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BROCKWAY GLASS COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION (12/16/81)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: December 16, 1981.

BROCKWAY GLASS COMPANY, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT

Appeal from the Order of the Pennsylvania Public Utility Commission in the case of Brockway Glass Company, Inc. v. West Penn Power Company, No. C-80021876.

COUNSEL

Edward J. Riehl, with him Robert H. Griswold, McNees, Wallace & Nurick, for petitioner.

Kandace F. Foust, Assistant Counsel, with her Shirley Rae Don, Deputy Chief Counsel and Joseph J. Malatesta, Jr., Chief Counsel, for respondent.

Edward S. Stiteler, for Amicus Curiae, West Penn Power Company.

Judges Blatt, MacPhail and Palladino, sitting as a panel of three. Opinion by Judge Blatt. Judge Mencer did not participate in the decision in this case.

Author: Blatt

[ 63 Pa. Commw. Page 239]

Brockway Glass Company (Brockway) appeals here from an order of the Pennsylvania Public Utility Commission (PUC) entered October 15, 1980, which adopted the Initial Decision and Ruling on Exceptions of the Administrative Law Judge (ALJ) and dismissed the petitioner's complaint against West Penn Power Company (West Penn). We affirm.

Brockway, an industrial customer of West Penn at several locations, has been taking electric service at its Plant No. 11 in Washington, Pennsylvania since acquisition of that plant in 1964, at which time it succeeded to the then-existing electric service agreement for that plant. Brockway and West Penn subsequently executed three new agreements: on October 10, 1965, September 8, 1967 and May 3, 1974, each of which was based upon a different West Penn rate schedule

[ 63 Pa. Commw. Page 240]

    chosen by Brockway with regard to its demand requirements at the time in question. The last agreement, dated May 3, 1974, was computed in accordance with Rate Schedule 47 and provided for 25,000 volt service to a maximum load of 10,000 kilowatts, and a minimum demand of 7,500 kilowatts. This agreement, as did Rate Schedule 47, provided for an initial agreement term of four years, subject to cancellation thereafter upon one-year's written notice by either party. On August 31, 1973 West Penn filed Rate Schedule 47 with the PUC as part of its tariff and refiled it on September 4, 1979.

On or about September 18, 1979,*fn1 Brockway notified West Penn that, due to the termination of operations at Plant No. 11 as of January 1, 1980, the power use at the plant would be drastically reduced and a transfer to a more appropriate rate was therefore requested as of that date. On January 3, 1980, Brockway confirmed the reduction in operations at the plant and again requested transfer to a more suitable rate. West Penn, considering itself bound by the one-year minimum notice provision of its filed tariff and, therefore, unable to effect a change in rate until September 18, 1980, continued to bill Brockway in accordance with Rate Schedule 47. Brockway, however, recomputed the billings for service provided it after January 1, 1980 pursuant to Rate Schedule 30, which it viewed as the rate most beneficial to it under its changed circumstances.

[ 63 Pa. Commw. Page 241]

On February 22, 1980 Brockway filed a complaint with the PUC 1) seeking to have it find that the one-year notice of cancellation requirement in the contract and in Rate Schedule 47 was unjust, unreasonable and unlawful and would result in West Penn's collecting excessive charges from Brockway, and 2) seeking a determination of Brockway's right to have its billing computed under a more beneficial rate in light of the drastic reduction in its demand requirements. After a hearing, at which only Brockway offered evidence, the ALJ found that Brockway had failed to meet its burden of proof and dismissed the complaint. The initial decision was reaffirmed by the ALJ in his Ruling on Exceptions and both of these determinations by the ALJ were subsequently adopted as its action by the PUC. This appeal then followed.

Our scope of review in rate making cases is limited to a determination of whether or not constitutional rights have been violated, or if an error of law has been committed, or whether or not the findings, determinations or order of the PUC are supported by substantial evidence. Zucker v. Pennsylvania Public Utility Commission, 43 Pa. Commonwealth Ct. 207, 401 A.2d 1377 (1979).

