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Sunrise Energy, LLC v. Ppl Corp.

United States District Court, W.D. Pennsylvania

March 27, 2015




Sunrise Energy, LLC ("plaintiff") commenced this action against PPL Corporation ("PPL") and PPL Electric Utilities Corporation ("PPLEU") (collectively "defendants") seeking redress for defendants' alleged violation of constitutional rights in denying or failing to approve plaintiff's applications made pursuant to Pennsylvania's Alternative Energy Portfolio Standards Act, 73 Pa. Cons. Stat. §§ 1648.1-1648.8 (the "Act"). Plaintiff asserts claims under the Civil Rights Act of 1871, as amended, 42 U.S.C. § 1983, for deprivation of its substantive due process and equal protection rights in violation of the Fourteenth Amendment and state law claims for tortious interference, unfair competition, direct violation of the Act and declaratory judgment. Presently before the court is defendants' motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the motion will be granted.

It is well-settled that in reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) "[t]he applicable standard of review requires the court to accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the non-moving party." Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989). Under the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), dismissal of a complaint pursuant to Rule 12(b)(6) is proper only where the averments of the complaint plausibly fail to raise directly or inferentially the material elements necessary to obtain relief under a viable legal theory of recovery. Id. at 555-56. In other words, the allegations of the complaint must be grounded in enough of a factual basis to move the claim from the realm of mere possibility to one that shows entitlement by presenting "a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. In contrast, pleading facts that only offer "labels or conclusions' or a formulaic recitation of the elements of a cause of action will not do, '" nor will advancing only factual allegations that are merely consistent with a defendant's liability. Id. (quoting Twombly, 550 U.S. at 555). Similarly, tendering only "naked assertions" that are devoid of "further factual enhancement" falls short of presenting sufficient factual content to permit an inference that what has been presented is more than a mere possibility of misconduct. Id. at 678; see also Twombly, 550 U.S. at 563 n.8 (A complaint states a claim where its factual averments sufficiently raise a "reasonably founded hope that the [discovery] process will reveal relevant evidence' to support the claim.") (quoting Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 347 (2005) (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 741 (1975))); accord Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir. 1997) (a court need not credit "bald assertions" or "legal conclusions" in assessing a motion to dismiss) (citing with approval Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 1357 (2d ed.1997) ("courts, when examining 12(b)(6) motions, have rejected legal conclusions, ' unsupported conclusions, ' unwarranted inferences, ' unwarranted deductions, ' footless conclusions of law, ' or sweeping legal conclusions cast in the form of factual allegations.'").

This is not to be understood as imposing a probability standard at the pleading stage. Iqbal, 556 U.S. at 678 ("The plausibility standard is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully."); Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (same). Instead, "[t]he Supreme Court's Twombly formulation of the pleading standard can be summed up thus: stating a claim requires a complaint with enough factual matter (taken as true) to suggest the required element.... [and provides] enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips, 515 F.3d at 234; see also Wilkerson v. New Media Technology Charter School Inc., 522 F.3d 315, 321 (3d Cir. 2008) ("The complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.'") (quoting Phillips, 515 F.3d at 234) (internal citations omitted). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 563.

The record read in the light most favorable to plaintiff establishes the background set forth below. Sunrise Energy LLC "was founded with the mission of developing and operating solar power facilities that serve as customer-generators under the Act." (Complaint at ¶ 24). According to its preamble, the Act was intended to provide "for the sale of electric energy generated from renewable and environmentally beneficial sources, for the acquisition of electric energy generated from renewable and environmentally beneficial sources by electric distribution and supply companies and for the powers and duties of the Pennsylvania Public Utility Commission" (the "PUC"). 2004 Pa. Legis. Serv. Act 2004-213 (S.B. 1030). In pursuit of these goals, the Act implemented certain milestones for the minimum utilization of alternative energy sources by electric distribution companies ("EDCs") and electric generation suppliers. 73 Pa. Cons. Stat § 1648.3.

