D.N. Hommrich v. Com. of PA, PA PUC

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

David N. Hommrich, :

:

Petitioner :

:

v. : No. 463 M.D. 2022

: Argued: April 9, 2025

Commonwealth of Pennsylvania, :

Pennsylvania Public Utility :

Commission, :

:

Respondent :

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge

HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE ANNE E. COVEY, Judge

HONORABLE MICHAEL H. WOJCIK, Judge

HONORABLE LORI A. DUMAS, Judge

HONORABLE STACY WALLACE, Judge

HONORABLE MATTHEW S. WOLF, Judge

OPINION BY JUDGE WOJCIK FILED: August 13, 2025

Before this Court is an Application for Partial Summary Relief (ASR)

filed by Petitioner David N. Hommrich (Hommrich) and Intervenors Kriebel

Minerals, Inc. (Kreibel) and ERD Energy, LLC (ERD) (collectively, Petitioners)

seeking declarations that certain regulations promulgated by the Pennsylvania Public

Utility Commission (PUC) on alternative energy (Regulations)1 are inconsistent with

the Alternative Energy Portfolio Standards Act (AEPS Act)2 and, therefore, are

invalid and unenforceable. After careful review, we deny the ASR.

1

The Regulations are codified in Title 52, Chapter 75 of the Pennsylvania Code,

52 Pa. Code §§75.1-75.72.

2

Act of November 30, 2004, P.L. 1672, as amended, 73 P.S. §§1648.1-1648.8.

I. Background

Hommrich, who is the sole owner of a solar power project located in

Mercer County, Pennsylvania, and frequent petitioner in alternative energy

litigation, initiated this action by filing, pro se, a petition for review (PFR) in the

nature of a complaint for declaratory relief in this Court’s original jurisdiction, which

he later amended (Amended PFR).3 Kreibel, a natural gas company operating in the

Commonwealth of Pennsylvania, and ERD, its equipment supplier (together,

Intervenors), which are owned and operated by the same individuals, were permitted

to intervene. Intervenors have adopted Hommrich’s Amended PFR in its entirety

with an additional prayer for relief. See Intervenors’ Application for Intervention,

Request for Relief ¶78.

The gravamen of the Amended PFR challenges Regulations pertaining

to the interconnection of “alternative energy systems”4 and requires statutory

interpretation of the AEPS Act. Interconnection is the mechanism through which a

source of generation connects and delivers power to an electrical distribution system.

See Amended PFR, ¶7; Answer to Amended PFR, ¶7. Petitioners are approved

“customer-generators” as defined under Section 2 of the AEPS Act5 that own and/or

3

In response to the PFR, the PUC filed preliminary objections (POs), which were mooted

by the amendment. PUC filed new POs to the Amended PFR, which this Court overruled by order

and opinion dated March 1, 2024. We directed the PUC to file an answer to the Amended PFR.

4

An “alternative energy system” is defined as “[a] facility or energy system that uses a

form of alternative energy source to generate electricity and delivers the electricity it generates to

the distribution system of an electric distribution company or to the transmission system operated

by a regional transmission organization.” Section 2 of the AEPS Act, 73 P.S. §1648.2.

5

A “customer-generator” is defined as:

A nonutility owner or operator of a net metered distributed

generation system with a nameplate capacity of not greater than 50

(Footnote continued on next page…)

2

operate net metered6 distributed generation systems, which generate electricity from

alternative energy sources.7 Customer-generators are customers of electric

distribution companies (EDCs) and generate electricity that flows into the EDCs’

kilowatts if installed at a residential service or not larger than 3,000

kilowatts at other customer service locations, except for customers

whose systems are above three megawatts and up to five megawatts

who make their systems available to operate in parallel with the

electric utility during grid emergencies as defined by the regional

transmission organization or where a microgrid is in place for the

primary or secondary purpose of maintaining critical infrastructure,

such as homeland security assignments, emergency services

facilities, hospitals, traffic signals, wastewater treatment plants or

telecommunications facilities, provided that technical rules for

operating generators interconnected with facilities of an electric

distribution company, electric cooperative or municipal electric

system have been promulgated by the Institute of Electrical and

Electronic Engineers and the [PUC].

73 P.S. §1648.2.

6

“Net metering” refers to:

The 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. Virtual

meter aggregation on properties owned or leased and operated by a

customer-generator and located within two miles of the boundaries

of the customer-generator’s property and within a single electric

distribution company’s service territory shall be eligible for net

metering.

Section 2 of the AEPS Act, 73 P.S. §1648.2.

7

The term “alternative energy sources” includes energy sourced from solar; wind;

hydropower; geothermal; biomass; biologically derived methane gas; fuel cells; waste coal; coal

mine methane; energy efficiency; and distributed generation systems. Section 2 of the AEPS Act,

73 P.S. §1648.2.

3

distribution systems. The AEPS Act provides for the retail compensation for any

excess electricity generated by any AEPS-qualified generating system owned or

operated by a customer-generator. To deliver the energy into the EDCs’ distribution

systems, customer-generators must first interconnect with the EDCs’ distribution

systems. Absent an interconnection, customer-generators’ alternative energy

systems cannot deliver and sell excess energy to an EDC.

