cease performing under the contract. SARAA sought to intervene in this action claiming that it had a direct interest as a party to the contract and asserting that any PUC action would affect passengers using HIA. The Commission denied SARAA’s intervention petition based on a determination that the PUC had no authority over a municipal authority.

On appeal, SARAA claimed that the Commission’s order was an appealable collateral order and asserted that the PUC erred in refusing SARAA’s request to intervene. The Commonwealth Court concluded that the Commission’s order was an appealable collateral order based on the fact that SARAA was a party to the contract at issue and the fact that the contract is being performed on SARAA’s property to the benefit of its business. The court noted that a party to a contract not only has a direct interest, but is also an indispensable party to any litigation involving the contract. The court also found that SARAA’s interests were not fully aligned with those of the other parties and that SARAA would be bound by any order issued by the PUC as it could affect the placement of taxis on SARAA’s property. Based on these facts, the Commonwealth Court held that the PUC committed a manifest abuse of discretion in denying the petition to intervene, as SARAA is a party to the contract at issue and owner of the property where the disputed acts are occurring.

Irwin A. Popowski v. Pa. PUC

No. 255 C.D. 2006, 2007 Pa. Commw. LEXIS 63, 917 A.2d 380(Pa. Cmwlth. 2007) (filed February 20, 2007) rev'd, Nos. 71 and 72 MAP 2007, ___ Pa. ___, 2007 Pa. LEXIS 2896, 937 A.2d 1040 (Pa. 2007) (filed December 27, 2007)
The Commonwealth Court reversedand remandedthe Commission’s order approving the merger between Verizon Communications, Inc. (Verizon) and MCI, Inc. and its subsidiaries (MCI). Verizon and MCI filed a joint application for approval of their merger. The Commission approved the merger finding that the applicants had established that the merger was in the public interest. The Commission’s determination was based on its finding that the merger would benefit both enterprise and mass market customers from the array of telecommunications and multi-media services that will be developed, and that there would be no significant adverse competitive impacts of the merger in Pennsylvania. The merger had also been approved, on a national basis, by the Federal Communications Commission and United States Department of Justice. Vice Chairman Cawley dissented, finding that the merger, without additional conditions, would adversely affect competition in Pennsylvania and would not produce substantial affirmative benefits for Pennsylvania consumers.

On appeal, the OCA, the only party to file an appeal, asserted that the merger, as approved, did not meet the standard established in City of York v. Pa. PUC, 295 A.2d 825, 828 (Pa. 1972). The City of York standard requires proponents to show that a merger will affirmatively promote the service, accommodation, convenience, or safety of the public in some substantial way. Id. After reviewing the record, the Commonwealth Court held that there was no substantial evidence presented showing that the merger would affirmatively promote the service, accommodation, convenience, or safety of the public in some substantial way. The court was not persuaded that the benefits cited by Commission were adequate because they were general in nature and not quantified. The court also found it significant that, due to the enactment of Chapter 30 of the Public Utility Code, 66 Pa.C.S. §§ 3011 et seq., savings from the merger would no longer be passed onto consumers, thus, any savings cannot be used to justify an approval of the merger. The court went on to state that the benefits presented only established that the merger was not detrimental to the public or were illusory. The court reversed and remanded the matter, directing the PUC to either reject the merger or impose conditions that will benefit the public in a substantial way.

Patty Tucker and Ellsworth Pendleton v. Pa. PUC

No. 1486 C.D. 2006, 2007 Pa. Commw. LEXIS 66, 917 A.2d 378 (Pa. Cmwlth. 2007) (filed February 20, 2007) The Commonwealth Court affirmedthe Commission’s denial of Patty Tucker and Ellsworth Pendleton’s (Petitioners) complaint against Pennsylvania-American Water Company (PAWC). The Petitioners filed a formal complaint against PAWC seeking an order directing PAWC to accept negotiable instruments in payment of the Petitioners’ water bill. Petitioners attempted to use a debt owed to them to pay the water bill, in essence making PAWC their collection agent. The ALJ concluded that negotiable instruments did not constitute reasonable payment of a water bill under 52 Pa. Code § 56.94 and that the PUC lacks jurisdiction to determine issues related to negotiable instruments under the Uniform Commercial Code (UCC). The Commission denied the Petitioners’ exceptions and adopted the ALJ’s decision.

