                IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Tanya J. McCloskey, Acting                         :
Consumer Advocate,                                 :
                       Petitioner                  :
                                                   :
                      v.                           :
                                                   :
Pennsylvania Public Utility Commission,            :       No. 1183 C.D. 2018
                         Respondent                :       Argued: June 6, 2019


BEFORE:       HONORABLE P. KEVIN BROBSON, Judge
              HONORABLE ANNE E. COVEY, Judge
              HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY
JUDGE COVEY                                        FILED: July 11, 2019


              The Office of Consumer Advocate (OCA) petitions this Court for review
of the Pennsylvania Public Utility Commission’s (PUC) April 26, 2018 order (April
2018 Order) holding that Act 40 of 2016 (Act 40)1 does not apply to Distribution
System Improvement Charge (DSIC) calculations. There are two issues before this
Court: (1) whether the OCA’s appeal was timely; and (2) whether the PUC correctly
held that Act 40 is ambiguous and, based upon its interpretation thereof, Newtown
Artesian Water Company (NAWC) was not required to include accumulated deferred
income taxes (ADIT) and state income taxes in its DSIC calculation.2




       1
         Act 40 was added to the Public Utility Code by Section 1 of the Act of June 12, 2016, P.L.
332, and consists only of Section 1301.1 of the Code, 66 Pa.C.S. § 1301.1.
       2
         This matter was argued seriately with McCloskey v. Pa. Pub. Util. Comm’n (Pa. Cmwlth.
No. 697 C.D. 2018, filed July 11, 2019).
                        Background

In order to address [concerns over aging infrastructure], the
[PUC] encouraged utilities to plan and implement
accelerated replacement of their aging infrastructure. At the
same time, however, it was understood by utilities making
infrastructure investment that they would be unable to
adjust the rates they charged to their customers between
traditional ratemaking cases to recover those specific
infrastructure investment costs in a timely manner.
Therefore, on February 14, 2012, Act 11 [of 2012, (Act 11),
which amended Chapters 3, 13 and 33 of the Public Utility
Code (Code), 66 Pa.C.S. § 101-3316] was signed into law.
Among other things, Act 11 repealed the prior statute that
permitted only water utilities to charge a DSIC (66 Pa.C.S.
§ 1307(g)), and authorized natural gas distribution, electric
distribution, as well as water and wastewater utilities to
charge a DSIC. Now, these utilities have access to an
alternative ratemaking mechanism whereby the utilities may
recover costs related to repair, improvement and
replacement of eligible projects outside of a ratemaking
case. See 66 Pa.C.S. §§ 1350-1360.
Section 1353(a) of the Code, 66 Pa.C.S. § 1353(a) states in
pertinent part []:
      [A] utility may petition the [PUC], or the
      [PUC] after notice and hearing, may approve
      the establishment of a [DSIC] to provide for
      the timely recovery of the reasonable and
      prudent costs incurred to repair, improve or
      replace eligible property in order to ensure and
      maintain adequate, efficient, safe, reliable and
      reasonable service.
66 Pa.C.S. § 1353(a).
Section 1352 of the Code, 66 Pa.C.S. § 1352, states that, as
a prerequisite to the implementation of a DSIC, a utility
must file a long-term infrastructure improvement plan
(LTIIP).




