Energy Express, Inc. v. Department of Public Utilities
477 Mass. 571
| Mass. | 2017Background
- Massachusetts unbundled retail gas commodity sales (1999) but left upstream pipeline capacity and local distribution with local distribution companies (LDCs) like Bay State (Columbia Gas of Massachusetts).
- The Department of Public Utilities (department) adopted a mandatory "slice-of-system" assignment: LDCs procure upstream capacity for all customers and assign a pro rata share to marketers based on their customers' needs.
- Marketers (e.g., Energy Express) pay assigned capacity costs up front on behalf of their customers but cannot independently procure pipeline capacity; transportation customers remain customers of the LDC for capacity and distribution.
- FERC later ordered Portland Natural Gas Transmission System to refund excess charges for upstream capacity; Bay State received the refund because it contracted with the pipeline.
- The department ordered Bay State to pass refunds to both sales and transportation customers; Energy Express claimed it (the marketer) — having paid capacity costs — was entitled directly to a proportional share of the refund.
- The department rejected Energy Express's claim; Energy Express appealed to the SJC, which reviewed the department's legal interpretation with deference and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a marketer assigned upstream capacity by an LDC qualifies as a "customer" under G. L. c. 164, § 94F and thus is entitled to FERC-ordered pipeline refunds | Energy Express: as assignee who paid the capacity costs, it is a "customer" entitled to refund | Department/Bay State: "customer" means the retail consumer that uses gas; marketers are intermediaries who pay on customers' behalf | Held: "Customer" limited to end consumers; marketers are not entitled to refunds under § 94F |
| Whether the department's interpretation violates the filed rate doctrine by causing marketers to pay more than filed rates | Energy Express: denying marketer the refund effectively forces it to pay a rate above Bay State's filed tariff | Department: marketers pay on behalf of customers and may choose contractually how much to pass through; denial does not alter filed-rate obligations | Held: No filed-rate violation; responsibility rests with customers and marketers' contractual choices govern cost recovery |
| Whether the department's order conflicts with its pro-competitive policy (allowing market efficiency) | Energy Express: denying refund undermines competitive market outcomes and fairness to marketers | Department: policy implementation is reasonable; marketers never had ultimate responsibility for capacity costs; market choices determine allocation of costs | Held: No conflict; department's interpretation reasonably implements policy and assigns final cost responsibility to consumers |
| Whether the department's interpretation is entitled to deference under administrative law | Energy Express: department erred in interpreting statutory "customer" to exclude marketers | Department: its interpretation is reasonable, consistent with regulations and legislative history; entitled to deference | Held: Court defers to the department's reasonable interpretation and affirms its order |
Key Cases Cited
- Bay State Gas Co. v. Department of Public Utilities, 459 Mass. 807 (2011) (deference to DPU interpretation of statutes it administers)
- DSCI Corp. v. Department of Telecomm. & Energy, 449 Mass. 597 (2007) (standards for judicial review of administrative orders)
- Meikle v. Nurse, 474 Mass. 207 (2016) (statutory interpretation principles)
- Central States Elec. Co. v. Muscatine, 324 U.S. 138 (1945) (state law governs intrastate refunds to protect ultimate retail consumers)
- Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953 (1986) (filed-rate doctrine requires state commissions to give binding effect to FERC-filed rates)