On appeal, Petitioners alleged that the PUC violated the Petitioners’ various rights under the United States and Pennsylvania Constitutions by not allowing them to assign a debt to PAWC pursuant to section 9406 of the UCC. The Commonwealth Court found that the PUC had no jurisdiction to administer the UCC. They went on to conclude that the PUC had no jurisdiction to determine whether PAWC violated the UCC by refusing a negotiable instrument. The Commonwealth Court did note that the PUC has jurisdiction over alleged violations of PUC regulations, but, the court could not address this issue as the Petitioners did not challenge the Commission’s determination that negotiable instruments do not constitute reasonable payment of a water bill.

Second Quarter

PECO Energy Co. v. Township of Upper Dublin

No. 1625 C.D. 2006, 2007 Pa. Commw. LEXIS 195, 922 A.2d 996 ( Pa. Cmwlth. 2007) (filed May 1, 2007)
The Commonwealth Court affirmedthe Common Pleas Court’s determination that the Township possesses no authority to regulate PECO’s vegetation management practices that are solely regulated by the PUC. Pursuant to the First Class Township Code, the Township created a Shade Tree Commission (STC) that adopted regulations governing tree trimming within the Township. These regulations were adopted by the Township as a shade tree ordinance. This ordinance required public utilities to obtain a $500 permit to prune around utility lines. The ordinance also required the utility to comply with specific pruning standards established by the STC. PECO notified the Township that it would begin trimming trees without complying with the ordinance. PECO asserted that PUC jurisdiction bars municipal regulation of utility functions. PECO filed a complaint in Common Pleas Court seeking mandamus, declaratory relief, or a permanent injunction, as well as other equitable relief. The PUC intervened in support of PECO.

On appeal, the Township argued that its right to protect its shade trees did not infringe on PUC jurisdiction over utility service. The Commonwealth Court explicitly concluded that vegetation management activities fell within the Public Utility Code’s definition of service at 66 Pa. C.S. §102. The Court held the Public Utility Code and PUC regulations preempt the Township from applying its shade tree ordinance standards to PECO’s vegetation management practices. The Court noted that a public utility may be required to obtain a routine township permit and to notify a township of its intended activities. But, permits conditioned on a township’s evaluation of necessity and management of the details of public notification and utility activities are not lawful or reasonable regulations. The Court further noted that the Township could file a complaint with the PUC if the Township has a problem with PECO’s tree trimming practices.

Mercury Trucking, Inc. v. Pa. PUC

No. 1168 C.D. 2006, 2007 Pa. Commw. LEXIS 237, 923 A.2d 1244 (Pa. Cmwlth. 2007) (filed May 14, 2007)
The Commonwealth Court vacatedthe PUC order and transferred the matter to the Commonwealth Court’s original jurisdiction. Mercury Trucking (Mercury) had failed to report its 2004 operating revenues to the PUC by the March 31, 2005 deadline. Thus, pursuant to 66 Pa. C.S. §510(b), the PUC estimated Mercury’s 2004 revenues as being 12% greater than its 2003 revenues and assessed Mercury based on this estimate. Mercury paid the assessment and filed an objection asserting that the assessment was erroneous and excessive based on the fact that its revenues had actually declined. An ALJ, finding that the estimate was excessive, sustained Mercury’s objection and granted a refund. The Commission reversed the ALJ’s decision, determining that 66 Pa. C.S. §510(b) expressly stated that the failure of a utility to file an annual revenue report operated as a bar to challenge the estimated revenue amount. Mercury appealed. The Commonwealth Court held that the appeal was not properly before it because, pursuant to 66 Pa. C.S. §510(d), challenges to the Commission’s assessments must be brought as an action at law. The Commonwealth Court went on to direct that the case be transferred to the Court’s original jurisdiction, pursuant to 42 Pa. C.S. §708.