                             2
McCloskey v. Pa. Pub. Util. Comm’n (McCloskey I), 127 A.3d 860, 863 (Pa. Cmwlth.
2015) (footnotes omitted).
             In McCloskey I, this Court considered whether the PUC erred when it
concluded that a utility was not required to include an ADIT adjustment in its DSIC
calculation and permitted the utility to include the state income tax gross-up in its
DSIC calculation. In affirming the PUC’s order, this Court relied upon Section 1301
of the Code, which provides, in relevant part, that “[e]very rate made, demanded, or
received by any public utility, or by any two or more public utilities jointly, shall be
just and reasonable, and in conformity with regulations or orders of the [PUC].” 66
Pa.C.S. § 1301. This Court held that “there is no single way to arrive at just and
reasonable rates and that the [PUC] is ‘vested with discretion to decide what factors it
will consider in setting or evaluating a utility’s rates.’” McCloskey I, 127 A.3d at 868
(quoting Popowsky v. Pa. Pub. Util. Comm’n (Pa. Cable Television Ass’n), 669 A.2d
1029, 1040 (Pa. Cmwlth. 1995), rev’d on other grounds, 706 A.2d 1197 (Pa. 1997)).
“The bottom line is that the appropriate inquiry is whether the total effect of the
surcharge results in unjust and unreasonable rates.” Id. at 869.
             Thereafter, on June 12, 2016, Act 40 was signed into law and became
effective on August 11, 2016. Act 40 added Section 1301.1 to the Code, which
requires:

             (a) Computation. -- If an expense or investment is allowed
             to be included in a public utility’s rates for ratemaking
             purposes, the related income tax deductions and credits
             shall also be included in the computation of current or
             deferred income tax expense to reduce rates. If an expense
             or investment is not allowed to be included in a public
             utility’s rates, the related income tax deductions and credits,
             including tax losses of the public utility’s parent or
             affiliated companies, shall not be included in the
             computation of income tax expense to reduce rates. The
             deferred income taxes used to determine the rate base of a
             public utility for ratemaking purposes shall be based solely

                                           3
               on the tax deductions and credits received by the public
               utility and shall not include any deductions or credits
               generated by the expenses or investments of a public
               utility’s parent or any affiliated entity. The income tax
               expense shall be computed using the applicable statutory
               income tax rates.
               (b) Revenue use. -- If a differential accrues to a public
               utility resulting from applying the ratemaking methods
               employed by the [PUC] prior to the effective date of
               subsection (a) for ratemaking purposes, the differential shall
               be used as follows:
                  (1) Fifty percent to support reliability or infrastructure
                  related to the rate base eligible capital investment as
                  determined by the [PUC]; and
                  (2) Fifty percent for general corporate purposes.
               (c) Application. -- The following shall apply:
                  (1) Subsection (b) shall no longer apply after December
                  31, 2025.
                  (2) This section shall apply to all cases where the final
                  order is entered after the effective date of this section.

66 Pa.C.S. § 1301.1.
               On September 1, 2017, NAWC filed a supplement to its DSIC tariff
seeking to increase NAWC’s existing cap from 5% to 7.5%. On September 29, 2017,
the OCA filed a formal complaint with the PUC opposing the proposed cap increase
(Complaint).3 The OCA also asserted that given the enactment of Act 40, NAWC
must comply with Section 1301.1 of the Code by including related federal and state
income tax credits and deductions in its DSIC rate calculation. On October 5, 2017,
the PUC instituted an investigation into the lawfulness, justness, and reasonableness
of NAWC’s existing and proposed rates, rules, and regulations. The PUC ordered
that NAWC’s supplement be suspended by operation of law until May 1, 2018,


      3
          The Complaint was docketed at C-2017-2626954.
                                              4
unless it directed otherwise. The matter was assigned to the Office of Administrative
Law Judge (ALJ). On February 9, 2018, the ALJ issued a recommended decision
(Recommended Decision) denying NAWC’s request to increase its rate cap, and
directing NAWC to modify its DSIC to account for all federal and state income tax
deductions and credits in its DSIC calculation.
            On March 1, 2018, NAWC filed exceptions to the Recommended
Decision and OCA filed reply exceptions.          By the April 2018 Order, the PUC
reversed the ALJ’s Recommended Decision, concluding that Section 1301.1(a) of the
Code applies to base rate filings but not to DSIC rates. The PUC explained:

