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Pennsylvania State University v. Public Utility Commission

IN THE COMMONWEALTH COURT OF PENNSYLVANIA


January 22, 2010

THE PENNSYLVANIA STATE UNIVERSITY, PETITIONER
v.
PUBLIC UTILITY COMMISSION, RESPONDENT

The opinion of the court was delivered by: Judge McGINLEY

Argued: September 14, 2009

BEFORE: HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE JIM FLAHERTY, Senior Judge.

OPINION

The Pennsylvania State University (PSU) petitions for review of the order of the Pennsylvania Public Utility Commission (PUC) which adopted the Recommended Decision of the Administrative Law Judge's (ALJ) denial of PSU's Petition for Declaratory Order to apply an extended generation rate cap for service to PSU's University Park campus (University Park) under the Tariff*fn1 37 account.

PSU is a major generation, transmission and distribution service customer of West Penn Power Company, d/b/a Allegheny Power (Allegheny Power) at University Park. PSU received service to University Park under the Tariff 37 account.*fn2 PSU is the only customer receiving service under the Tariff 37 account. Definitive Form Brief for Petitioner The Pennsylvania State University (PSU Brief) at 11. All other customers receive retail electric service from Allegheny Power under Tariff 39 accounts, which also includes additional PSU service locations.*fn3

I. Procedural History

A. 1998 Restructuring Settlement

In 1998, Allegheny Power submitted a restructuring filing to the PUC pursuant to the Electricity Generation Customer Choice and Competition Act (Competition Act).*fn4 Under the terms of the 1998 Restructuring Settlement, first, Allegheny Power's generation rate caps*fn5 were extended for three additional years beyond the statutory rate cap period from the end of 2005 through the end of 2008 for all Allegheny Power customers. Second, the 1998 Restructuring Settlement established stranded costs payment obligations for customers and Allegheny Power recovered $670 million in stranded costs*fn6 through a reconcilable surcharge that was to expire at the end of 2008. The extension and stranded costs obligations applied to both Tariff 37 and Tariff 39 accounts. At that time PSU was an intervenor to the Allegheny Power restructuring proceeding and a signatory to the 1998 Restructuring Settlement.

In 1999, PSU and Allegheny Power negotiated a stranded cost settlement agreement consistent with Section 2808(b) of the Competition Act, 66 Pa.C.S. § 2808(b). Under this agreement a customer was provided with the statutory option of voluntarily paying off its stranded or competitive transition charge (CTC) obligation.*fn7 The Competitive Transition Charge Buyout (CTC Buyout) accelerated PSU's monthly payment of its stranded cost liability with a reduced interest rate. PSU made its final payment under the CTC Buyout agreement in August 2003. PSU continued to receive generation service at a capped rate after its final payment.*fn8 The CTC Buyout agreement, however, did not modify the terms of the 1998 Restructuring Settlement regarding the generation rate cap for the Tariff 37 account which was set to expire at the end of 2008.

B. 2003 Petition to Extend the Stranded Cost Recovery Period

On November 25, 2003, Allegheny Power filed a Petition and Request for Expedited Action (2003 Petition) which sought authorization from the PUC to extend the stranded cost recovery period beyond December 31, 2008, which was the planned end point of Allegheny Power's stranded cost recovery period and generation rate cap as set forth in the 1998 Restructuring Settlement. Allegheny Power projected that the stranded costs for Tariff 39 accounts would not be fully collected by the end of 2008. Allegheny Power represented that it expected a short fall of more than $157 million in the recovery of its stranded costs by the end of 2008, absent an extension. Allegheny Power Exh. No. GBB-2 at 2; R.R. at 482a. The 2003 Petition, which sought the extension of the stranded costs recovery period, did not request a generation rate cap extension.

Allegheny Power's stranded costs recovery request was met with opposition from other customers because the customer's generation rate protection wound not be continued through 2009 and 2010 while Allegheny Power continued to recover stranded costs. In September 2004, the Office of Consumer Affairs (OCA), the Office of Small Business Advocate (OSBA), and the West Penn Power Industrial Power, as intervenors, argued that generation rate cap protection contained in the 1998 Restructuring Settlement, which also initially approved the stranded costs recovery period, was needed to continue if stranded costs were recovered later than 2008.