According to Petitioners, the Regulations have allowed EDCs to cause

customer-generators, like Petitioners, to bear all costs involved in the planning,

design, development, and implementation of distribution system improvements,

including interconnection, that enable EDCs to purchase excess energy generated

from alternative energy sources. Petitioners assert that the AEPS Act does not

obligate customer-generators to pay for these costs, but rather it requires them to be

paid by ratepayers as a cost of generation supply. Petitioners claim that their

business interests are adversely impacted by the Regulations. Petitioners maintain

that the challenged Regulations are invalid because they are contrary to the AEPS

Act and precedent limiting the PUC’s authority in these matters. Petitioners seek

declarations interpreting the AEPS Act and invalidating and/or limiting the

Regulations. See Amended PFR, Requests for Relief A-I; Intervenors’ Application

for Intervention, Request for Relief ¶78(a).

PUC filed an answer to the Amended PFR denying material allegations.

On July 19, 2024, Petitioners filed the ASR and accompanying Memorandum of

Law. The PUC filed an answer and brief in response.

4

Petitioners seek partial summary relief narrowed to the following six

requests:8

• Declare that excess energy purchased from customer-generators by

EDCs pursuant to Section 5 of the AEPS Act, 73 P.S. §1648.5,

constitutes the purchase of a “resource” as that term is described in

Section 3(a)(3)(ii) of the AEPS Act, 73 P.S. § 1648.3(a)(3)(ii). See

Amended PFR, Request for Relief A.

• Declare that the costs to interconnect to EDCs’ distribution systems,

which enables EDCs to purchase electricity generated from alternative

energy sources, are “direct or indirect resource costs” subject to the

mandatory cost recovery mechanism in Section 3(a)(3)(ii) of the AEPS

Act, 73 P.S. §1648.3(a)(3)(ii). As such, those costs must be recovered

from ratepayers on a full and current basis pursuant to an automatic

energy adjustment clause under Section 1307 of the Public Utility

Code, 66 Pa. C.S. §1307, as a cost of generation supply under Section

2807 of the Public Utility Code, 66 Pa. C.S. §2807. See Amended PFR,

Request for Relief B.

• Declare that the AEPS Act does not give the PUC a legislative grant of

authority to promulgate regulations for cost recovery pursuant to

Section 3(a)(3)(ii) of the AEPS Act, 73 P.S. §1648.3(a)(3)(ii), and that

Section 75.67 of the Regulations, 52 Pa. Code §75.67, governing

“alternative energy cost-recovery,” impermissibly alters the clear

language of the AEPS Act and is, therefore, invalid and unenforceable.

See Amended PFR, Request for Relief C.

8

Petitioners have abandoned Requests for Relief E through G in their Amended PFR. See

Petitioners’ ASR, at 2 n.1. They have tabled Request for Relief H, seeking a declaration that

[c]ustomer-generators may utilize third-party contractors, under

confidentiality commitments with an EDC, to provide both impact

studies and design and construction services in order to facilitate a

timely and cost-effective interconnection, so long as the cost or

timeline of the third-party option results in a lower cost or a shorter

timeline for the customer-generator[,]

because additional factual development is necessary and summary relief is not appropriate at this

time. Id.

5

• Extend these holdings by declaring that any other PUC Regulations

allowing EDCs to charge customer-generators for distribution system

improvement costs associated with the interconnection of a renewable

energy systems are invalid and unenforceable as contrary to the AEPS

Act. See Amended PFR, Request for Relief D.

• Declare as invalid the current PUC practice of allowing EDCs to

impose costs on customer-generators in the form of a Contribution in

Aid of Construction (CIAC), a Public Utility Code concept wholly

absent from the AEPS Act, and another example of the PUC improperly

allowing the imposition of costs on customer-generators. See Amended

PFR, Request for Relief I.

• Declare that Sections 75.13(d) and (e) of the Regulations, 52 Pa. Code

§75.13(d) and (e), are unauthorized by and contrary to the AEPS Act,

and therefore invalid and unenforceable. See Intervenors’ Application

for Intervention, Request for Relief ¶78(a).

ASR at 1-2.

II. Discussion

A. Applicable Legal Standards

In ruling on ASRs, this Court has explained:

An [ASR] may be granted if a party’s right to judgment is

clear, and no material issues of fact are in dispute. When

ruling on an [ASR], we must view the evidence of record

in the light most favorable to the non-moving party and

enter judgment only if there is no genuine issue as to any

material facts and the right to judgment is clear as a matter

of law.

Gregory v. Pennsylvania State Police, 185 A.3d 1202, 1205 (Pa. Cmwlth. 2018)

(citations and quotations omitted).

When a regulation is challenged, we consider:

It is axiomatic that all regulations “must be consistent with

the statute under which they were promulgated.” Slippery

Rock Area School District v. Unemployment

Compensation Board of Review, 983 A.2d 1231, 1241

([Pa.] 2009). “A statute is the law and trumps an

6

administrative agency’s regulations.” [Commonwealth v.]

Kerstetter, 62 A.3d [1065,] 1069 [(Pa. Cmwlth. 2013),

aff’d, 94 A.3d 991 (Pa. 2014)]. Similarly, “[w]here there

is a conflict between the statute and a regulation

purporting to implement the provisions of that statute, the

regulation must give way.” Commonwealth v. Colonial

Nissan, Inc., 691 A.2d 1005, 1009 (Pa. Cmwlth. 1997).