Brockway contends that Section 1303 of the Public Utility Code (Code), 66 Pa. C.S. ยง 1303, requires a customer, whose service requirements have changed subsequent to execution of a service agreement and who has given notice to the utility of the changed conditions, to have its future billings computed at the rate most advantageous to the customer's realigned service requirements. Brockway's reliance on this Section of the Code, however, is misplaced.

Section 1303 of the Code provides:

No public utility shall, directly or indirectly, by any device whatsoever, or in anywise, demand or receive from any person, corporation,

[ 63 Pa. Commw. Page 242]

    or municipal corporation a greater or less rate for any service rendered or to be rendered by such public utility than that specified in the tariffs of such public utility applicable thereto. The rates specified in such tariffs shall be the lawful rates of such public utility until changed, as provided in this part. Any public utility, having more than one rate applicable to service rendered to a patron, shall, after notice of service conditions, compute bills under the rate most advantageous to the patron. (Emphasis added.)

Tariffs, of course, can include schedules of rates, and all rules, regulations, practices or contracts involving rates and have the force of law and are binding on both the utility and its customer. Behrend v. Bell Telephone Company, 242 Pa. Superior Ct. 47, 363 A.2d 1152 (1976). And, in Bell Telephone Co. v. Pennsylvania Public Utility Commission, 53 Pa. Commonwealth Ct. 241, 244, 417 A.2d 827, 828-29 (1980), this Court construed Section 1303 of the Code and stated that "[t]here can be no lawful rate except the last tariff published as provided by law. . . . Further, it is well established that in the absence of an exception by the Commission, a public utility may not charge any rate for services other than that lawfully tariffed. . . ." (Citations omitted, emphasis in original.) It is well-settled in Pennsylvania that:

Contracts for the service of utilities are presumed to have been made subject to the police power of the state . . . , and it is beyond the power of the contracting parties to fix rates or provide for service permanently. . . . [T]he Public Utility Law supplant[s] any agreement in so far as rates are involved between the consumer and the utility. (Citations omitted, emphasis added.)

[ 63 Pa. Commw. Page 243]

    itself, from the position of hindsight, primarily to the unreasonableness of the provision as now applied to Brockway. Indeed, Brockway did not complain of any unreasonableness until such time as Rate Schedule 47 became financially disadvantageous to it.

Tariff limitations have been upheld by our courts, which have recognized "the power vested in the PUC to evaluate the reasonableness of tariffs or regulations filed with it and to determine whether the provisions therein are compatible with the code and policies of the commission and consistent with its regulatory scheme." Behrend, 242 Pa. Superior Ct. at 74-75, 363 A.2d at 1166. Rate Schedule 47 had met the test of reasonableness at rate proceedings on at least two previous occasions when it had been submitted by West Penn as a proposed rate, and Brockway has now failed to meet its burden of demonstrating that Rate Schedule 47 is now unreasonable.

Brockway does contend, and rightly, that the PUC was incorrect when it stated that "[w]here there is an outstanding contract, based on reasonable tariff provisions, it is the time of the contract that governs the application of Section 1303, and not the time of use." (Emphasis in original.)*fn2 We have previously held that the rate in effect at the time of delivery of service, rather than the rate at the time of contracting is controlling, because, "[t]here can be no lawful rate except the last tariff published as provided by law." Bell Telephone, 53 Pa. Commonwealth Ct. at 244, 417 A.2d at 828 (emphasis in original). We must conclude here, however, that the PUC's misstatement of the law in this adjudication is harmless error, for Rate Schedule 47, as part of the last published tariff, was the tariff in effect at the time of use as well as at the time of contracting and was, therefore, the controlling lawful rate.

[ 63 Pa. Commw. Page 245]

For the foregoing reasons, we must affirm the order of the PUC.

Order

And Now, this 16th day of December, 1981, the order of the Pennsylvania Public Utility Commission in the above-captioned matter is affirmed.

Judge Mencer did not participate in the decision in this case.

Disposition

Affirmed.


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