C. 2004 Petition to Extend the Generation Rate Cap

The parties to the 2003 Petition proceeding reached a settlement which was proposed to the PUC. The proposed 2004 Joint Petition For Settlement And For Modification of the 1998 Restructuring Settlement (2004 Petition), unlike the 2003 Petition, proposed an extension of Allegheny Power's generation rate cap. The 2004 Petition permitted Allegheny Power to extend its stranded cost recovery period for an additional two years through 2010 in return for a companion two year extension of Allegheny Power's generation rate cap. Allegheny Power Exh. No. GBB-3; R.R. at 514a. The 2004 Petition also preliminarily required notice to the parties in the 1998 Restructuring Settlement and to Allegheny Power customers.

As a result, Allegheny Power included a bill insert that outlined the 2004 Petition terms in its September 30 to October 28, 2004, customer billing cycle. The notice stated that the "proposed settlement would have the following effect" on the generation rate cap of Allegheny Power customers: "Generation rate protection through generation rate caps, which was to end in 2008, will be extended for two years until the end of 2010 to all customers. The generation rate caps for all customers increases each year between 2006 and 2010 to specified levels." PSU Exh. No. 1; R.R. at 283a.

Additionally, the full text of the 2004 Petition was published in the Pennsylvania Bulletin on September 25, 2004. Allegheny Power Exh. No. GBB-4; R.R. at 596a. The text referred to specific proposed rates in an Appendix A that would be applicable to customers as new capped generation rates for 2009 and 2010. The listed rate schedules in Appendix A were limited to Tariff 39 accounts.

D. Amended Joint Petition for Settlement And For Modification Of The 1998 Restructuring Settlement (2005 Settlement)

On May 11, 2005, the PUC issued an Order that approved the 2005 Settlement which referenced a Revised Appendix A where it extended the stranded cost recovery and modified a capping for Allegheny Power's generation rates for 2009 and 2010.*fn9

II. Current Controversy

A. Petition for Declaratory Order

On December 3, 2007, PSU filed a Petition for Declaratory Order with the PUC and sought a declaration that the extension of Allegheny Power's generation rate cap from the end of 2008 through 2010, pursuant to the May 11, 2005, Order,*fn10 applied to electric generation service provided to PSU at University Park under the Tariff 37 account as well as to customers under Tariff 39 accounts. Without capped generation rate protection, PSU alleged that it would be exposed to increased market prices for electric generation for 2009 and 2010 for approximately $9.2 million per year. PSU Exh. No. 1 at 10; R.R. at 77a.

Allegheny Power filed an answer and new matter and requested the PUC to dismiss PSU's Petition for Declaratory Order. Allegheny Power argued the May 11, 2005, Order, which approved the 2005 Settlement, extended the generation rate caps through 2010 for specific rate schedules for Tariff 39 accounts because Allegheny Power was under-collecting its stranded costs for customers serviced under Tariff 39 accounts. Therefore, PSU's rate cap under the Tariff 37 account was not extended under the May 11, 2005, Order. PSU replied to Allegheny Power's New Matter. The OSB and the OCA intervened.

B. Petition for Default Service Procurement Plan

On January 21, 2008, Allegheny Power filed a Petition with the PUC for approval of a Default Service Procurement Plan (DSPP Petition) to establish the terms and conditions under which Allegheny Power would supply Provider of Last Resort (POLR) service to PSU's University Park campus under the Tariff 37 account for 2009-2010 if PSU did not obtain generation service from a PUC-licensed competitive electric generation supplier. The proposed DSPP Petition was based upon Allegheny Power's assertion that the restructuring transition period and generation rate cap for the Tariff 37 customers account expired on December 31, 2008.

PSU filed an Answer and a Petition to Intervene on February 8, 2008, and a Protest to the DSPP Petition on March 10, 2008. PSU again stated that the extended generation rate cap approved by the PUC in the May 11, 2005, Order also applied to service rendered by Allegheny Power to University Park under the Tariff 37 account. PSU argued that the issue concerning the extension of the generation rate caps under Tariff 37 account needed to be initially determined because if the rate cap extensions applied, there was no need to determine the issue of default service supply for PSU at University Park for 2009 and 2010.