            [W]e disagree with the ALJ’s conclusion that Section
            1301.1 [of the Code] requires [NAWC’s] DSIC to include
            federal and state income tax deductions and credits
            generated by DSIC investment. We find that the language
            in Section 1301.1 [of the Code] is ambiguous regarding
            whether Act 40 applies to the DSIC. Statutory language is
            considered ambiguous when a pertinent provision is
            susceptible to more than one reasonable interpretation or
            when the language is vague, uncertain, or indefinite.
            Section 1301.1 [of the Code] is susceptible to more than
            one reasonable interpretation. The OCA argues that the
            language in the first sentence of Section 1301.1(a) [of the
            Code] clearly provides that Act 40 applies to the DSIC
            because Act 40 applies to rates as broadly defined in
            Section 102 of the Code, [66 Pa.C.S. § 102,] and the DSIC
            is a rate that recovers utility investment and income tax
            expense related to that investment.
            However, the OCA’s position does not account for the
            language in the third sentence of Section 1301.1(a) [of the
            Code], which provides as follows:
                   The deferred income taxes used to determine
                   the rate base of a public utility for ratemaking
                   purposes shall be based solely on the tax
                   deductions and credits received by the public
                   utility and shall not include any deductions or
                   credits generated by the expenses or


                                          5
                       investments of a public utility’s parent or any
                       affiliated entity.
                66 Pa.C.S. § 1301.1(a). This provision explains how the
                deductions and credits in the first sentence of Section
                1301.1(a) [of the Code] should be calculated. It refers back
                to the first two sentences of Section 1301.1(a) [of the Code]
                and specifically uses the term ‘rate base’ and not the general
                term ‘rate.’ The term ‘rate base’ is a technical term that is
                used in general base rate cases. The use of both the terms
                ‘rate’ and ‘rate base’ creates an ambiguity in the meaning of
                Section 1301.1 [of the Code] and supports [NAWC’s]
                position that the language in Section 1301.1 [of the Code] is
                ambiguous and, therefore, should be analyzed under Section
                1921(c) [of the Statutory Construction Act of 1972 (SCA),4]
                1 Pa.C.S. § 1921(c), to ascertain the intention of the General
                Assembly.

April 2018 Order at 37-39 (citations and footnotes omitted).5


       4
           Section 1921(c) of the SCA provides:
                When the words of a statute are not explicit, the intention of the
                General Assembly may be ascertained by considering, among other
                matters:
                       (1) The occasion and necessity for the statute.
                       (2) The circumstances under which it was enacted.
                       (3) The mischief to be remedied.
                       (4) The object to be attained.
                       (5) The former law, if any, including other statutes upon the
                       same or similar subjects.
                       (6) The consequences of a particular interpretation.
                       (7) The contemporaneous legislative history.
                       (8) Legislative and administrative interpretations of such
                       statute.
1 Pa.C.S. § 1921(c).
        5
          The PUC adopted the April 2018 Order on April 19, 2018. On that same date, the PUC
adopted and entered the order at issue in McCloskey v. Pennsylvania Public Utility Commission (Pa.
Cmwlth. No. 697 C.D. 2018, filed July 11, 2019), argued seriately with the instant matter. Notably,
in that case, Commissioner David Sweet (Commissioner Sweet) issued a dissenting statement,
explaining, in relevant part:
                                                   6
              The PUC remanded the matter to the ALJ for a determination of whether
NAWC exceeded its rate cap and would continue to do so, thereby justifying the rate
cap increase. The OCA did not appeal from the April 2018 Order at that time. On
June 15, 2018, the ALJ issued a recommended decision on remand (Recommended
Decision on Remand) concluding that NAWC exceeded its 5% DSIC rate cap and
would continue to do so, but denying the rate cap increase. NAWC filed exceptions
to the Recommended Decision on Remand and OCA filed reply exceptions, but did
not further argue the applicability of Section 1301.1(a) of the Code to DSIC rates
therein. By July 27, 2018 Opinion and Order (July 27, 2018 Order), the PUC
formally adopted the Recommended Decision on Remand and denied NAWC’s rate
cap increase request. On August 27, 2018, the OCA appealed to this Court seeking
review of the April 2018 Order with respect to Act 40’s applicability to DSIC rates. 6


