United States: PUC Rejects Utilities’ Motions For Reconsideration; Evidentiary Hearings On Energy Savings Targets Have Commenced

On August 3, 2012, the Pennsylvania Public Utilities Commission (PUC) issued an Implementation Order extending the Energy Efficiency and Conservation (EE&C) Program under Act 129 of 2008 into a second phase, requiring that the seven largest Electric Distribution Companies (EDCs) in the Commonwealth reduce electricity usage in their service territory by an amount particular to each EDC, ranging from 1.6 percent (West Penn Power Company) to 2.9 percent (PECO).

PECO, PPL Electric Utilities (PPL) and FirstEnergy (comprising Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, and West Penn) each filed separate motions requesting reconsideration of various aspects of the Implementation Order, causing uncertainty as to whether Phase II of the EE&C Program would proceed.

The motions varied widely in scope. PECO and FirstEnergy made several technical claims, but also broadly challenged the validity of the Implementation Order as a whole. Both PECO and FirstEnergy stated that the binding savings targets were regulations, and therefore not binding because the PUC had not followed proper rulemaking procedure.

The PUC denied both motions, stating "The operative language in [Act 129] is that the commission 'shall adopt' further reductions in consumption .... If the legislature had intended a rulemaking process, as opposed to an adjudicative process, for [the Phase II additional reductions] it would have so stated." Reconsideration Order at 21.

PPL's motion was narrower than that of FirstEnergy and PECO. PPL asked the PUC to affirm the right of the EDCs to challenge their assigned savings target if substantial changes are made to the Technical Reference Manual (TRM). The TRM sets forth the protocol for establishing the actual energy savings achieved by specific measures installed or implemented as part of an EDC's EE&C plan and for measuring the cost effectiveness of specific measures.

The PUC denied PPL's motion, stating that the savings targets should not be tied to TRM changes because "The TRM does not establish the [energy savings] goal, nor do changes to the TRM move the goal," and that any party has the ability to challenge changes to the TRM as part of its separate adoption proceeding.

Although the PUC denied the motions for reconsideration, the Implementation Order also provided for a "fast-track" appeals process whereby the EDCs could request an evidentiary hearing on their energy savings target on or before August 20, 2012. PECO, PPL and FirstEnergy all petitioned the PUC to hold evidentiary hearings related to their Phase II targets, meaning the PUC has another opportunity to revise the savings targets.

Prehearing conferences on the savings proceedings were held on September 10. PECO's evidentiary hearing was held on October 3, PPL's will be held on October 18, and FirstEnergy's will be held on October 19. If the EDCs are unsatisfied with the outcome of the evidentiary hearings, the EDCs have the right to appeal the PUC's decision to Commonwealth Court.

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