The PUC consolidated PSU's Petition for Declaratory Order with Allegheny Power's DSPP Petition.*fn11 On June 18 and 19, 2008, evidentiary hearings were held before the ALJ.

C. The PUC's Decision

The PUC addressed the consolidated proceeding at a public meeting on September 11, 2008.

In the PUC's September 11, 2008, Order, the PUC "concur[ed] with the ALJ's reading of the May 11, 2005 Order" and "adopt[ed] the ALJ's recommendations...",*fn12 and determined that "PSU failed to demonstrate that... [the two year generation] rate cap has been, or should be extended" to the Tariff 37 account. Pennsylvania Public Utility Commission, Opinion and Order (PUC Opinion 9/11/2008), September 11, 2008, at 23; R.R. at 1105a. The PUC denied PSU's Petition for Declaratory Order and declined PSU's request to extend Allegheny Power's generation rate cap for service to University Park under the Tariff 37 account. The PUC agreed with the ALJ that PSU had adequate notice of the 2003 Petition proceedings. The PUC held that Allegheny Power provided PSU with several notices of the 2003 Petition proceeding, which included notice in the Pennsylvania Bulletin and the customer bill inserts that the rate cap extension did not apply to the Tariff 37 account.

D. Petition For Reconsideration and Petition For Review

On September 26, 2008, Allegheny Power filed a Petition for Reconsideration of the September 11, 2008, Order and requested that the PUC reconsider a finding related to notice provided to PSU. Specifically, Allegheny Power alleged that it mailed documents pertaining to the 2003 Petition proceedings to a law firm that represented PSU. PSU filed an answer in opposition. On October 16, 2008, the PUC granted reconsideration concerning Allegheny Power's notice argument, pending further review and consideration of the merits.*fn13

On December 4, 2008, the PUC addressed the merits of Allegheny Power's Petition for Reconsideration at a public meeting. On December 9, 2008, the PUC granted Allegheny Power's Petition for Reconsideration, in part, as to clarification of portions of the September 11, 2008, Order.*fn14 Last, the PUC reaffirmed the September 11, 2008, Order, "in all other respects" in that it was to remain "in full force and effect," which included its rejection of PSU's request for a generation rate cap extension for service under the Tariff 37 account. PUC Opinion 12/9/08 at 9; R.R. at 1132a.

On January 6, 2009, PSU filed a petition with this Court for review of the September 11, 2008, and December 9, 2008, Orders. Allegheny Power, OSBA and the OCA intervened in the proceeding.

III. Whether The Rate Cap Extension Was Applicable To The Tariff 37 Account?

Initially PSU contends*fn15 that the May 11, 2005, Order, which included a two-year generation rate cap, also extended to PSU's University Park under the Tariff 37 account.*fn16 This Court must disagree.

Specifically, the ALJ rejected this argument:

Because PSU had already paid its Tariff 37 stranded cost obligation [under the alternative CTC Buyout agreement] before the 2003 Petition was filed, the 2003 Petition was logically oriented only to the Tariff 39 customers. [The 2003 Petition, in its original form, initially only requested to extend the time period for recovering stranded costs to the end of 2010 for those].... customers who would be subject to continued stranded costs payments. The [subsequent] settlement process added the extension of the [generation] rate caps. Given that the original [2003] Petition only concerned Tariff 39 customers, it was entirely logical that the [generation rate cap] extension was limited to those customers as well.... When the parties agreed and signed the 2004 Joint Petition, they included Appendix A which listed the rate schedules which would be subject to the cap extension. Not surprisingly, the... rates were listed with no reference to Tariff 37. (Emphasis added).

PUC Opinion adopting ALJ Recommended Decision, at 23; R.R. at 1069a.

Further, Allegheny Power points out to this Court that the Tariff 37 account was not included in its competitive Request-for-Proposals (RFP) process, "which was initiated to obtain generation [service] from certain Tariff 39 rate schedules in 2009 and 2010 under the terms of the Commission [PUC]-approved [1998 Restructuring] settlement.... [N]owhere within the service types to be served under the RFP... is Tariff 37 identified as qualifying for load service." Final Form Brief for Intervenor West Penn Power Company, July 20, 2009, at 23.

