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decided: February 16, 1989.


Appeal from the Order of the Pennsylvania Public Utility Commission, in the case of The Peoples Natural Gas Company v. T. W. Phillips Gas and Oil Company, No. C-860644.


Dennis J. Lewis, with him, Victoria Lee, Alder, Cohen & Grigsby, P.C., and William P. Boswell, Secretary and General Counsel, for petitioner.

Frank B. Wilmarth, Deputy Chief Counsel, with him, Daniel P. Delaney, Chief Counsel, for respondent.

Walter A. Bunt, Jr., with him, Bruce Wiegand and Nancy L. Krzton, Kirkpatrick & Lockhart, and Jay W. Dawson, for intervenor, T. W. Phillips Gas and Oil Co.

Jack E. Solomon, University Legal Counsel, for intervenor, Indiana University of Pennsylvania.

Judges Colins and Smith, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Colins. Judge MacPhail did not participate in the decision in this case.

Author: Colins

[ 123 Pa. Commw. Page 483]

The Peoples Natural Gas Company (Peoples) petitions for review of an order of the Pennsylvania Public Utility Commission (Commission) entered on August 24, 1987, denying Peoples' exceptions to the Initial Decision of Administrative Law Judge (ALJ) Nemec, granting summary judgment in favor of T. W. Phillips Gas and Oil Co. (Phillips), and dismissing Peoples' complaint against Phillips.


Peoples initiated this matter on December 30, 1985, by filing with the Commission a petition for issuance of a declaratory order. Therein, Peoples sought a declaration that Phillips lacked the requisite authority to provide service to a proposed cogeneration facility (Cogen Plant) to be owned and operated by the Indiana University of Pennsylvania (IUP). Phillips filed an answer, therein asserting that it did possess the requisite authority to serve the IUP facility. IUP petitioned to intervene.

Peoples filed a formal complaint against Phillips with the Commission on February 20, 1986. It alleged therein that Phillips had neither charter rights nor certificated rights to provide service in Indiana County and therefore, Phillips was unlawfully providing service to IUP's Robertshaw Building. Phillips filed an answer on March 17, 1986, denying these allegations. The Commission, reasoning that the issue of whether Phillips had the right to provide service in Indiana County would be resolved in the formal complaint proceeding, entered an order on March 12, 1986, denying Peoples' petition for declaratory order without prejudice to Peoples' right to pursue the service rights issue in the complaint proceeding.

[ 123 Pa. Commw. Page 484]

Thereafter, Peoples filed an amended complaint challenging Phillips' right to serve the Cogen Plant, IUP's Robertshaw Building and a tire manufacturing facility owned by McCreary Tire & Rubber Co. (McCreary).*fn1 In its answer thereto, Phillips submitted that: (1) it had been serving customers in Indiana County continuously since at least 1916; (2) it was currently providing natural gas service to over two thousand six hundred (2,600) residential, commercial and industrial customers in Indiana County, a number of whom including IUP's Robertshaw Building are located in White Township; and (3) its tariffs, as filed with and approved by the Commission, have included Indiana County in its service territory since at least 1916 and its current tariff specifically lists Indiana County and numerous municipalities, including White Township as being within its authorized service territory (Reproduced Record (RR) at 110a). IUP and McCreary intervened in favor of Phillips.

Discovery ensued and several pre-hearing conferences were held. Peoples maintained that there were several issues to be decided: (1) whether Phillips' charter rights provided the authority to merely purchase gas rather than serve customers in Indiana County; (2) whether Phillips was authorized to provide service to the Cogen Plant even if they had the right to provide service in White Township since the Cogen Plant itself, as opposed to the point of delivery of the gas, was in Indiana Borough; and (3) the resolution of "public policy issues". Phillips on the other hand, proposed that the sole issue to be resolved was whether it possessed charter and certificated rights to provide service in Indiana County. As a result, disputes arose as to the proper scope of

[ 123 Pa. Commw. Page 485]

    discovery. ALJ Nemec and the Commission subsequently issued numerous interim orders in response to inter alia, motions to compel responses to interrogatories, motions for protective orders and motions for sanctions.

On August 25, 1986, during the course of on-going discovery, Phillips filed a motion for partial summary judgment on the sole issue of whether it possessed certificated authority to provide service in White Township. Appended to this motion were certified copies of: (1) the Commission's order, dated December 16, 1974, granting to Phillips a certificate of public convenience (1974 certificate) which expressly stated that Phillips had a right to serve in "all or portions of certain boroughs, townships and cities in . . . Indiana Count[y]"*fn2 (RR at 316a); (2) Phillips' application to the Commission which referred to Phillips' predecessor's gas tariff which specifically authorized the provision of gas service in White Township (RR at 320a); (3) a certificate of service verifying that Peoples had been served with a copy of the application for the 1974 certificate (RR at 362a); (4) copies of Phillips' articles of incorporation, and (5) the affidavit of Phillips' Vice President Robert M. Hovanec (Hovanec) wherein he attested that according to the records he had reviewed, Phillips' predecessor was serving customers in White Township at the time of the application (RR at 354a).

The ALJ issued an order dated September 25, 1986, granting Peoples leave to depose Hovanec and an Initial

[ 123 Pa. Commw. Page 486]

Decision dated September 26, 1986, granting Phillips' motion for partial summary judgment. The ALJ concluded that as a matter of law, Phillips possessed the right to render natural gas service to the public in White Township pursuant to the 1974 certificate. Peoples filed exceptions to this decision and a petition for Commission Review and Answer to a Material Question.

On November 10, 1986,*fn3 Phillips filed a motion for summary judgment. Attached thereto were affidavits from officials of IUP and McCreary attesting to the fact that they were receiving service from Phillips at a point within White Township.*fn4 The ALJ deferred ruling on this motion pending resolution of the appeal from the order granting partial summary judgment.

Hearings commenced on the issue of service rights. Peoples conducted cross-examination of Hanovec who testified inter alia, about Phillips' provision of service in White Township at the time the Commission granted the 1974 certificate. Peoples thereafter stipulated on the record that Phillips was providing service to 144 customers in White Township in 1974 (RR at 961b).

By Opinion and Order in Answer to a Material Question entered January 27, 1987, the Commission affirmed the ALJ's decision granting partial summary judgment and remanded the matter to the ALJ for further proceedings. Peoples petitioned this Court for review. In a Memorandum Opinion authored by Judge Craig and dated

[ 123 Pa. Commw. Page 487]

April 8, 1987, this Court quashed the appeal on the basis that the order granting partial summary judgment was not a final appealable order.

The ALJ sent notice to the parties that he would now entertain argument on the summary judgment motion. Both parties filed briefs and on May 5, 1987, the ALJ entered summary judgment in favor of Phillips. Peoples' exceptions were denied by the Commission in its order entered August 24, 1987, wherein it affirmed the ALJ's ...

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