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06/05/97 SOMERSET RURAL ELECTRIC COOPERATIVE INC.

COMMONWEALTH COURT OF PENNSYLVANIA


June 5, 1997

SOMERSET RURAL ELECTRIC COOPERATIVE INC., AND PENNSYLVANIA RURAL ELECTRIC ASSOCIATION, PETITIONERS
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION, RESPONDENT

Appealed From No. C-00945626. State Agency Pennsylvania Public Utility Commission.

Before: Honorable James Gardner Colins, President Judge, Honorable Rochelle S. Friedman, Judge, Honorable Charles A. Lord, Senior Judge. Opinion BY Judge Friedman. Judge Leadbetter did not participate in the decision in this case.

The opinion of the court was delivered by: Friedman

OPINION BY JUDGE FRIEDMAN

FILED: June 5, 1997

Somerset Rural Electric Cooperative, Inc. (Somerset) and the Pennsylvania Rural Electric Association (Association) appeal from an order of the Pennsylvania Public Utility Commission (PUC) granting the Exceptions filed by the Pennsylvania Electric Company (Penelec) and reversing the decision of an Administrative Law Judge (ALJ). The effect of the PUC's order is to permit Penelec to continue providing electric service to Custom Coals International (Custom Coals) under section 7355(d) of the Unincorporated Area Certified Territory Act of 1990 (Territory Act). *fn1

On March 23, 1994, Somerset and the Association jointly filed a formal complaint against Penelec alleging that, under sections 7354(b) and 7355(b) of the Territory Act, *fn2 Somerset is the lawful retail electric supplier to Custom Coals because Custom Coals is a new electric-consuming facility and Somerset is the closest retail electric supplier. Thus, the PUC should direct Penelec to cease rendering electric service to Custom Coals. Penelec filed an answer with new matter claiming that Penelec is the lawful retail electric supplier under section 7355(d) of the Territory Law because, since 1973, Penelec has been continuously supplying retail electric service to the site where Custom Coals is located. The case was assigned to an ALJ, who held extensive hearings on the matter. *fn3

Based on the evidence presented, the ALJ made findings of fact and concluded that Somerset was the lawful retail electric supplier to Custom Coals. Thus, the ALJ sustained the complaint. Penelec filed Exceptions to the ALJ's decision, and Somerset, together with the Association, filed Reply Exceptions.

In reviewing the ALJ's decision, the PUC noted an apparent contradiction in the ALJ's decision. While the ALJ found that Custom Coals is building, or is planning to build, various "new electric-consuming facilities" at its location, *fn4 the ALJ concluded that the Custom Coals complex constitutes a single "electric-consuming facility." (ALJ's Conclusion of Law, No. 5.) Agreeing that the Custom Coals complex constitutes a single "electric-consuming facility," the PUC decided that Penelec is the lawful retail electric supplier under section 7355(d) of the Territory Act because Penelec has continuously provided electric service to the site since 1973 through an existing substation that will continue to be used to supply electric service to the Custom Coals' complex. Thus, the PUC granted Penelec's Exceptions and reversed the ALJ's decision.

On appeal to this court, *fn5 Somerset and the Association contend that the PUC should have concluded that the Custom Coals complex is a "new electric-consuming facility" under section 7355(b) of the Territory Act. We agree.

Section 7352 of the Territory Act, 15 Pa.C.S. § 7352 (emphasis added), defines an "electric-consuming facility" as "everything that utilizes electric energy from a central station source." Given this broad statutory definition, *fn6 one could argue that each of the separate structures to be built by Custom Coals in its business complex is a new "electric-consuming facility." *fn7 However, under the same definition, the various pre-existing structures are also "electric-consuming facilities." Moreover, the Custom Coals business complex, taken as an interdependent whole, (ALJ's Finding of Fact, No. 21), is also an "electric-consuming facility."

Like the PUC and the ALJ, we believe that the best approach here is to treat the entire Custom Coals business complex as a single "electric-consuming facility." Otherwise, integrated industrial sites, like the one here, could have multiple retail electric service suppliers providing retail electric service. This would defeat the purposes of the Territory Act, which are:

[1] to encourage the orderly development of retail electric service in unincorporated areas, [2] to avoid wasteful duplication of distribution facilities, [3] to avoid unnecessary encumbering of the landscape of the Commonwealth, [4] to prevent the waste of materials and natural resources, [5] to minimize inconvenience, diminished efficiency and higher costs in serving the consumer and otherwise for the public inconvenience and necessity....

15 Pa.C.S. § 7353.

Having made this determination, we must next examine whether the single interdependent Custom Coals complex is a new "electric-consuming facility" governed by section 7355(b) of the Territory Act. Here, the PUC adopted the ALJ's finding that Custom Coals is constructing a "new coal cleaning/blending plant and related structures" on land which includes "the former Laurel Mine site." *fn8 (ALJ's Finding of Fact, No. 4.) (Emphasis added.) Based on that finding, the PUC could not logically conclude that section 7355(d) of the Territory Act applies here. Because the PUC found that the planned Custom Coals facility is "new" and, thus, different from the "former" electric-consuming facility, we conclude, like the ALJ, that section 7355(b) of the Territory Act controls.

Under Pennsylvania Rural Electric Association v. Pennsylvania Public Utility Commission, 81 Pa. Commw. 466, 473 A.2d 1134 (Pa. Commw. 1984), the lawful retail electric supplier to a new electric-consuming facility is the one whose distribution line is closer to the center of the complex. Here, Somerset's nearest existing distribution line is in closer proximity to the center of the Custom Coals complex than is the nearest existing distribution line of Penelec. (ALJ's Conclusion of Law, No. 7; R.R. at 91a.) Therefore, pursuant to section 7355(b) of the Territory Act, Somerset is the lawful retail electric supplier for the Custom Coals complex. *fn9

Accordingly, we reverse.

ROCHELLE S. FRIEDMAN, JUDGE

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

ORDER

AND NOW, this 5th day of June , 1997, the order of the Pennsylvania Public Utility Commission, dated June 10, 1996, is reversed.

ROCHELLE S. FRIEDMAN, JUDGE


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