Judge Leavitt issued a concurring and dissenting opinion questioning whether the Administrative Agency Law, 2 Pa. C.S. §§101-508, and 701-704, augments the procedure established by Section 510 of the Public Utility Code. Judge Leavitt noted that both parties proceeded before the Commission in the belief that the grievance could be resolved by a formal administrative hearing. Judge Leavitt stated that the parties should have been given an opportunity to brief the jurisdictional and statutory construction questions and have the matter argued before the Court en banc.

PMC Management Consultants, Inc. v. Pa. PUC

No. 1453 C.D. 2006 ( Pa. Cmwlth. 2007) (filed May 15, 2007)
In an unreported memorandum opinion, the Commonwealth Court quashed PMC Management’s (PMC) appeal as being untimely. In December 2005, the PUC’s Bureau of Audits (Bureau) issued a request for proposal seeking an independent firm to perform an audit. PMC submitted such a proposal. On April 20, 2006, the Bureau notified PMC that it had selected another company. PMC filed a bid protest with the Bureau 53 days later. On June 26, 2006, the Bureau informed PMC that the bid protest was untimely. On July 3, 2006, PMC filed with the PUC, an appeal of the Bureau’s determination. In a July 13, 2006 reply, the PUC informed PMC that there were no further appeal opportunities before the PUC. On July 28, 2006, PMC filed its appeal with the Commonwealth Court.

The Court noted that the definition of a final order contained in Pennsylvania Rule of Appellate Procedure 341 includes any order that is expressly defined as a final order by statute. In the instant case, the Commonwealth Procurement Code defines a final order as a written determination by the purchasing agency that outlines the reasons for its determination of a protest. See 62 Pa. C.S. §1711.1(f). Pursuant to the Commonwealth Procurement Code, a protestant has 15 days from the mailing date of the determination to file an appeal with the Commonwealth Court. 62 Pa. C.S. §1711.1(g). The Court concluded that the June 26, 2006 letter from the PUC was a final order, noting that this letter evaluated the bid protest and provided support for the Bureau’s denial. The Court went on to hold that as PMC did not file its appeal until 32 days after the PUC final determination, PMC’s appeal was untimely.

Constantine N. Polites v. Pa. PUC

No. 83 C.D. 2007, 2007 Pa. Commw. LEXIS 310, 928 A.2d 388 ( Pa. Cmwlth. 2007) (filed June 11, 2007)
The Commonwealth Court affirmedthe Commission’s order dismissing Polites’ complaint for lack of jurisdiction. As a commercial customer, Polites was required to install and maintain backflow prevention devices approved by Aqua Pennsylvania. Aqua’s Tariff required backflow devices to be tested annually by a certified tester. Polites filed a complaint with the PUC requesting that Aqua’s Tariff be amended to allow small commercial customers to test the devices themselves, thus eliminating the need for certified testers. Aqua asserted that the Department of Environmental Protection (DEP) required the testing of the backflow devices. The ALJ concluded that although the PUC had jurisdiction over the backflow devices it did not have jurisdiction over the testing for water purity under the Pennsylvania Safe Drinking Water Act, 35 P.S. §§721.1-721.17, and the Federal Safe Drinking Water Act, 42 U.S.C. §§300j-330j-10, both of which were enforced by DEP. The PUC denied Polites’ exceptions, concluding that the testing of backflow devices was based upon water quality requirements imposed by DEP and that as such, the PUC lacked jurisdiction.

On appeal, Polites again argued that small commercial customers should be exempt from backflow device testing by a certified tester. The Commonwealth Court agreed with the PUC that the basis for the testing was to maintain the quality and purity of the public water supply. The Court went on to note that 35 P.S. §721.5 gives authority to DEP to preserve water quality. Thus, any matter affecting water quality was within DEP jurisdiction. The Court held that, as such, the PUC properly dismissed Polites’ complaint.