Relevant to the instant matter, the Act provides for "net metering, " which is defined as "[t]he means of measuring the difference between the electricity supplied by an electric utility and the electricity generated by a customer-generator when any portion of the electricity generated by the alternative energy generating system is used to offset part or all of the customer-generator's requirements for electricity."[1] 73 Pa. Cons. Stat. § 1648.2. The Act defines a "customer-generator" primarily as "[a] nonutility owner or operator of a net metered distributed generation system." 73 Pa. Cons. Stat. § 1648.2.

In short, net metering permits a customer-generator to sell any cumulative yearly excess of energy generated by an alternative energy system back to its EDC, receiving "full retail value for all energy produced." 73 Pa. Cons. Stat. § 1648.5. The PUC was tasked with promulgating the rules that would govern this practice. Id.

After adopting a final rulemaking order on June 22, 2006, the PUC's first set of regulations took effect on December 15, 2006. 36 Pa. Bull. 7574. After amendment, the present form of these regulations became effective on November 29, 2008. 52 Pa. Code §§ 75.1-75.70 (the "Regulations").

On February 20, 2014, the PUC issued a proposed rulemaking order recommending extensive revisions to the regulations governing net metering. See 44 Pa. Bull. 4179. These changes have yet to take effect. See 44 Pa. Bull. 6730. The proposed changes include requirements that (1) customer-generators have a need for electricity beyond what is needed to operate the alternative energy system (a "non-generational load") and (2) alternative energy systems be sized to generate no more than 110 percent of the customer-generator's annual electric consumption. 44 Pa. Bull. 4179. These changes would not affect the general process under which a customer wishing to net meter must seek approval from its EDC to do so. 52 Pa. Code § 75.32.

Plaintiff has operated one 950 kilowatt solar power facility utilizing the Act's current net metering provisions since 2010 in the service territory of EDC West Penn Power. (Complaint at ¶ 26). Desiring to construct an additional 1.95 megawatt facility in 2014, plaintiff investigated three potential sites. PPLEU was the EDC for each of these sites. (Id., at ¶¶ 29, 32, 34). These properties were located in Beavertown, East Berwick, and Beach Haven, Pennsylvania. (Id., at ¶ 30).

Plaintiff submitted its first application for net metering to PPLEU for the Beavertown property on March 11, 2014. (Doc. No. 1-2, at p. 3). PPLEU denied this application on March 25, 2014, explaining that the proposal did not meet the intent of the Act due to the absence of a "non-generational load." (Doc. No. 1-5, at p. 1). Plaintiff then filed its second and third applications on March 30 and April 16, 2014, for the East Berwick and Beach Haven sites. (Doc. Nos. 1-3, at p. 3; 1-4, at p. 3). PPLEU did not deny these applications, but instead responded by issuing separate letters for each of plaintiff's three applications. These letters explained that "substantial uncertainty regarding the requirements to qualify as a customer-generator'" made it unclear whether each application qualified for net metering.[2] (Doc. Nos. 1-6, 1-7, 1-8). These letters further advised that PPLEU intended to file a pleading with the PUC seeking determinations on plaintiff's applications. (Id.). Plaintiff has been unable to move forward with any of its proposed projects, as each is contingent upon receiving approval to net meter. (Complaint at ¶¶ 33, 45).

PPLEU filed a petition with the PUC on May 9, 2014, seeking a declaratory order to resolve its uncertainty as to the ability of plaintiff and another similar applicant to take part in net metering. (Doc. No. 13-4, at p. 2). Four days later, plaintiff filed the instant action. (Doc. No. 1).

Plaintiff asserts five claims in its Complaint. At Count I, plaintiff advances a § 1983 claim, alleging that defendants, as state actors, violated its Fourteenth Amendment substantive due process and equal protection rights by denying its net metering applications and treating other customer-generators more favorably. (Id., at ¶¶ 46-73). At Count II, plaintiff seeks a declaratory judgment stating that customer-generators are not required to have a non-generational load in order to net meter under the Act. (Id., at ¶¶ 74-81). Count III asserts a claim for "tortious interference with existing and potential contracts, " on the ground that defendants' denials of plaintiff's applications have interfered with a contract guaranteed by the Act. (Id., at ¶¶ 82-93). Count IV purports to bring a direct cause of action under the Act premised on plaintiff having met all of the Act's requirements for net metering, and yet being excluded from ...

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