Sunrise Energy, LLC v. FirstEnergy Corp. and West Penn Power Company

148 A.3d 894, 2016 Pa. Commw. LEXIS 435, 2016 WL 5956039
CourtCommonwealth Court of Pennsylvania
DecidedOctober 14, 2016
Docket1282 C.D. 2015
StatusPublished
Cited by20 cases

This text of 148 A.3d 894 (Sunrise Energy, LLC v. FirstEnergy Corp. and West Penn Power Company) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sunrise Energy, LLC v. FirstEnergy Corp. and West Penn Power Company, 148 A.3d 894, 2016 Pa. Commw. LEXIS 435, 2016 WL 5956039 (Pa. Ct. App. 2016).

Opinions

OPINION BY

PRESIDENT JUDGE LEAVITT

FirstEnergy Corporation and West Penn Power1 (collectively, West Penn) appeal an order of the Washington County Court of Common Pleas (trial court) overruling their preliminary objections to a complaint filed by Sunrise Energy, LLC (Sunrise Energy). Sunrise Energy, inter alia, seeks declaratory relief and damages for breach of contract. West Penn filed a motion to dismiss asserting that the matter should be transferred to the Pennsylvania Public Utility Commission (PUC) because the dispute requires the construction of the Alternative Energy Portfolio Standards Act (Alternative Energy Act).2 The trial court concluded, however, that a court of common pleas was competent to construe the terms of the Alternative Energy Act. Because the legislature did not authorize the PUC, or any other state agency with responsibilities in the area of alternative energy, to adjudicate a dispute arising from the Alternative Energy Act, we affirm the order of the trial court.

Background

Sunrise Energy operates a 950 kilowatt solar power facility in Washington County, Pennsylvania; West Penn is an electric distribution company.3 Amended Complaint, ¶ 8. On October 21, 2010, Sunrise Energy and West Penn entered into an “Electric Service Agreement” that designated Sunrise Energy as the “customer.” [897]*897Amended Complaint, Exhibit 2; Reproduced Record (R.R_) at 27a-29a. In accordance with this contract, West Penn agreed to purchase the excess electricity generated by Sunrise Energy. Amended Complaint, Exhibit 6; R.R. 40a. Sunrise Energy measures the electricity it generates and the electricity it consumes through the use of a bidirectional electricity meter. This measurement is known as “net metering.”

As a condition to its agreement to purchase electricity from Sunrise Energy, West Penn required Sunrise Energy to pay for certain infrastructure improvements. Sunrise Energy did so in two payments: the first payment was in the amount of $29,804.40 and the second was in the amount of $39,147.66. Amended Complaint, ¶ 30. Both parties to the Electric Service Agreement believed that Sunrise Energy was á customer-generator within the meaning of the Alternative Energy Act and, as such, eligible to sell the electricity it generated in excess of what it consumed. Amended Complaint, ¶ 97 and Exhibit 2; R.R. 27a-32a.

On May 22, 2014, West Penn terminated its Electric Service Agreement with Sunrise Energy for the stated reason that Sunrise Energy did not qualify for net metering. Amended Complaint, ¶ 38. Stated otherwise, Sunrise Energy lacked a sufficient “native retail load.” Amended Complaint, ¶ 41. West Penn asserted that Sunrise Energy was not a consumer-generator but, in actuality, an electric generation supplier.4 West Penn notified Sunrise Energy that it intended to compensate Sunrise Energy at a rate other than that set forth in its Net Energy Metering Rider and to recover its prior overpayments. Amended Complaint, ¶ 43.

On February 20, 2014, two months before West Penn terminated its Electric Service Agreement with Sunrise Energy, the PUC published a proposed amendment to its net metering regulation in the Pennsylvania Bulletin; The amendment proposed to require customer-generators to maintain “an independent retail load” in addition to meeting the other requirements for customer-generators set forth in the Alternative Energy Act. The PUC ex[898]*898plained its proposed amendment as follows:

Currently, Section 75.13(a) requires EDCs [Electric Distribution Companies] to offer net metering to customer-generators and provides that EGSs [Electric Generation Suppliers] may offer net metering to customer-generators under the terms and conditions set forth in agreements between the EGS and the customer-generator taking service from the EGS. The current regulation is silent as to which customer-generators can net meter, other than that they must be using Tier I or Tier II alternative energy sources.
We have added a provision for DSPs [Default Service Provider] and have moved the EGS net metering role to subsection 75.13(b) and re-lettered the remaining subsections. In our proposed new section (a), we require EDCs and DSPs to offer net metering to customer-generators that generate electricity on the customer-generator’s side of the meter using Tier I or Tier II alternative energy sources, on a first come, first served basis, provided they meet certain conditions.
The first condition requires the customer-generator to have load, independent of the alternative energy system, behind the meter and point of interconnection of the alternative energy system. To be independent, the electric load must have a purpose other than to support the operation, maintenance or administration of the alternative energy system. This provision makes explicit what was previously implied in the [Alternative Energy] Act and the regulations.
This requirement is implied in the [Alternative Energy] Act definition of net metering where it states that net metering is the means of measuring the difference between the electricity supplied by an electric utility and the electricity generated by the 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. If there is no independent load behind the meter and point of interconnection for the alternative energy system, by definition, the customer-generator has no requirement for electricity to offset. In addition, this requirement is implied in the current regulations, where it states that EDCs shall offer net metering to customer-generators that generate electricity on the customer-generator’s side of the meter. Again, there would be no need for a customer’s electric meter if there was no independent demand for electricity. Furthermore, we note that both alternative and traditional electric generation facilities require electric service to start, operate and maintain those facilities. Thus, to preclude utilities, such as merchant generators, from qualifying for net metering, we require load independent of the generation facility. To do otherwise would be contrary to the definition of a customer-generator that only includes nonutility owners and operators of alternative energy systems.

44 Pa. B. 4181-4182 (2014) (emphasis added); R.R. 71a-72a. On May 19, 2016, the Independent Regulatory Review Commission disapproved the PUC’s proposed regulation for the stated reason that it exceeded the PUC’s authority under the Alternative Energy Act.5 46 Pa. B. 2919 (2016).

[899]*899On August 20, 2014, Sunrise Energy-initiated an action against West Penn for refusing to pay for the. electricity it received from Sunrise Energy and for terminating the Electric Service Agreement one year before the expiration of the five-year term ■ of the agreement. In its amended complaint, Sunrise Energy asserted the following five counts: Declaratory Judgment (Count I), Breach of Contract (Count II), Quasi-Contract (Count III), Promissory Estoppel (Count IV), and Direct Cause of Action for Alternative Energy Act Violations (Count V).

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Cite This Page — Counsel Stack

Bluebook (online)
148 A.3d 894, 2016 Pa. Commw. LEXIS 435, 2016 WL 5956039, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunrise-energy-llc-v-firstenergy-corp-and-west-penn-power-company-pacommwct-2016.