              I agree with the ALJ that the language of the statute is clear in its use
              of the word ‘rate,’ and is free from ambiguity.
              Chapter 13 of the . . . Code addresses ratemaking generally, and the
              definition of the term ‘rates’ is broad, and includes but is not limited
              to base rates. Further, rate base is not the same as base rates. The
              reference, therefore, to ‘rate base’ within Section 1301.1 does not
              render that section ambiguous with regard to its applicability to a
              DSIC rate calculation, nor does it support the conclusion that the
              section is limited to base rate calculations only. If it was the intent of
              the General Assembly to limit this section to base rate calculations in
              base rate proceedings, they [sic] could have so specified.
Pub. Util. Comm’n, No. P-2015-2508942, Dissenting Statement, Commissioner Sweet (Apr. 19,
2018) (footnotes omitted). Commissioner Sweet did not issue a dissenting statement in the instant
case.
       6
         This Court has explained:
              On a petition to review a decision of [the] PUC, our standard of
              review is limited to determining whether substantial evidence
              supports the necessary findings of fact, whether [the] PUC erred as a
              matter of law, and whether constitutional rights were violated. [Coal.
              for Affordable Util. Servs. & Energy Efficiency in Pa. v. Pa. Pub. Util.
              Comm’n,] 120 A.3d [1087,] 1094 [(Pa. Cmwlth. 2015)]. We defer to
              [the] PUC’s interpretation of the . . . Code and its own regulations
                                                  7
                                           Discussion


              The PUC argues that the OCA’s appeal must be dismissed as untimely.
Because that issue is dispositive, we will address it first. The PUC contends that the
PUC’s April 2018 Order included, among other things, a determination as to Act 40’s
applicability to the DSIC rate calculation. The PUC contends that, although the April
2018 Order remanded the issue of whether NAWC had exceeded its DSIC rate cap,
Act 40’s applicability to NAWC’s DSIC rate calculation was not addressed on
remand because it had already been ruled upon in the April 2018 Order. The PUC
further emphasizes that the OCA did not request reconsideration of the April 2018
Order, nor did it timely petition this Court for review within 30 days thereof, and it
did not file its current appeal until 31 days7 after the PUC issued its July 27, 2018
Order.
              This Court has explained:

              A final order is any order that disposes of all claims or of all
              parties . . . . [Pennsylvania Rule of Appellate Procedure
              (Rule)] 341(b)(1) . . . . Pa.R.A.P. 341(b)(1)[]. Appeals are
              permitted only from final orders so as to prevent piecemeal
              determinations and the consequent protraction of litigation.

              unless [the] PUC’s interpretations are clearly erroneous. Id. at 1095.
              We may not substitute our judgment for that of [the] PUC ‘when
              substantial evidence supports the PUC’s decision on a matter within
              the [PUC’s] expertise.’ Id. (internal quotation marks and citation
              omitted). ‘Judicial deference is even more necessary when the
              statutory scheme is technically complex.’ Id. (internal quotation
              marks and citation omitted). On issues of law, ‘our standard of
              review is de novo and our scope of review is plenary.’ Id.
Retail Energy Supply Ass’n v. Pa. Pub. Util. Comm’n, 185 A.3d 1206, 1220 (Pa. Cmwlth. 2018)
(footnote omitted).
       7
         The OCA explains that since August 26, 2018, the 30th day following July 27, 2018, was a
Sunday, the OCA filed its petition for review the following day. Section 1908 of the SCA, 1
Pa.C.S. § 1908, relating to the computation of time, omits the last day of a time period which falls
on a Saturday, Sunday or a legal holiday.
                                                 8
             The general rule that a final order is required before an
             appeal may be taken is fundamental to the exercise of
             jurisdiction by the appellate court and is rigorously applied.