Consequently, this Court must conclude that the PUC correctly found in its September 11, 2008, and December 9, 2008, Orders, there was no basis for PSU's proposition that the generation rate cap for the Tariff 37 account had been, or should have been, extended under the May 11, 2005, Order, which approved the 2005 Settlement which limited its application to Tariff 39 accounts.*fn17

IV. Whether The Generation Rate Cap Should Be Extended until December 31, 2010, Under The Tariff 37 Account Pursuant To The Competition Act?

PSU next contends that pursuant to Section 2804(4)(ii) of the Competition Act, 66 Pa.C.S. § 2804(4)(ii), the generation rate cap under the Tariff 37 account should be extended from December 31, 2008, until December 31, 2010, because PSU will not have a choice of an alternative electric supplier.*fn18

Section 2804(4)(ii) of the Competition Act provides:

(ii) In addition to the rate cap set forth in subparagraph

(i), for a period of nine years from the effective date of this chapter or until an electric distribution utility is no longer recovering its transition or stranded costs through a competitive transition charge or intangible transition charge and all customers of an electric distribution utility can choose an alternative provider of electric generation, whichever is shorter, the generation component of a utility's charges to customers who purchase generation from the utility, including the competitive transition charge and intangible transition charge, shall not exceed the generation component charged to the customers that has been approved by the commission [PUC] for such service as of the effective date of this chapter. (Emphasis added).

The PUC adopted the ALJ's determination that Section 2804(4)(ii) of the Competition Act was not applicable to the current controversy:

Penn State [PSU] misread Section 2804(4)(ii) [of the Competition Act]........

The University [PSU] emphasized that the... language [in Section 2804(4)(ii)] held open the rate caps for all customers until Allegheny [Power] was 'no longer recovering' its stranded costs and until all customers could 'choose an alterative provider of electric generation....' Penn State [PSU] asserted that, because there was no current alternative suppliers in the Allegheny [Power] service territory, the second requirement could not be met until a market formed after the rate cap expired at the end of 2010........

I find that the language of the statute is more properly construed as authorizing rate caps for the shorter of two time measurements: The first measure was nine years. The second was until an electric distribution utility was no longer recovering its transition or stranded costs through a competitive transition charge or intangible transition charge AND all customers of an electric distribution utility could choose an alternative provider of electric generation. Given that nine years [past the January 1, 1997, effective date of the Competition Act] ended in December 2005, I find that this section of the statute is not applicable to the current fact pattern and not supportive of the Penn State [PSU] argument. (Emphasis in original).

PUC Opinion adopting ALJ Recommended Decision at 26-27; R.R. at 1058a-1059a.

Where a statute is free and clear from ambiguity the plain language controls. 1 Pa.C.S. §§ 1903, 1921; O'Rourke v. Commonwealth Department of Corrections, 566 Pa. 161, 778 A.2d 119 (2001). Here, the plain language of Section 2804(4)(ii) of the Competition Act addresses two scenarios, contrary to PSU's interpretation. Under PSU's interpretation the rate caps for all customers must stay in place for nine years or until the stranded costs are recovered and all customers are able to choose an alternative supplier. PSU's interpretation equalizes the two time periods which is inconsistent with the statutes' intent to authorize rate caps for "whichever is shorter" of the two time periods. Consequently, this Court is of the opinion that the ALJ and PUC applied the proper construction of the statute.

However, PSU asserts that the failure to extend the generation rate cap to the Tariff 37 account was discriminatory. Specifically, PSU asserts that it would pay a higher rate while other similarly situated customers would pay a lower rate. This assertion is specious.

Section 2804(7) of the Competition Act, 66 Pa.C.S. § 2804(7), provides that "[t]he commission [PUC] shall require that restructuring of the electric utility industry be implemented in a manner that does not unreasonably discriminate against one customer class to the benefit of another." (Emphasis added).

