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October 6, 1997


Appealed From No. L-00930089. State Agency Pennsylvania Public Utility Commission.

Before: Honorable Doris A. Smith, Judge, Honorable Dan Pellegrini, Judge, Honorable Emil E. Narick, Senior Judge. Opinion BY Senior Judge Narick.

The opinion of the court was delivered by: Narick


FILED: October 6, 1997

The issue before this Court is whether Irwin A. Popowsky, Pennsylvania Office of the Consumer Advocate (OCA) properly challenges the Pennsylvania Public Utility Commission's (PUC or Commission) exercise of its authority granted under 66 Pa. C.S. § 1501 to establish regulations governing the conditions under which public utilities shall be required to render service when it adopted certain regulations in 1996.

The OCA appeals from the PUC's revised order entitled Final Rulemaking Re: Line Extension--52 Pa. Code §§ 65.21-65.22 (Revised Final Order) which adopted regulations regarding line extensions by water utilities (Final Regulations). We quash the appeal.

The adoption of the Final Regulations was the culmination of a process that began in 1992, when the PUC issued a policy statement containing its proposed interpretation of Pennsylvania law concerning the circumstances under which utilities may request contributions or advances for constructing facilities to accommodate applicants for new service. At the time the 1992 policy statement was adopted, most water utilities' tariffs stated that mainlines would be extended to serve new customers on the basis of the "thirty-five foot rule," which had been in effect for many years. Under the thirty-five foot rule, a utility would fund the installation of thirty-five feet of mainline for each bona fide service applicant. The cost of any facilities required to serve the prospective customer in excess of thirty-five feet of mainline, had to be advanced by the applicant. *fn1

The 1992 policy statement prompted the filing of complaints by numerous prospective applicants for service. As a consequence, on December 8, 1993, the PUC entered an order initiating proposed rulemaking to eliminate the uncertainty which has arisen under the Policy Statement.

On July 1, 1994, the PUC issued proposed regulations which set forth an economic test for determining the maximum amount a utility should be required to invest to extend its mainlines at the behest of a bona fide applicant. Specifically, the maximum investment would be determined by reference to the annual depreciation expense that would be covered by the anticipated average annual revenue to be received from the prospective customer, less variable operating and maintenance expenses incurred to serve the customer. The approach requires a substantially greater utility investment per applicant than provided by the thirty-five foot rule. *fn2

The Final Regulations differed from the proposed regulations in three material respects: 1) they apply only to water utilities; 2) the economic test was modified; and 3) that if an advance is required, the utility must refund a portion of the advance to the applicant for each customer added. The PUC entered the Revised Final Order on October 7, 1996. *fn3

On November 5, 1996, the OCA filed a petition for review with this Court of the Revised Final Order which implemented the regulations in which it alleged that the regulations were not consistent with the decisions of Pennsylvania appellate courts concerning mainline extensions. *fn4

While the OCA has appealed from a final order, the truth is that it is challenging the PUC's regulations and thus, we must sua sponte raise the question of whether this appeal is proper at all.

The PUC is an agency whose adjudications are subject to this Court's appellate review. However, we must determine whether the promulgation of the regulations at issue here is an adjudication within the meaning of section 101 of the Administrative Law, 2 Pa. C.S. § 101 which states, in pertinent part, that an "adjudication" is:

Any final order, decree, decision, determination, or ruling by an agency affecting personal or property rights, privileges, immunities, duties, liabilities or obligations of any or all of the parties ...

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