“[W]hen an agency adopts a regulation pursuant to its

legislative rule-making power, as opposed to its

interpretive rule-making power, it is valid and binding

upon courts as a statute so long as it is (a) adopted within

the agency’s granted power, (b) issued pursuant to proper

procedure, and (c) reasonable.” Tire Jockey Service, Inc.

v. Department of Environmental Protection, 915 A.2d

1165, 1186 ([Pa.] 2007). When analyzing whether a

regulation is adopted within an agency’s granted power, a

court should consider, inter alia, whether the regulation is

“consistent with the enabling statute” because “clearly, the

[General Assembly] would not authorize agencies to adopt

regulations inconsistent with the enabling statutes.”

Marcellus Shale Coalition v. Department of

Environmental Protection, 216 A.3d 448, 459 . . . (Pa.

Cmwlth. 2019) (internal quotation marks omitted). Thus,

when “a regulation presents ‘an actual conflict with the

statute,’ we cannot reasonably understand the regulation

to be within the agency’s ambit of authority, and the

statute must prevail.” Id. (quoting AMP Inc. v.

Commonwealth, 814 A.2d 782, 786 (Pa. Cmwlth. 2002),

aff’d, 852 A.2d 1161 ([Pa.] 2004)).

Victory Bank v. Commonwealth, 219 A.3d 1236, 1242 (Pa. Cmwlth. 2019), aff’d,

240 A.3d 95 (Pa. 2020) (emphasis added; footnote omitted).

Similar to claims made in Hommrich v. Pennsylvania Public Utility

Commission, 231 A.3d 1027, 1033 (Pa. Cmwlth. 2020) (Hommrich I), Petitioners’

arguments here largely “center[] over whether the PUC has the authority to enact the

challenged [R]egulations and whether those [R]egulations contradict the AEPS

Act.” This calls for a straightforward analysis, as “[s]uch issues may be resolved

7

based on comparison of statutory interpretation and regulatory provisions as a matter

of law.” Id. (citing Marcellus Shale Coalition v. Department of Environmental

Protection, 193 A.3d 447, 460 (Pa. Cmwlth. 2018), appeal quashed, 198 A.3d 330

(Pa. 2018)).

“‘To determine whether a regulation is adopted within an agency’s

granted power, we look for statutory language authorizing the agency to promulgate

the legislative rule and examine that language to determine whether the rule falls

within the grant of authority.’” Hommrich I, 231 A.3d at 1034 (quoting Marcellus

Shale Coalition v. Department of Environmental Protection, 216 A.3d 448, 459 (Pa.

Cmwlth.), appeals quashed, 223 A.3d 655 (Pa. 2019)). “We consider ‘the purpose

of the statute and its reasonable effect’ and whether ‘the regulation is consistent with

the enabling statute.’” Id. (quoting Marcellus Shale, 216 A.3d at 459). The General

Assembly would not authorize an agency “to adopt binding regulations inconsistent

with the applicable enabling statutes.” Id. (citation and quotation omitted). “When

. . . a regulation presents an actual conflict with the statute, we cannot reasonably

understand the regulation to be within the agency’s ambit of authority, and the statute

must prevail.” Id. (citation and quotation omitted). Administrative agencies do not

have the power to make laws, only to prescribe rules and regulations to carry out the

law. Id. at 1035.

In some instances, the General Assembly confers broad regulatory

power upon an agency. Hommrich I, 231 A.3d at 1035. “If the statute makes a clear

grant of authority, then neither a court nor the agency can disregard the clearly

expressed intent of the General Assembly.” Marcellus Shale Coalition v.

Department of Environmental Protection, 292 A.3d 921, 936 (Pa. 2023). Although

the General Assembly has conferred broad powers to agencies in other chapters

8

relating to alternative energy, as this Court has previously recognized, the powers

“conferred to the PUC under the AEPS Act are much narrower.” Hommrich I,

231 A.3d at 1035.

The statutory language of the AEPS Act is the starting point. When

examining statutory language, we follow the rules of statutory construction in the

Statutory Construction Act of 1972 (Statutory Construction Act), 1 Pa. C.S. §1501-

1991. As our Supreme Court has recently explained:

[Section 1921(a) of] [t]he Statutory Construction Act

provides that the object of all statutory interpretation “is to

ascertain and effectuate the intention of the General

Assembly.” 1 Pa. C.S. §1921(a). Generally, the plain

language of the statute provides the best indication of

legislative intent.” Miller v. [County] of Centre, []173

A.3d 1162, 1168 ([Pa.] 2017). If the statutory language is

clear and unambiguous in setting forth the intent of the

General Assembly, then “we cannot disregard the letter of

the statute under the pretext of pursuing its spirit.”

Fletcher v. [Pennsylvania Property & Casualty Insurance

Guarantee Association], []985 A.2d 678, 684 ([Pa.] 2009)

(citing 1 Pa. C.S. §1921(b)). In this vein, “we should not

insert words into [a statute] that are plainly not there.”

Frazier v. Workers’ [Compensation] Appeal [Board]

(Bayada Nurses, Inc.), 616 Pa. 592, 52 A.3d 241, 245

(2012). When the statutory language is ambiguous,

however, we may ascertain the General Assembly’s intent

by considering the factors set forth in Section 1921(c) of

the Statutory Construction Act, 1 Pa. C.S. §1921(c), and

other rules of statutory construction. See [Pennsylvania

School Boards Association], Inc. v. [Public School

Employees Retirement Board], []863 A.2d 432, 436 ([Pa.]

2004) (observing that “other interpretative rules of

statutory construction are to be utilized only where the

statute at issue is ambiguous”). “We also presume that ‘the

General Assembly does not intend a result that is absurd,

impossible of execution or unreasonable,’ and that ‘the

General Assembly intends the entire statute to be effective

and certain.’” Berner v. Montour [Township] Zoning

9

Hearing [Board], []217 A.3d 238, 245 ([Pa.] 2019)

(quoting 1 Pa. C.S. §1922(1)-(2)).