Additionally, Section 1304 of the Code, 66 Pa.C.S. §1304, provides:

No public utility shall, as to rates, make or grant any unreasonable preference or advantage to any person, corporation, or municipal corporation, or subject any person, corporation, or municipal corporation to any unreasonable prejudice or disadvantage. No public utility shall establish or maintain any unreasonable difference as to rates, either as between localities or as between classes of service. (Emphasis added).

This Court concurs with the ALJ determination that PSU's exclusion from the rate cap extension under the Tariff 37 account was not discriminatory:

I disagree with the University's [PSU's] arguments that equity and fairness favor the grant of the cap extension to Tariff 37. Penn State [PSU] entered into the CTC Buyout Agreement with the knowledge that the Tariff 37 rate cap would expire at the end of 2008. At the risk of some repetition, both sides got what they bargained for in a private agreement: Penn State [PSU] got a lower interest rate, and Allegheny [Power] got its stranded costs payments faster. In this instance the main campus [under the Tariff 37 account] will not get the cap extension, but the other 100 [Tariff 39] accounts will. Penn State [PSU] got the benefit of those other 100 accounts without any action on its part. I find that it was treated as fairly as all of the other Tariff 39 customers who got the cap extension without appearing in the 2003 Petition case. Chapter 28 of the Public Utility Code does not require all customers to have the same rate cap expiration date........

Section 2808(b)*fn19 authorized the Commission [PUC] to extend the CTC recovery period for good cause. Good cause existed in the 2003 Petition case when the Company [Allegheny Power] demonstrated that it was underrecovering its stranded costs from selected Tariff 39 customers.... Section 2808(b) is silent on the issue of extending rate caps. However, the May 11 Order approved the settlement offered by the parties in the [2005] Amended Joint Petition because the settlement offered extended rate caps to the affected customers and was judged to be in the public interest. At the risk of continued repetition, there was no underrecovery of Tariff 37 stranded costs and no reason for the commission [PUC] to act gratuitously in favor of Penn State [PSU], particularly when Penn State [PSU] failed to intervene. Any alleged discrimination suffered by the University [PSU] was attributable to its own inaction. (Emphasis added).

PUC Opinion adopting ALJ Recommended Decision at 28-29; R.R. at 1060a-1061a.

In conclusion, all parties were treated equally. First, under the Tariff 39 accounts Allegheny Power was granted a two year extension to recover its stranded costs and the customers, including PSU, received a two year rate cap extension. Second, under the Tariff 37 account Allegheny Power had already recouped its stranded costs and PSU received a lower interest rate concerning those costs which had resulted in substantial savings to PSU.

Therefore, this Court must conclude that the PUC properly found that all customers were treated fairy and equally and as a result there was no legal basis supporting PSU's allegation of discrimination concerning the extension of the generation rate cap under the Tariff 37 account.

V. Whether PSU Was Adequately Notified That The Rate Cap Extension Would Not Apply To University Park Under The Tariff 37 Account?

Last, PSU contends it was denied the opportunity to have the new generation rate cap extension apply to the Tariff 37 account at the 2003 Petition proceeding and as a result, it was denied due process.

Our Pennsylvania Superior Court has annunciated the criteria that must be established to satisfy due process:

To satisfy due process, notice of a class action settlement must be 'reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.' Mullane [v. Central Hanover Bank & Trust Co.], 339 U.S. 306, 314,70 S.Ct. 652, 94 L.Ed. 865 (1950)].... Although the notice need not be entirely comprehensive, the notice must not be misleading or materially incomplete. Weinberger v. Kendrick, 698 F.2d 61, 70 (2d Cir.1982). The notice must contain an adequate description of the proceedings written in objective, neutral terms that may be understood by the average absentee class member. In Re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088, 1104 (5th Cir.1977). The notice also must 'contain information that a reasonable person would consider to be material in making an informed, intelligent decision of whether to opt out or remain a member of the class and be bound by the final judgment.' Id. at 1105.

Wilkes v. Phoenix Home Life Mutual Insurance Company, 851 A.2d 204, 211 (2004), rev'd on other grounds, 587 Pa. 590, 902 A.2d 366 (2006).

Here, abundant evidence established that PSU was adequately notified of the 2003 Petition proceeding.