Green Mountain Energy Co. v. Pa. Pub. Util. Comm’n, 812 A.2d 740, 743 (Pa.
Cmwlth. 2002) (citations omitted). Rule 341 provides, in relevant part:

             (b) Definition of Final Order. – A final order is any order
             that:
                (1) disposes of all claims and of all parties; or
                ....
                (3) is entered as a final order pursuant to paragraph (c)
                of this rule.
             (c) Determination of finality. – When more than one
             claim for relief is presented in an action, whether as a claim,
             counterclaim, cross-claim, or third-party claim or when
             multiple parties are involved, the trial court or other
             government unit may enter a final order as to one or more
             but fewer than all of the claims and parties only upon an
             express determination that an immediate appeal would
             facilitate resolution of the entire case. Such an order
             becomes appealable when entered. In the absence of such
             a determination and entry of a final order, any order or
             other form of decision that adjudicates fewer than all
             the claims and parties shall not constitute a final order.

Pa.R.A.P. 341 (bold text emphasis added). Thus, “[a]n order is final if it disposes of
all claims and all parties, and an order is interlocutory when it does not effectively put
a litigant out of court.” Koken v. Colonial Assurance Co., 885 A.2d 1078, 1101 (Pa.
Cmwlth. 2005) (citation omitted), aff’d, 893 A.2d 98 (Pa. 2006).
             Because the April 2018 Order did not “dispose[] of all claims and all
parties[,]” it was not a final order. Pa.R.A.P. 341(b)(1). Accordingly, the OCA was
not required to file its appeal within 30 days of when the April 2018 Order was
issued. Rather, the OCA timely appealed from the July 27, 2018 Order which
disposed of all remaining issues. The Court, therefore, rejects the PUC’s argument.

                                            9
            The OCA argues that the PUC erred when it concluded that Act 40 is
ambiguous and that the legislative intent was to limit its application to base rates.
The OCA contends that Act 40 is unambiguous and that the relevant statutory
definitions mandate Act 40’s application to DSIC calculations. It further claims that
Act 40’s enactment supersedes this Court’s McCloskey I decision.              The OCA
maintains that, since it is undisputed that the DSIC is a statutorily defined rate,
Section 1301.1(a) of the Code applies to DSIC calculations and, accordingly, the
PUC and this Court must accept the statutory definition and apply it to Section
1301.1(a) of the Code.
            Specifically, the OCA argues:

            [T]he statute contains no language limiting its application to
            a specific type of ‘rate.’ [66 Pa.C.S. § 1301.1(a).] Section
            1301.1 [of the Code] does not mention ‘DSIC’ or ‘base
            rates.’ The statute does mention ‘rate base’ in the third
            sentence of 1301.1(a) [of the Code]. Rate base and base
            rates, however, are not the same. Rate base is another
            technical word that is defined by the [Code] as follows:
            [‘]The value of the whole or any part of the property of a
            public utility which is used and useful in the public
            service.[’] 66 Pa.C.S. § 102.
            The DSIC rate, like base rates, is calculated to recover the
            value (depreciation and pretax return) of a utility’s capital
            investment (property) which is used and useful in the public
            service. 66 Pa.C.S. § 1357(a)(1), (3). Specifically, the
            DSIC rate recovers the value of utility property that has
            ‘been placed in service’ in the prior quarter and has ‘not
            previously been reflected in the utility’s rates or rate base.’
            66 Pa.C.S. § 1357(a)(1). Thus, rate base is not particular
            to base rates and its usage in Section 1301.1(a) [of the
            Code] creates no limitation on the application of the
            statute.

OCA Br. at 23 (emphasis added).