Section 1921(b) of the Statutory Construction Act, which

provides that “when the words of a statute are clear and

free from all ambiguity, the letter of it is not to be

disregarded under the pretext of pursuing its spirit,” is

crucial to our analysis here. If the statute or rule . . . are not

ambiguous, then we cannot apply the presumptions set

forth in Section 1922 of the Statutory Construction Act.

“A statute is ambiguous when there are at least two

reasonable interpretations of the text under review.”

Warrantech Consumer [Products Services], Inc. v.

Reliance [Insurance] Co. in Liquidation, []96 A.3d 346,

354-55 ([Pa.] 2014). “This Court has consistently held that

. . . interpretive rules of statutory construction are to be

utilized only where the statute [or rule] at issue is

ambiguous.” [Pennsylvania School Board Association],

863 A.2d at 436.

Commonwealth v. Green, 291 A.3d 317, 327-28 (Pa. 2023).

Legislative rules that are properly enacted are presumed to be

reasonable, and reviewing courts will accord them a “particularly high measure of

deference.” Marcellus Shale, 292 A.3d at 927 (citation omitted). While this Court

may not substitute its own judgment for that of an agency, we will defer to a

regulation an agency has promulgated pursuant to its interpretative powers where

the regulation is reasonable and “genuinely tracks the meaning of the underlying

statute.” Id. at 929 (citation omitted); accord Tire Jockey, 915 A.2d at 1190. Indeed,

when “faced with interpreting statutory language,” we “afford great deference to the

interpretation rendered by the administrative agency overseeing the implementation

of such legislation.” Winslow–Quattlebaum v. Maryland Ins. Group, 752 A.2d 878,

881 (Pa. 2000). However, “no deference is due where an agency exceeds its legal

authority, or its interpretation is clearly erroneous.” Marcellus Shale, 292 A.3d at

929 (citations omitted). “While an agency’s interpretation of an ambiguous statute

10

it is charged with enforcing is entitled to deference, courts’ deference never comes

into play when the statute is clear.” Seeton v. Pennsylvania Game Commission, 937

A.2d 1028, 1037 (Pa. 2007). With these legal standards in mind, we address each

of Petitioners’ requests for relief.

B. Requests for Relief

Amended PFR, Requests for Relief A, B, and C

Petitioners’ first three requests focus on Section 3(a)(3)(ii) of the AEPS

Act, 73 P.S. §1648.3(a)(3)(ii), which dictates who pays, and how, for the costs

associated with the purchase of electricity generated from alternative energy sources.

Because these requests for relief are interrelated and interdependent, we address

them together.

Petitioners maintain that excess energy purchased from customer-

generators by EDCs pursuant to Section 5 of the AEPS Act, 73 P.S. §1648.5, are

“resource” purchases as described in Section 3(a)(3)(ii) of the AEPS Act,

73 P.S. §1648.3(a)(3)(ii), which include “the purchase of electricity generated from

alternative energy sources.” As resources, Petitioners advance that “any direct or

indirect costs” must be recovered as a cost of generation supply under Section

3(a)(3)(ii) of the AEPS Act. Costs incurred by EDCs – whether direct or indirect –

can only be recovered from ratepayers through the automatic energy adjustment

clause in Section 3(a)(3)(ii). Although the PUC may not agree with the General

Assembly’s decision to compensate customer-generators for excess energy at full

retail value and costs under the AEPS Act, that is how it operates and was intended

to operate. The PUC’s role is to implement the business model chosen by the

General Assembly to encourage growth and investment in renewable sources of

energy. Therefore, Petitioners ask this Court to declare that excess energy purchases

11

under Section 5 of the AEPS Act qualify as resource purchases under Section 3 of

the AEPS Act and, as such, constitute direct and indirect costs that must be recovered

on a full and current basis through an automatic energy adjustment clause under

Section 1307 of the Code, 66 Pa. C.S. §1307, as a cost of generation supply under

Section 2807 of the Code, 66 Pa. C.S. §2807.

If the Court agrees with the foregoing statutory analysis, Petitioners ask

this Court to also declare the Regulation at 52 Pa. Code §75.67, governing

“alternative energy cost-recovery,” invalid and unenforceable for two reasons. First,

this Regulation conflicts with Section 3 of the AEPS Act because it alters the

statutory language to make automatic adjustment clause recovery optional rather

than mandatory through the use of “may” instead of “shall.” This improperly allows

the imposition of interconnection costs on customer-generators rather than

ratepayers. Second, the AEPS Act does not grant the PUC a legislative grant of

authority to promulgate regulations for cost recovery pursuant to Section 3 of the

AEPS Act.

To begin, under Section 5 of the AEPS Act, EDCs are mandated to

purchase all excess energy from net-metered customer-generators. Specifically:

Excess generation from net-metered customer-generators

shall receive full retail value for all energy produced on

an annual basis. The [PUC] shall develop technical and

net metering interconnection rules for customer-

generators intending to operate renewable onsite

generators in parallel with the electric utility grid,

consistent with rules defined in other states within the

service region of the regional transmission organization

that manages the transmission system in any part of this

Commonwealth. The [PUC] shall convene a stakeholder

process to develop Statewide technical and net metering

rules for customer-generators. The [PUC] shall develop

12

these rules within nine months of the effective date of this

act.