Pennsylvania Power Co. v. Township of Pine

No. 2102 C.D. 2005, 2007 Pa. Commw. LEXIS 318, 926 A.2d 1241 (Pa. Cmwlth. 2007) (filed June 18, 2007)
The Commonwealth Court vacatedthe order of the Allegheny County Court of Common Pleas and transferred the matter to the PUC. The issue to be addressed is whether it is practicable for Pennsylvania Power Co. (Penn Power) to place transmission lines underground. Penn Power requested a permit to place five wooden poles for an overhead main feeder distribution line. The Township denied the permit for multiple reasons, the primary of which was the Township’s requirement that all new utility service lines be located underground. Penn Power filed a Motion for Declaratory Oder with the PUC, which the PUC denied because there were outstanding issues of fact. Concurrently, Penn Power appealed the Township’s denial to the Court of Common Pleas. The trial court concluded that the Township had authority to deny the permit based on 52 Pa. Code § 57.84, which requires distribution lines within 100 feet of a development to be placed underground if practicable. The trial court found that Penn Power failed to show that the underground installation was not practicable.

On appeal, the Commonwealth Court was asked to address whether the Township had authority to regulate electric utilities by requiring underground installation of distribution lines and whether the underground installation was required by PUC regulations. In addressing the first issue, the Court analyzed Duquesne Light Co. v. Monroeville Borough, 298 A.2d 252 (Pa. 1972). The Court concluded that Duquesne Light reaffirmed the long line of decisions establishing that municipalities may not compel the underground installation of electric utilities. The Court also concluded that the decision whether to place distribution lines underground remains solely with the public utility. In regard to the second issue, the Court, based again on Duquesne Light, concluded that the PUC is the ultimate authority to determine the particulars of implementing its regulations. The Court ultimately held that the trial court erred in upholding the Township’s permit denial and exceeded its jurisdiction in deciding the practicability issue under 52 Pa. Code § 57.84, which must be decided by the PUC.

Third Quarter

Dennison Township v. Pa. PUC

No. 2146 C.D. 2006, (Pa. Cmwlth. 2007) (filed July 11, 2007)
In an unreported memorandum opinion the Commonwealth Court affirmeda PUC order dismissing Dennison Township’s complaint against Reading Blue Mountain & Northern Railroad (Railroad) for lack of jurisdiction. The Township had alleged that two culverts under the railroads property were inadequate and caused flooding. The Township asserted that the Railroad’s facility caused an unsafe condition in violation of 66 Pa.C.S. § 1501. The ALJ determined, after two hearings, that the culverts at issue were not solely on the Railroad’s property. As such, the ALJ determined that any remedy would require work on land owned by other entities not joined in the suit. The ALJ then dismissed the complaint for lack of jurisdiction because the Township had failed to join indispensable parties. The PUC subsequently denied the Township’s exceptions and adopted the ALJ’s decision.

The Township appealed, asserting that the ALJ’s findings went to the merits of the case or, in the alternative, were not supported by the evidence. The PUC asserted that the ALJ’s findings did not address the merits of the case, but simply supported the finding that indispensable parties had not been joined. The Commonwealth Court agreed with the PUC.

Pilot Travel Centers, LLC v. Pa. PUC

No. 2237 C.D. 2006, 2007 Pa. Commw. LEXIS 585, 933 A.2d 123 (Pa. Cmwlth. 2007) (filed July 17, 2007) (Petition for Allowance of Appeal denied, 674 MAL 2007, 2007 Pa. LEXIS 2627, ___ A.2d ___ (Pa. 2007))
The Commonwealth Court affirmeda PUC decision concluding that Jai-Mai, Inc. was not a public utility subject to PUC regulation. In 2003, Pilot Travel Centers, LLC (Pilot) filed a petition with the PUC alleging that Jai-Mai was operating a sewage treatment facility without PUC authority. Pilot sought a refund of rates paid to Jai-Mai. An ALJ issued an initial decision recommending that Jai-Mai file an application for public convenience. Exceptions were filed by both parties. On January 17, 2006, the PUC entered an order adopting the ALJ recommendation, but remanding the matter to the ALJ to address the refund issue. On April 4, 2006, the PUC issued an order requesting comments as to whether Jai-Mai held itself out to the public or provided sewage treatment service to a defined, privileged and limited group. In a decision issued on November 30, 2006, the PUC concluded that Jai-Mai was not a public utility.