                                          10
            The PUC rejoins:

            The initial inconsistency arises with use of the term ‘rates’
            contained in the first sentence of subsection (a) with the use
            of the [term] ‘rate base’ in the third sentence of subsection
            (a).
            The third sentence of the subsection specifically uses the
            term ‘rate base’ and not the general term ‘rate.’ The term
            ‘rate base’ is also a technical term defined by Section 102
            of the Code and is primarily used in general base rate cases
            under Section 1308 of the Code[, 66 Pa.C.S. § 1308].
            Ambiguity arises, however, when attempting to reconcile
            the third sentence of subsection (a) with the first two
            sentences of the subsection. The third sentence refers back
            to the first two sentences and explains to what rates the
            computation of the related income tax deductions and
            credits in the first two sentences of subsection (a) should
            apply.
PUC Br. at 21-22 (footnote omitted).
            Initially,
            [w]hen reviewing agency interpretations of statutes they are
            charged to enforce, our Supreme Court, in Pennsylvania
            Human Relations Commission v. Uniontown Area School
            District, . . . 313 A.2d 156 ([Pa.] 1973) (as well as the
            United States Supreme Court in Chevron v. Natural
            Resources Defense Council, 467 U.S. 837. . . (1984)), has
            adopted a ‘strong deference’ standard for reviewing agency
            interpretations of statutes they are charged to enforce.
            Under the ‘strong deference’ standard, if we determine
            that the intent of the legislature is clear, that is the end
            of the matter and we, as well as the agency, must give
            effect to the unambiguously expressed intent of the
            legislature. If, however, we determine that the precise
            question at issue has not been addressed by the legislature,
            we are not to impose our own construction on the statute as
            would be necessary in the absence of an administrative
            interpretation, but review the agency’s construction of the
            statute to determine whether that construction is
            permissible.      We must give deference to the
            interpretation of the legislative intent of a statute made
            by an administrative agency only where the language of

                                         11
            that statute is not explicit or ambiguous. A statute is
            ambiguous or unclear if its language is subject to two or
            more reasonable interpretations.

Bethenergy Mines, Inc. v. Dep’t of Envtl. Prot., 676 A.2d 711, 715 (Pa. Cmwlth.
1996) (citations omitted; emphasis added).      Thus, resorting to legislative intent
through statutory construction principles to determine whether Section 1301.1(a) of
the Code applies to DSIC calculations is only necessary if the term “rates,” as used in
Section 1301.1(a) of the Code, is ambiguous.
            The Pennsylvania Supreme Court explained:

            Whether a statute is ambiguous cannot be determined in a
            vacuum.
                 A statute is ambiguous when there are at least
                 two reasonable interpretations of the text. In
                 construing and giving effect to the text, ‘we
                 should not interpret statutory words in
                 isolation, but must read them with reference to
                 the context in which they appear.’ Roethlein v.
                 Portnoff Law Assoc[s]., . . . 81 A.3d 816, 822
                 (Pa. 2013) (citing Mishoe v. Erie Ins. Co., . . .
                 824 A.2d 1153, 1155 (Pa. 2003)); accord
                 Commonwealth v. Office of Open Records, . . .
                 103 A.3d 1276, 1285 (Pa. 2014) (party’s
                 argument that statutory language is ambiguous
                 ‘depends upon improperly viewing it in
                 isolation;’ when language is properly read
                 together and in conjunction with rest of statute,
                 legislative intent is plain). The United States
                 Supreme Court also takes a contextual
                 approach in assessing statutes and in
                 determining predicate ambiguity.             See
                 generally King v. Burwell, __ U.S. __, 135
                 S.Ct. 2480, 2489, 192 L. Ed. 2d 483 ([]. 2015)
                 (‘If the statutory language is plain, we must
                 enforce it according to its terms.           But
                 oftentimes the meaning - or ambiguity - of
                 certain words or phrases may only become
                 evident when placed in context. So when
                 deciding whether the language is plain, we
                 must read the words in their context and with a