73 P.S. §1648.5 (emphasis added). Excess generation, also known as surplus power,

occurs when a customer-generator produces more electricity than needed for all

excess energy produced. Id.; Hommrich I, 231 A.3d at 1034.

Section 3 of the AEPS Act, 73 P.S. §1648.3, governs the cost recovery

for the purchase of electric distribution by EDCs to comply with the AEPS Act.

Specifically, Section 3(a)(3) of the AEPS Act states:

(3) All costs for:

(i) the purchase of electricity generated from

alternative energy sources, including the costs of the

regional transmission organization, in excess of the

regional transmission organization real-time locational

marginal pricing, or its successor, at the delivery point of

the alternative energy source for the electrical production

of the alternative energy sources; and

(ii) payments for alternative energy credits

[(AECs)],

in both cases that are voluntarily acquired by an [EDC]

during the cost recovery period on behalf of its customers

shall be deferred as a regulatory asset by the [EDC] and

fully recovered, with a return on the unamortized balance,

pursuant to an automatic energy adjustment clause under

[Section 1307 of the Public Utility Code,] 66 Pa. C.S.

§1307 (relating to sliding scale of rates; adjustments) as a

cost of generation supply under [Section 2807 of the

Public Utility Code,] 66 Pa. C.S. §2807 (relating to duties

of [EDCs]) in the first year after the expiration of its cost-

recovery period. After the cost-recovery period, any direct

or indirect costs for the purchase by electric distribution

of resources to comply with this section, including, but

not limited to, the purchase of electricity generated from

alternative energy sources, payments for [AECs], cost of

credits banked, payments to any third party administrators

for performance under this act and costs levied by a

13

regional transmission organization to ensure that

alternative energy sources are reliable, shall be recovered

on a full and current basis pursuant to an automatic

energy adjustment clause under 66 Pa. C.S. §1307 as a

cost of generation supply under 66 Pa. C.S. §2807.

73 P.S. §1648.3(a)(3) (emphasis added).

Section 3 of the AEPS Act expressly incorporates by reference Sections

1307 and 2807 of the Public Utility Code, 66 Pa. C.S. §§1307 and 2807. In turn,

Section 2807(e)(3.5) of the Public Utility Code cross references Section 3 of the

AEPS Act:

[T]he provisions of this section shall apply to any type of

energy purchased by a default service provider to provide

electric generation supply service, including energy or

alternative energy portfolio standards credits required to

be purchased under [Section 3 of the AEPS Act] . . . .

66 Pa. C.S. §2807(e)(3.5) (emphasis added). Because Section 3 of the AEPS Act

and 66 Pa. C.S. §§1307 and 2807 “relate to the same persons or things,” i.e., EDC

recovery of the costs of purchasing AECs, these provisions are in pari materia and

must be construed together, if possible, as one statute. Section 1932 of the Statutory

Construction Act, 1 Pa. C.S. §1932.

Complementing the PUC’s power to create an AEC program to

implement Section 3 as required by the AEPS Act, Section 1307 of the Code grants

the PUC authority, “by regulation or order,” to “prescribe for any class of public

utilities . . . a mandatory system for the automatic adjustment of their rates[.]”

66 Pa. C.S. §1307(b) (emphasis added). Meanwhile, Section 2807 of the Code

provides for customer choice in the electric power supply market and requires EDCs,

as “the default service provider,” to “provide electric generation supply service to

[a] customer pursuant to a [PUC]-approved competitive procurement plan.”

66 Pa. C.S. §2807(e)(3.1). Section 2807 of the Code authorizes the PUC to

14

supervise, evaluate, and approve EDC cost recovery of energy supply, including

AECs required by the AEPS Act:

• “The default service provider shall file a plan for

competitive procurement with the [PUC] and obtain

[PUC] approval of the plan . . . .” 66 Pa. C.S.

§2807(e)(3.6).

• “At the time the [PUC] evaluates the plan and prior to

approval, in determining if the default electric service

provider’s plan obtains generation supply at the least cost,

the [PUC] shall consider the default service provider’s

obligation to provide adequate and reliable service to

customers and that the default service provider has

obtained a prudent mix of contracts . . . .” 66 Pa. C.S.

§2807(e)(3.7).

• “[T]he [PUC] may modify contracts or disallow costs

only when the party seeking recovery of the costs” is

found to be at fault for failure to comply with the plan or

fraud, collusion or market manipulation. 66 Pa. C.S.

§2807(e)(3.8).

• “The default service provider shall have the right to

recover on a full and current basis, pursuant to a

reconcilable automatic adjustment clause under section

1307 (relating to sliding scale of rates; adjustments), all

reasonable costs incurred under this section and a [PUC]-

approved competitive procurement plan.” 66 Pa. C.S.

§2807(e)(3.9).

Drawing upon these statutory grants of authority and responsibility, the

PUC conducted rulemaking to implement Section 3 of the AEPS Act and provide

for EDC cost recovery related solely to the ensuring that a certain portion of the

electricity that is sold to customers is generated from alternative energy sources. The

PUC adopted the challenged Regulation, 52 Pa. Code §75.67, after notice and

comment and reasoned deliberation. Section 75.67 of the Regulations governs

alternative energy cost recovery and provides:

15

(a) A default service provider may recover from default

service customers the following reasonable and prudently

incurred costs for compliance with the [AEPS A]ct:

(1) The costs of electricity generated by an

alternative energy system, purchased by a default service

provider, and delivered to default service customers for

purposes of compliance with §75.61 (relating to EDC and

EGS obligations).