First, Allegheny Power provided PSU with adequate notice through its customer bill inserts. PSU received approximately 100 of the inserts as a customer under the Tariff 39 accounts. The bill insert explained that "the proposed settlement would have the following effect" on the generation rate cap of Allegheny Power customers: "Generation rate protection through generation rate caps, which was to end in 2008, will be extended for two years until the end of 2010 to all customers...."*fn20 PSU Exh. No. 1; R.R. at 283a.

And as the ALJ astutely noted:

Having reviewed the bill insert, I find it was sufficient to give notice to Penn State [PSU]: 1) that [the 1998] Restructuring Settlement was being amended; 2) that generation and distribution rate caps were going to be extended; 3) that the period for recovery of stranded costs was going to be extended; and 4) that the generation rate cap would increase in 2006, 2007, 2009 and 2010.... Had Penn State [PSU] representatives read through the notice, they would have realized the importance of the proposed amendment to the restructuring settlement (a very important document to which Penn State [PSU] was a signatory), the extension of the stranded cost recovery period and the extension of the rate caps which would produce a concurrent rise in the generation cap (almost annually). At this point, (had the notice been read) the University [PSU] would have known it could be impacted by the case. (Emphasis added and in original).

PUC Opinion adopting ALJ Recommended Decision at 37-38; R.R. at 1069a-1070a.

Second, Allegheny Power provided PSU with adequate notice when it published on September 25, 2004, the full text of the 2004 Petition in the Pennsylvania Bulletin. Allegheny Power Exh. No. GBB-4; R.R. at 596a, 602a. Appendix A listed the proposed rates that would apply to customers affected by the new capped generation rates for 2009 and 2010. Critically, no rates applicable to PSU under the Tariff 37 account were included in Appendix A. Appendix A made it clear that the extended capped generation rates would only apply to Tariff 39 accounts and not to the Tariff 37 account.

PSU's failure to remain diligent in reading the Pennsylvania Bulletin was its undoing. Again, as noted by the ALJ:

The Joint Petition as published in the Pa. Bull. provided an even clearer message.... Had Penn State [PSU] representatives read the... [Pa. Bull.] the title of the document [captioned 'West Penn Power Company Joint Petition for Settlement and For Modification of the 1998 Restructuring Settlement'] and the addition of the restructuring docket number would have alerted the University [PSU] that the restructuring settlement was being amended to change the rates and rate caps and that Appendix A contained a list of the proposed increases to the generation rate schedules for 2008, 2009 and 2010.... At this point, the University [PSU] should have known that its rights were at risk. Even though none of the Appendices (A, B, C and D) noted in the text of the Joint Petition were included in the Pa. Bull., Penn State [PSU] was on notice to find a copy of Appendix A to learn more. If it had done so, it would have learned that the proposed changes to the rate schedules only impacted its Tariff 39 accounts and would have known that it had an opportunity to be heard on the subject of Tariff 37. (Emphasis added).

PUC Opinion adopting ALJ Recommended Decision at 38; R.R. at 1070a.

Therefore, the PUC properly concluded that pursuant to the customer bill inserts and the Pennsylvania Bulletin PSU "had reasonable notice of the scope of the 2003 Petition case and that its Tariff 37 rights could be impacted... [and] all of its due process rights were properly protected, and it failed to use its opportunity to participate in that case due to its own inactions...." PUC Opinion adopting ALJ Recommended Decision at 36, 40; R.R. at 1068a, 1072a. Consequently, PSU was not denied due process.*fn21

Accordingly, this Court affirms.

ORDER

AND NOW, this 22nd day of January, 2010, the orders of the Pennsylvania Public Utility Commission, dated September 11, 2008, and December 9, 2008, are hereby affirmed.

BERNARD L. McGINLEY, Judge

DISSENTING AND CONCURRING OPINION BY JUDGE COHN JUBELIRER

Because I would conclude that The Pennsylvania State University (PSU) did not receive adequate notice that the 2004 Petition's rate cap extension would not apply to all of PSU's Tariff accounts, I respectfully dissent from Part V of the majority's opinion. In Part V, the majority concludes that the customer bill inserts sent by Allegheny Power and the publication of the 2004 Petition in the Pennsylvania Bulletin on September 25, 2004, provided PSU with adequate notice of the "Petition case and that its Tariff 37 rights could be impacted." The Pennsylvania State University v. Public Utility Commission, ___ A.2d ___ (Pa. Cmwlth., No. 18 C.D. 2009, filed January 22, 2010), slip op. at 22.