Pilot appealed, asserting that there was no evidence to support the PUC’s conclusion that Jai-Mai served a defined, privileged and limited group. The Commonwealth Court noted that the critical question was whether the service at issue is available to all members of the public who need the service. The court also noted that the Pennsylvania Supreme Court held in Bethlehem Steel Corp. v. Pa. PUC, 552 Pa. 134, 713 A.2d 1110 (1998), that a utility does not fall under the PUC’s jurisdiction simply because it conducts negotiations concerning the possibility of public utility activity. The Commonwealth Court held that Jai-Mai only provided service to two neighboring businesses pursuant to private contractual agreements and, as such, was not holding itself out to the public as a public utility.

Keystone Cab Service, Inc. v. Pa. PUC; Capital City Cab Service, Inc. v. Pa. PUC

No. 2318 C.D. 2006 & 2368 C.D. 2006 (Pa. Cmwlth. 2007) (filed August 8, 2007)
In an unreported memorandum opinion, the Commonwealth Court affirmeda PUC order granting AAA Alpine Taxi Company, LLC (Alpine) a certificate of public convenience to operate within Harrisburg. Both Keystone Cab Service (Keystone) and Capital City Cab Service (Capital City) protested Alpine’s application. At a hearing, Alpine presented oral testimony by an owner and a driver, and introduced thirteen exhibits, to include one containing thirty-six verified statements supporting the application. No party objected to the exhibits. The ALJ found that the thirty-six verified statements were hearsay and could not be used to prove need. The ALJ recommended that Alpine’s application be denied due to its failure to establish a public demand or need. Alpine filed exceptions, which the PUC granted concluding that the evidence presented clearly demonstrated public need.

Keystone and Capital City appealed asserting that the admission of the thirty-six verified statements violated their Due Process rights and that there was insufficient evidence to support the PUC’s conclusion. The Commonwealth Court found it significant that neither Keystone nor Capital City objected to the admission of the statements. The court pointed out that issues not raised before a tribunal at the earliest possible opportunity are waived, citing Dehus v. UCBR, 545 A.2d 434 (Pa. Cmwlth. 1988) and Wing v. UCBR, 496 Pa. 113, 436 A.2d 179 (1981). The Court went on to hold that since the admission of the statements was not objected to, the constitutional and rule-violation claims were waived. Regarding the second argument, the court noted that hearsay evidence admitted without objection is to be given its full probative effect and may support a finding if it is corroborated by other competent evidence. (Citing Walker v. UCBR, 367 A.2d 366 ( Pa. Cmwlth. 1976)). The court went on to find that the statements were corroborated by the testimony of Alpine’s two witnesses, who demonstrated personal knowledge of the need for additional service in accordance with 52 Pa. Code § 3.382(a).

United Parcel Service, Inc. v. Pa. PUC

No. 1382 C.D. 2006, 2007 Pa. Commw. LEXIS 468, 933 A.2d 672 (Pa. Cmwlth. 2007) (filed August 15, 2007) (Application for reargument denied 2007 Pa. Commw. LEXIS 575 (Oct. 3, 2007)
The Commonwealth Court quashedUnited Parcel Service’s (UPS) appeal of the PUC’s interlocutory order for lack of appellate jurisdiction. UPS had filed with the PUC objections to PUC assessments for fiscal years 2002-03, 2003-04, 2004-05 and 2005-06, asserting that the method for allocating the assessments was inappropriate. The PUC Fiscal Office filed a petition for interlocutory review. The PUC conducted the interlocutory review and issued an order declaring that the PUC had authority to group all common carriers in one group for assessment purposes; that the PUC could establish utility groups for assessment purposes without holding hearings or using rulemaking processes; and that Section 510 of the Public Utility Code does provide a utility with an opportunity to be heard regarding the reasonableness of assessments. The PUC subsequently certified the decision for immediate appeal upon request by UPS. UPS then filed a petition for permission to appeal the interlocutory order with the Commonwealth Court, which was granted.