(2) The costs of [AECs] purchased and used within

the same reporting period for purposes of compliance with

§75.61.

(3) The costs of [AECs] purchased in one reporting

period and banked for use in later reporting periods,

consistent with §75.69 (relating to banking of [AECs]).

(4) The costs of [AECs] purchased in the true-up

period to satisfy compliance obligations for the most

recently concluded reporting period, consistent with

§75.61(e).

(5) Payments to the [AECs] program administrator

for its costs of administering an [AECs] program,

consistent with §75.64 (relating to alternative energy

credit program administrator).

(6) Payments to a third party for its costs in

operating an [AECs] registry, consistent with §75.70

(relating to the alternative energy credit registry).

(7) The costs levied by a regional transmission

organization to ensure that alternative energy sources are

reliable.

(8) The costs of alternative compliance payments

made under §75.66 (relating to force majeure).

****

16

(d) The costs of compliance with the [AEPS Act] shall be

recovered through an automatic adjustment clause

within the meaning of 66 Pa. C.S. §1307 (relating to

sliding scale of rates; adjustments) and consistent with

§54.187 (relating to default service rate design and the

recovery of reasonable costs) according to the following

standards:

(1) Costs incurred by a default service provider

during the cost-recovery period shall be deferred as a

regulatory asset and fully recovered with a return on the

unamortized balance during the first full 12-month

reporting period after the expiration of the cost-recovery

period in the EDC service territory where it is acting as the

default service provider.

(2) Costs incurred by a default service provider after

the expiration of a cost-recovery period shall be recovered

during the reporting period in which they are incurred,

except as provided for in paragraph (7).

(3) The default service implementation plan shall

include a schedule of rates for the recovery of these costs

as required under 66 Pa. C.S. §1307(a).

(4) A default service provider shall file a report with

the [PUC] within 30 days of the conclusion of each

reporting period that includes the information identified in

66 Pa. C.S. §1307(e)(1).

(5) The [PUC] will hold public hearings on the

substance of these reports, and other matters pertaining to

this subject, as required by 66 Pa. C.S. §1307(e)(2).

(6) The [PUC] will order the default service

provider to provide refunds to or recover additional costs

from default service customers consistent with 66 Pa. C.S.

§1307(e)(3).

(7) The costs of [AECs] purchased by the default

service provider during the true-up period under section

3(e)(5) of the act (73 P.S. §1648.3(e)(5)) shall be

17

recovered during the reporting period in which these costs

are incurred.

52 Pa. Code §75.67(a), (d) (emphasis added).

Upon review, Section 3 of the AEPS Act provides that “any direct or

indirect costs for the purchase by electric distribution of resources to comply with

this section . . . shall be recovered on a full and current basis pursuant to an automatic

energy adjustment clause under 66 Pa. C.S. §1307 as a cost of generation supply

under 66 Pa. C.S. §2807.” 73 P.S. §1648.3(a)(3)(ii) (emphasis added). By its plain

language, Section 3 is limited to costs for the “purchase” by EDCs of resources “to

comply with this section,” meaning Section 3. Id. (emphasis added). Section 3 of

the AEPS Act deals with an EDC’s duty to purchase certain percentages of their total

energy supply from alternative sources and to demonstrate compliance by

accumulating AECs. Section 3 makes clear that qualified alternative energy is a

component of a mix of energy supply contracts EDCs purchase to meet their default

service obligations. Contrary to Petitioners’ assertions, Section 3’s reference to

“resources” refers to alternative energy resources purchased to satisfy Section 3’s

requirements, not an EDC’s obligation to pay for excess generation at the full retail

value under Section 5 of the AEPS Act.

Further, Section 3 incorporates both Sections 1307 and 2807 of the

Public Utility Code, providing the regulatory pathway for EDCs to recover their

Section 3 costs. Section 2807 of the Public Utility Code applies, by its own terms,

“to any type of energy purchased by a default service provider to provide electric

generation supply service, including energy . . . required to be purchased under

. . . the [AEPS] Act.” 66 Pa. C.S. §2807(e)(3.5) (emphasis added). Consequently,

costs associated with interconnection are not “direct or indirect costs” of compliance

with Section 3 of the AEPS Act.

18

Section 75.67(d) of the Regulations closely tracks the statutory

language providing that the “[t]he costs of compliance with the [AEPS A]ct shall be

recovered through an automatic adjustment clause within the meaning of 66 Pa. C.S.

§1307 (relating to sliding scale of rates; adjustments) and consistent with §54.187

(relating to default service rate design and the recovery of reasonable costs).”

52 Pa. Code §75.67(d). The Regulation permits EDCs to recover costs of

compliance with Section 3 of the AEPS Act via the statutory and regulatory

mechanisms established pursuant to Section 1307 and 2807 of the Public Utility

Code.

Petitioners take issue with Section 75.67 of the Regulations,

particularly subsection (a), which provides that a “default service provider may

recover from default service customers the following reasonable and prudently

incurred costs for compliance with the [AEPS A]ct . . . .” 52 Pa. Code §75.67(a)

(emphasis added). Petitioners claim that the PUC impermissibly altered the clear

language of the statute by swapping out the “shall” with “may.” As the PUC

explains, Section 3 of the AEPS Act merely provides that costs “shall be recovered”

pursuant to Sections 1307 and 2807 of the Code. However, it does not provide that

EDCs shall recover every cost they claim. This interpretation is supported by

Sections 1307 and 2807 of the Public Utility Code because those sections require an

EDC to present costs to the PUC for approval as part of a competitive procurement

process. See 66 Pa. C.S. §§1307, 2807. Therefore, not all costs are approved. Any

costs that are approved by the PUC are recovered from ratepayers on a full and

current basis pursuant to an automatic energy adjustment clause under 66 Pa. C.S.

