An argument a teenager might make after being caught drinking at a party was essentially employed by the lawyer for an energy company, who asked the Pennsylvania Supreme Court to upend a $1.8 million penalty imposed on it for price gouging because ”everybody did it.”
Vincent Gentile of Drinker Biddle & Reath represents electric distribution company HIKO Energy, a company that up-charged 5,700 Pennsylvania consumers by 300 percent for heat—well over the company’s guaranteed rate—during record-low temperatures in the winter of 2014. As a result, the state Public Utility Commission hit HIKO with the penalty, which the company claimed was unfair given how other utility companies who were found to have price gouged were treated.
In June 2017 a sharply divided en banc panel of the Commonwealth Court ruled 4-3 that the penalty was not excessive, even though it was the highest penalty that the PUC had ordered in its nearly 80-year history.
The justices agreed to take up HIKO’s appeal in December of last year.
During the court’s oral argument session on Sept. 26 in Philadelphia, Gentile argued that HIKO’s price hike was no different from what its competition had done.
“Everybody did it,” Gentile said. ”This was an industry-wide phenomenon,” he continued, pointing to skyrocketing energy prices during what was known as the 2014 “polar vortex.”
But while other companies settled with the PUC for much lower amounts, HIKO fought the case and lost. Gentile argued that HIKO was being punished for choosing to litigate the case. The high court, however, did not appear to be sympathetic to his logic.
Justice David Wecht said HIKO took its chances in court and was now being a sore loser because that turned out to be the wrong move.
Wecht asked Gentile how this case was different from a convicted murderer getting sentenced to life in prison, while another one charged with the same thing pleads guilty and gets a lower sentence.
Gentile repeated the same argument, telling Wecht, “this is exactly the same conduct all companies were doing” only with an “obvious” disparity in punishment.
Justice Kevin Dougherty noted that not every company promised a six-month flat-rate guarantee.
Gentile said other companies had guarantees, albeit for smaller amounts of time, and once again argued “HIKO did exactly what other companies did, the only difference is … HIKO paid over 70 times more.”
Wecht responded that the other cases were different because they settled.
“You want a volume discount,” he quipped.
The PUC’s attorney, Patty Lee, told the court that HIKO’s case also differed from those of the other energy companies because those companies used variable rates while HIKO’s were supposedly capped.
“If you say you’re going to charge five cents, then you have to charge five cents,” she said.
The case came before the Supreme Court after HIKO appealed a Commonwealth Court ruling that found the penalty was reasonable.
“The fact-finder determined that HIKO’s highest-level executives made the decision to intentionally overcharge approximately 5,708 customers on nearly 15,000 invoices in a manner contrary to the clear language of its welcome letter and disclosure statement,” Commonwealth Court Judge Robert Simpson, who wrote the majority opinion, said. “The intentional misconduct by HIKO’s top management, combined with the sheer magnitude of the violations, separates this case.”
President Judge Mary Hannah Leavitt, however, dissented, saying the penalty was “grossly disproportionate,” and violated the PUC’s policy, as well as the constitutional prohibition against excessive fines. Specifically, she said the PUC’s calculation of the fine was flawed because the agency’s investigations and enforcement division failed to prove each claimed violation.