On appeal, UPS argued that the PUC lacked authority to change the utility groups because it failed to conduct a formal rulemaking or engage in any factfinding. UPS also argued that the PUC’s regrouping of utilities did not satisfy the requirement of Section 510(b)(1) of the Public Utility Code, which directs that groups combined for assessment purposes must furnish the same kind of service. The Commonwealth Court held that this appeal was improvidently granted because there is no appellate review of a PUC decision under Section 510(c) of the Public Utility Code, citing Mercury Trucking, Inc. v. Pa. PUC, 923 A.2d 1244 (Pa. Cmwlth. 2007). The Court went on to state that UPS must pay the assessment ordered by the PUC as a result of a Section 510(c) hearing and then seek recovery of that payment in whole or in part by filing an original jurisdiction action with the Commonwealth Court, citing 66 Pa.C.S. § 510(d).

Pennsylvania Power Co. v. Pa. PUC

No. 1004 C.D. 2006, 2007 Pa. Commw. LEXIS 472, 932 A.2d 300 (Pa. Cmwlth. 2007) (filed August 21, 2007)
The Commonwealth Court vacated, remandedin part and reversed in part PUC orders denying Pennsylvania Power Company (Penn Power) use of a proposed interim rate reconciliation mechanism and access to alternative energy sources located within the PJM Interconnection, LLC (PJM) service territory but outside Pennsylvania. Penn Power had proposed a quarterly cost reconciliation mechanism to recover costs associated with its provider of last resort obligations. In the alternative, Penn Power requested that it be allowed to shift the risk of provider of last resort collection obligations to wholesale suppliers. The PUC issued an order denying Penn Power’s proposed reconciliation mechanisms. The PUC also ordered that only alternative energy sources located within Pennsylvania or the service territory of MISO are eligible to Penn Power to meet its AEPS Act compliance requirements.

On appeal, Penn Power asserted that the PUC’s denial of the proposed reconciliation mechanism is in conflict with the mandate of Section 2807(e)(3) of the Competition Act, 66 Pa.C.S. § 2807(e)(3), by preventing full recovery of all reasonable costs incurred in serving provider of last resort customers. The Commonwealth Court agreed that the statutory language was quite explicit in mandating full cost recovery. The Court vacated and remanded this issue to the PUC to provide a cost recovery mechanism that complies with the Competition Act. Regarding the alternative energy issue, Penn Power asserted that the PUC decision was contrary to the plain language of the AEPS Act. The Commonwealth Court agreed with Penn Power and reversed the PUC’s decision on this issue, holding that the plain language of the AEPS Act does not restrict access to out-of-state alternative energy sources to only those that are within the same service territory as the distribution companies.

Maher Saber d/b/a United Cab v. Pa. PUC

No. 527 C.D. 2007, (Pa. Cmwlth. 2007) (filed September 24, 2007)
In an unreported memorandum opinion, the Commonwealth Court affirmeda PUC order denying Mr. Saber’s request to protest the application of Harrisburg City Cab (City Cab) nunc pro tunc. At an evidentiary hearing, Saber testified that he filed protests of City Cab’s application in person at the PUC’s Secretary’s Bureau and mailed copies to City Cab. An employee of the PUC’s Secretary’s Bureau testified that she saw Mr. Saber in the bureau on the date asserted, but, she did not receive or file any protests from Mr. Saber. In addition, the Bureau employee testified that the PUC’s docket entries contained no indication that Mr. Saber filed any Protests on the due date. Finding Mr. Saber not credible, the ALJ denied the request to file protests nunc pro tunc. The PUC adopted the ALJ’s Initial Decision.

On appeal, Mr. Saber asserted that the PUC abused its discretion in finding him not credible. The Commonwealth Court noted that if believed, Mr. Saber’s testimony would have established a prima facie case for a nunc pro tunc filing. But, the Court stated that Mr. Saber’s testimony was not believed and as it was his burden to establish that a breakdown occurred in the PUC’s Secretary’s Bureau, there was no evidence to justify his request to file the protests nunc pro tunc.