§1307 as a cost of generation supply under 66 Pa. C.S. §2807.

19

Such an interpretation is reasonable and not inconsistent with the plain

language of the AEPS Act. The PUC, as the administrative body charged with

implementing the AEPS Act and the Code, is entitled to substantial deference in the

performance of its duties, and its interpretation of the law should not be overturned

unless it is clear that such construction is erroneous, which Petitioners have not

demonstrated here. See Pennsylvania Power Co. v. Public Utility Commission, 932

A.2d 300, 306 (Pa. Cmwlth. 2007) (extending deference to the PUC’s interpretation

of the Electricity Generation Customer Choice and Competition Act, 66 Pa. C.S.

§§2801-2812).

Moreover, to conclude otherwise and accept the interpretations

advanced by Petitioners would lead to an absurd result. As the PUC explains,

although Petitioners currently limit their argument to interconnection costs as being

an indirect cost of alternative energy, the logical extension of their position is that

all costs associated with project development -- construction, financing, and

operation of a customer-generator system -- would similarly qualify as indirect costs.

This runs counter to two statutory construction principles: (1) “[t]hat the General

Assembly does not intend a result that is absurd, impossible of execution or

unreasonable”; and (2) “[t]hat the General Assembly intends to favor the public

interest as against any private interest.” 1 Pa. C.S. §1922(1), (5). Further, requiring

ratepayers to fully subsidize the development of alternative energy projects would

also run counter to Section 1301 of the Public Utility Code, 66 Pa. C.S. §1301, which

provides “[e]very rate made, demanded, or received by any public utility . . . shall

be just and reasonable, and in conformity with regulations or orders of the [PUC].”

For these reasons, we deny the relief requested as set forth in Requests for Relief A,

B, and C in the Amended PFR.

20

Amended PFR, Requests for Relief D and I

Next, Petitioners claim that any PUC Regulation that allows an EDC to

charge a customer-generator for costs associated with the interconnection of a

customer-generator’s alternative energy system is invalid under the AEPS Act.

Specifically, Petitioners challenge Section 75.39(e)(4) of the Regulations,

52 Pa. Code §75.39(e)(4),9 which requires a customer-generator to pay for studies or

improvements for the interconnection of an alternative energy system, as unlawful

and contrary to the AEPS Act. They also object to the PUC practice of allowing

EDCs to impose costs on customer-generators. Thus, Petitioners ask this Court to

invalidate the PUC Regulations and practices that allow EDCs to charge customer-

generators for distribution system improvement costs related to interconnection.

However, as Petitioners themselves recognize, the declarations sought

under Requests for Relief D and I are wholly dependent upon the success of their

claims under Requests for Relief A through C. Having determined that Petitioners

are not entitled to relief on Requests for Relief A, B, and C, Petitioners are similarly

9

Section 75.39(e)(4) provides:

Upon completion of the interconnection facilities study, and with

the agreement of the interconnection customer to pay for the

interconnection facilities and distribution upgrades identified in the

interconnection facilities study, the EDC shall provide the

interconnection customer with a standard small generator

interconnection agreement within 5 business days.

52 Pa. Code §75.39(e)(4).

21

not entitled to relief on these dependent claims.10 We, therefore, deny the relief

requested as set forth in Requests for Relief D and I in the Amended PFR.

Intervenors’ Application for Intervention, Request for Relief ¶78(a)

Lastly, Petitioners claim they are entitled to the Request for Relief

¶78(a) presented by Intervenors in their Application to Intervene, which concerns

how and when customer-generators are paid by EDCs for excess energy.

Specifically, Petitioners challenge the PUC’s Regulation codified at

52 Pa. Code §75.13(d) and (e), which establishes that EDCs accumulate excess

energy supplied until the end of the reporting year (June 1-May 31), after which the

EDCs pay the customer-generators. According to Petitioners, the AEPS Act does

not grant the PUC rule-making authority over this aspect of the Act. Rather, Section

5 of the AEPS Act granted the PUC the narrow authority to issue “technical and net

metering interconnection rules.” Regulating when and how customer-generators are

paid for the excess energy they produce does not qualify as such a rule. Therefore,

this Court should declare 52 Pa. Code §75.13(d) and (e) invalid and unenforceable.

In 2007, the General Assembly amended Section 5 of the AEPS Act by

adding this provision: “Excess generation from net-metered customer-generators

shall receive full retail value for all energy produced on an annual basis.”

73 P.S. §1648.5. Prior to the amendment, customer-generators were compensated

based on a “monthly standard at the avoided cost of wholesale power.” See In Re

Implementing of Act 35 of 2007: Net Metering and Interconnection, 103 Pa. P.U.C.

91, 2008 WL 6690078 (Pa. P.U.C., filed July 2, 2008). The payment provision

10

We further note that there appears to be disputed issues of fact concerning tariffs and

CIACs, which favors denying summary relief. See Respondents’ Brief at 16; see also Gregory,

185 A.3d at 1205.

22

appears in the same section directing the PUC to develop “technical and net metering

interconnection rules” for customer-generators, which was not altered. Id.

