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Philadelphia Gas Works v. Pennsylvania Public Utility Commission

Commonwealth Court of Pennsylvania

December 9, 2019

Philadelphia Gas Works, Petitioner
Pennsylvania Public Utility Commission, Respondent

          ARGUED: November 12, 2019




         Philadelphia Gas Works (PGW) petitions for review from three orders of the Pennsylvania Public Utility Commission (Commission): a December 8, 2016 final order; a May 18, 2018 order denying reconsideration of the December 8, 2016 order; and an August 23, 2018 order granting in part and denying in part reconsideration of the May 18, 2018 order. The Commission concluded that once liens securing payment of delinquent gas bills are docketed against real property in the Philadelphia County Court of Common Pleas (County Court), the Commission no longer has jurisdiction over rate issues related to those bills. Based on that conclusion, the Commission reasoned that the late fees of 1.5% per month charged by PGW, although authorized as rates under its Commission tariff, are no longer applicable to unpaid gas bills once liens are docketed relating to those bills. As a result, the Commission ordered refunds of years of late fees on charges that were subject to docketed liens, imposed financial penalties on PGW for charging those late fees, and ordered PGW to reorganize its billing system.[1] After thorough review, we reverse.

         I. Background

         PGW is owned by the City of Philadelphia (City). PGW functions as a public utility providing natural gas to customers in the City. Pursuant to the Commission's applicable regulations and PGW's tariff approved by the Commission, PGW charges a late fee of 1.5% per month on all overdue gas bills. PGW charges this late fee regardless of whether the City has docketed a lien in the County Court in relation to an unpaid balance. Only if a lien balance is reduced to a judgment do late fees stop accruing on that balance.[2]

         Colonial Garden Realty Co., L.P. (Colonial) and Simon Garden Realty Co., L.P. (Simon), along with their mutual property management company, SBG Management Services, Inc. (collectively, Owners) have intervened in this appeal.[3] Colonial and Simon are owners of real properties in the City improved with apartment complexes. Their properties receive gas service from PGW.

         Owners raised several billing disputes with PGW in complaints before the Commission. Relevant here, Owners disputed PGW's continued accrual of late fees on docketed liens. Viewing a docketed lien as the equivalent of a final judgment, the Commission concluded it no longer had jurisdiction to determine the amount of the debt once a lien was filed. The Commission further reasoned that once it no longer had jurisdiction, its approved tariff no longer applied, and PGW could not continue charging the monthly late fees authorized by the tariff. Instead, the Commission determined only statutory interest could be added to the docketed lien amount going forward.[4] Based on these conclusions, the Commission ordered PGW to refund several years of late fees charged on docketed lien amounts. Although it acknowledged the issue of adding late fees to docketed lien amounts was one of first impression, the Commission also imposed a financial penalty on PGW for having charged those fees. Further, the Commission ordered PGW to undertake what would amount to a complete reorganization of its billing operations. The Commission directed PGW to stop adding late fees to arrearages subject to docketed liens and to stop reflecting those arrearages on subsequent gas bills. The Commission ordered PGW to complete its billing reorganization within 90 days of the date of the Commission's May 18, 2018 order.

         This petition for review by PGW followed.

         II. Issues

         On appeal, [5] PGW presents five arguments, which we paraphrase as follows:

         1. The Commission misinterpreted applicable statutory directives and case law in holding that once a customer's debt becomes subject to a docketed municipal lien, the Commission loses jurisdiction over the debt and PGW may not assess further late payment charges on the past due amounts consistent with its Commission-approved tariff.

         2. The Commission violated PGW's constitutional due process rights by announcing, applying, and enforcing a new legal interpretation against PGW without prior notice.

         3. The Commission's monetary civil penalty imposed against PGW was not supported by substantial evidence, and its imposition constituted arbitrary and ...

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