Fourth Quarter

Ace Moving & Storage, Inc., et al. v. Pa. PUC

No. 368 C.D. 2007, 2007 Pa. Commw. LEXIS 596, 935 A.2d 75 (Pa. Cmwlth. 2007) (filed July 11, 2007)
The Commonwealth Court reverseda PUC decision that denied objections to an application by Shannon Transport, Inc. (Shannon) to expand its service territory as a mover of household goods. The ALJ concluded that Shannon had met its burden of showing that the expansion of its service would serve a useful public purpose that was responsive to a public demand or need. The ALJ found that testimony by certain realtors established this need. The realtors testified to their interest in having Shannon transport household goods for their clients. Exceptions were filed, which the Commission denied. The Commission modified the ALJ’s decision by granting Shannon authority to provide intrastate services only for customers who have a contractual agreement with the realtors.

On appeal, the protestants asserted that the Commission erred in affirming the ALJ’s reliance on the realtors’ assertions of need or demand. The Commonwealth Court agreed, holding that testimony from actual users, not persons seeking to refer the service to actual users, is required to show public demand or need. The Commonwealth Court concluded that the testimony in the present case concerned requests by realtors, not the actual customers, as such, Shannon failed to establish a demand or need for its services.

Irwin A. Popowsky v. Pa. PUC

Nos. 71 and 72 MAP 2007, ___ Pa. ___, 2007 Pa. LEXIS 2896, 937 A.2d 1040 (Pa. 2007) (filed December 27, 2007)
The Pennsylvania Supreme Court reversedthe Commonwealth Court’s decision and reinstatedthe PUC order approving the merger of MCI with Verizon. The Commission’s determination was based on its finding that the merger would benefit both enterprise and mass market customers through the array of telecommunications and multi-media services that will be developed, and that there would be no significant adverse competitive impacts in Pennsylvania. The Commonwealth Court held that there was no substantial evidence presented showing that the merger would affirmatively promote the service, accommodation, convenience, or safety of the public in some substantial way. The Commonwealth Court went on to state that the benefits presented only established that the merger was not detrimental to the public or were illusory. The Commonwealth Court reversed and remanded the matter, directing the PUC to either reject the merger or impose conditions that will benefit the public in a substantial way.

The PUC filed a petition for allowance of appeal, which was granted. The PUC asserted that the Commonwealth Court misapplied City of York v. Pa. PUC, 295 A.2d 825, 828 ( Pa. 1972) when it required Verizon to provide absolute assurances that asserted public benefits will materialize before the PUC can approve the merger. The Supreme Court agreed, stating that “City of York merely credited the Commission’s preponderance-based finding of public benefit grounded upon the testimony of an industry professional and references to the Commission’s judgment.” The Court also noted that “City of York does not hold that a merger benefits the public onlyif the PUC can demonstrate that the merger savings will lower prices to consumers.” The Court further stated that “the Commission is not required to secure legally binding commitments or to quantify benefits where this may be impractical, burdensome, or impossible; rather, the PUC properly applies a preponderance of the evidence standard to make factually-based determinations (including predictive ones informed by expert judgment) concerning certification matters.” The Court specifically noted that “the record replete with evidence of public benefit....”

In response to the OCA’s arguments relating to rate concessions, the Court noted that the PUC’s “opinion makes it clear that its decision to accept a likelihood of longer-term benefits in lieu of more immediate price concessions is grounded in the same philosophy as the General Assembly’s decision to move from cost-based to price-cap regulation – both decisions appear to incorporate the underlying understanding that, in a competitive environment, market forces will constrain price and encourage valuable innovation.” The Court stated that “requiring that all types of customers receive unique, affirmative, and direct benefits from a transaction, would, in effect, prohibit transactions among companies which target their businesses to particular customer classes, even where other classes suffer no harm.” Finally, the Court held that “the PUC’s conclusion that the Verizon/MCI merger will affirmatively promote the service, accommodation, convenience, or safety of the Pennsylvania public in some substantial way should have been sustained.”