Following the statutory amendment, the PUC made corresponding

changes to its Regulations. Specifically, Section 75.13(d) and (e) of the Regulations

provide:

(d) An EDC and [default service provider] shall credit a

customer-generator at the full retail kilowatt-hour rate,

which shall include generation, transmission and

distribution charges, for each kilowatt-hour produced by a

Tier I or Tier II resource installed on the customer-

generator’s side of the electric revenue meter, up to the

total amount of electricity used by that customer during

the billing period. If a customer-generator supplies more

electricity to the electric distribution system than the EDC

and [default service provider] deliver to the customer-

generator in a given billing period, the excess kilowatt

hours shall be carried forward and credited against the

customer-generator’s kilowatt-hour usage in subsequent

billing periods at the full retail rate. Any excess kilowatt

hours that are not offset by electricity used by the customer

in subsequent billing periods shall continue to accumulate

until the end of the year. For customer-generators involved

in virtual meter aggregation programs, a credit shall be

applied first to the meter through which the generating

facility supplies electricity to the distribution system, then

through the remaining meters for the customer-generator’s

account equally at each meter’s designated rate.

(e) At the end of each year, the [default service provider]

shall compensate the customer-generator for any

remaining excess kilowatt hours generated by the

customer-generator that were not previously credited

against the customer-generator’s usage in prior billing

periods at the [default service provider]’s price to compare

rate.

52 Pa. Code §75.13(d), (e) (emphasis added). The IRRC approved the changes,

noting they implemented the General Assembly’s amendment and were consistent

23

with statutory authority. See PUC Brief, Exhibit 3 (IRRC Approval Order,

Regulation No. 57-264 (#2724), 11/6/08).

Section 5 of the AEPS Act authorizes the PUC to develop “technical

and net metering interconnection rules.” 73 P.S. §1648.5 (emphasis added).

Regulations promulgated pursuant thereto are lawful if they were “(a) adopted

within the agency’s granted power, (b) issued pursuant to proper procedure, and (c)

reasonable.” Marcellus Shale, 292 A.3d at 927. As this Court held in Hommrich I,

231 A.3d at 1037, the General Assembly did not task the PUC with redefining

statutory terms and eligibility standards. However, unlike the regulation at issue in

Hommrich I, the challenged Regulation here does not redefine terms or eligibility

standards. Rather, the Regulation provides necessary guidance on net metering,

specifically, how excess generation is measured, credited, and compensated at the

full retail rate on a yearly basis, consistent with the terms of the AEPS Act. By its

very definition, “net metering” is “[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.” Section 2 of the AEPS Act, 73 P.S. §1648.2.

Customer-generators are entitled to receive compensation for the “excess

generation,” i.e., the difference between the electricity generated by a customer-

generator and electricity supplied by the utility, “at the full retail value . . . on an

annual basis.” 73 P.S. §1648.5 (emphasis added). Although Petitioners advocate

for monthly or even quarterly revenue, Section 5 of the AEPS Act clearly provides

24

for compensation on an annual basis.11 73 P.S. §1648.5. Upon review, the

Regulation falls within the ambit of the PUC’s regulatory authority under the AEPS

Act and tracks the statutory language. For these reasons, we deny the relief

requested in Intervenors’ Application for Intervention, Request for Relief ¶78(a).

III. Conclusion

Based on the foregoing, we deny Petitioners’ ASR.

MICHAEL H. WOJCIK, Judge

Judge Fizzano Cannon did not participate in the decision of this case.

11

We further note that Section 5’s “annual basis” provision corresponds with Section

3(e)(5) of the AEPS Act, which provides that the alternative energy credits program shall be based

on a 12-month “reporting period” from June 1 through May 31. 73 P.S. §1648.3(e)(5); see Section

2 of the AEPS Act, 73 P.S. §1648.2 (defining “reporting period’).

25

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

David N. Hommrich, :

:

Petitioner :

:

v. : No. 463 M.D. 2022

:

Commonwealth of Pennsylvania, :

Pennsylvania Public Utility :

Commission, :

:

Respondent :

ORDER

AND NOW, this 13th day of August, 2025, Petitioner’s Application for

Summary Relief is DENIED.

__________________________________

MICHAEL H. WOJCIK, Judge

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

David N. Hommrich, :

Petitioner :

:

v. : No. 463 M.D. 2022

: Argued: April 9, 2025

Commonwealth of Pennsylvania, :

Pennsylvania Public Utility :

Commission, :

Respondent :

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge

HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE ANNE E. COVEY, Judge

HONORABLE MICHAEL H. WOJCIK, Judge

HONORABLE LORI A. DUMAS, Judge

HONORABLE STACY WALLACE, Judge

HONORABLE MATTHEW S. WOLF, Judge

CONCURRING AND DISSENTING OPINION

BY JUDGE WALLACE FILED: August 13, 2025

I would hold, based on the plain statutory text, that excess alternative energy

purchased from net metered customer-generators under Section 5 of the Alternative

Energy Portfolio Standards Act (AEPS Act)1 is a “resource” as that term appears in

Section 3(a)(3)(ii) of the AEPS Act,2 and I would grant summary relief with respect

to Request for Relief A. I otherwise join the Majority’s thoughtful opinion, denying

1

Act of November 30, 2004, P.L. 1672, as amended, 73 P.S. § 1648.5.

2

73 P.S. § 1648.3.

summary relief as to the remaining requests. Therefore, I respectfully concur and

dissent.

______________________________

STACY WALLACE, Judge

SW - 2