Adequate notice of a proceeding is required by the constitutional mandate for due process under both the United States and Pennsylvania Constitutions. Wilkes v. Phoenix Home Life Mutual Insurance Company, 851 A.2d 204, 210 (Pa. Super. 2004), rev'd on other grounds, 587 Pa. 590, 902 A.2d 366 (2006). Our Supreme Court has stated that "[n]notice is the most basic requirement of due process." Pennsylvania Coal Mining Association v. Insurance Department of Pennsylvania, 471 Pa. 437, 452, 370 A.2d 685, 692 (1977). To satisfy due process, notice must be "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Wilkes, 851 A.2d at 211 (quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). "Although the notice need not be entirely comprehensive, the notice must not be misleading or materially incomplete." Wilkes, 851 A.2d at 211. "The notice must contain an adequate description of the proceedings written in objective, neutral terms" and "must 'contain information that a reasonable person would consider to be material in making an informed, intelligent decision.'" Id. (quoting In re Nissan Motor Corporation Antitrust Litigation v. Nissan Motor Company, LTD, 552 F.2d 1088, 1104 (5th Cir. 1977)).

Contrary to the majority's holding, I would conclude that the customer bill inserts did not provide notice that was reasonably calculated, under all the circumstances, to apprise PSU that its Tariff 37 rates would be excluded from the rate cap extension. Allegheny Power included this bill insert in its September and October 2004 electricity bills notifying its customers, in relevant part, that:

Generation rate protection through generation rate caps, which was to end in 2008, will be extended for two years until the end of 2010 to all customers. The generation rate caps for all customers increases each year between 2006 and 2010 to specified levels.

(Allegheny Power Customer Bill Insert, Reproduced Record (R.R.) at 286a (emphasis added).) Although the notice was technically accurate that it applied to all customers even if the Tariff 37 rates were excluded (because PSU has Tariff 39 accounts), I would conclude that the bill inserts were misleading as to what rates would be subject to the rate cape extension. Like the Tariff 39 accounts, PSU's Tariff 37 account was subject to "[g]eneration rate protection through generation rate caps, which was to end in 2008." (Allegheny Power Customer Bill Insert, R.R. at 286a.) This notice does not differentiate between rates or tariffs and expressly states that the generation rate protection that would have ended in 2008, like the rate cap on PSU's Tariff 37 account, was being extended for two years for all customers. Given this very broad language, I would conclude there was no reason for PSU to inquire further into whether the rate caps on its Tariff 37 account, which were to expire in 2008, were included in the rate cap extension that applied to those generation rate caps ending in 2008.

Furthermore, I disagree with the majority that the text of the 2004 Petition, published in the Pennsylvania Bulletin on September 25, 2004, 34 Pa. B. 5326, provided adequate notice that PSU's Tariff 37 account was excluded from the 2004 Petition rate cap extension. The text of the 2004 Petition offers no indication as to which tariffs would be affected; rather, the 2004 Petition broadly states: "The period of the generation rate cap shall be extended from the end of 2008 through 2009 and 2010." 34 Pa. B. at 5326. As noted above, PSU's Tariff 37 rate cap, like the Tariff 39 rate cap, was scheduled to end in 2008. Appendix A, which was referenced in the text of the Pennsylvania Bulletin publication of the 2004 Petition and relied upon by the majority as support for its conclusion that PSU received adequate notice, was not published in the Pennsylvania Bulletin. However, a review of Appendix A reveals that, although it offers a detailed list of rate schedules, it makes no reference to which tariff accounts these rate schedules fall within.

I would, therefore, conclude that these notices do not contain an adequate description of the 2004 Petition written in objective, neutral terms that contain information that a reasonable person would consider to be material in making an informed and intelligent decision. Accordingly, I dissent from Part V and concur with the remainder of the majority opinion.

RENÉE COHN JUBELIRER, Judge


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