                                          12
                  view to their place in the overall statutory
                  scheme.’ ([I]nternal quotation marks and
                  citations omitted)); Yates v. U[.]S[.], __U.S.
                  __, 135 S.Ct. 1074, 1081-82, 191 L. Ed. 2d 64
                  ([] 2015) (‘Whether a statutory term is
                  unambiguous, however, does not turn solely on
                  dictionary definitions of its component words.
                  Rather, ‘[t]he plainness or ambiguity of
                  statutory language is determined [not only] by
                  reference to the language itself, [but as well
                  by] the specific context in which that language
                  is used, and the broader context of the statute
                  as a whole.’ Ordinarily, a word’s usage
                  accords with its dictionary definition. In law
                  as in life, however, the same words, placed in
                  different contexts, sometimes mean different
                  things.’ ([I]nternal citations omitted)).
            A.S. v. Pa. State Police, . . . 143 A.3d 896, 905-906 ([Pa.]
            2016) (some citations omitted, others modified).

In re Tr. Under Deed of Kulig, 175 A.3d 222, 231-32 (Pa. 2017).
            Section 102 of the Code defines “rate” as:

            Every individual, or joint fare, toll, charge, rental, or other
            compensation whatsoever of any public utility, or
            contract carrier by motor vehicle, made, demanded, or
            received for any service within this part, offered, rendered,
            or furnished by such public utility, or contract carrier by
            motor vehicle, whether in currency, legal tender, or
            evidence thereof, in kind, in services or in any other
            medium or manner whatsoever, and whether received
            directly or indirectly, and any rules, regulations,
            practices, classifications or contracts affecting any such
            compensation, charge, fare, toll, or rental.

66 Pa.C.S. § 102 (emphasis added).
            The Pennsylvania Supreme Court has held that “if the General
Assembly defines words that are used in a statute, those definitions are binding.”
Pa. Associated Builders & Contractors, Inc. v. Dep’t of Gen. Servs., 932 A.2d 1271,
1278 (Pa. 2007) (emphasis added); see also Lower Swatara Twp. v. Pa. Labor

                                          13
Relations Bd., __ A.3d __ (Pa. Cmwlth. No. 1276 C.D. 2018, filed May 2, 2019).
“When the [General Assembly] defines the words it uses in a statute, neither the
jury nor the court may define them otherwise.” Commonwealth v. Massini, 188
A.2d 816, 817 (Pa. Super. 1963) (emphasis added). “When [the General Assembly]
does define the words used in a statute, the courts need not refer to the technical
meaning and deviation of those words as given in dictionaries, but must accept the
statutory definitions.” Id. (emphasis added); see also Commonwealth v. Lobiondo,
462 A.2d 662 (Pa. 1983). Thus, according to the OCA, the term, “rate,” used in
Section 1301.1(a) of the Code is the broadly-inclusive term defined in Section 102 of
the Code, and it is not limited to “base rate.”8
              This Court notes that Section 1353 of the Code authorizes the PUC to
grant or approve the establishment of a DSIC and sets forth the process to petition the
PUC for DSIC approval. See 66 Pa.C.S. § 1353. Section 1357 of the Code details
the method for calculating a DSIC, see 66 Pa.C.S. § 1357, and Section 1358 of the
Code, entitled “[c]ustomer protections[,]” inter alia, imposes a permissible DSIC cap.
66 Pa.C.S. § 1358. Significantly, Sections 1353, 1357 and 1358 of the Code refer to
the DSIC as a “charge” rather than a “rate.” 66 Pa.C.S. §§ 1353, 1357, 1358.
Regardless, as a charge, the DSIC falls within Section 102 of the Code’s definition of
“rate.” 66 Pa.C.S. § 102.
              “A statute is ambiguous when there are at least two reasonable
interpretations of the text under review.” Warrantech Consumer Prods. Servs., Inc. v.
Reliance Ins. Co. in Liquidation, 96 A.3d 346, 354-55 (Pa. 2014) (emphasis added).
Nonetheless, an interpretation that disregards and/or contradicts an explicitly
stated, statutorily defined meaning cannot be reasonable.                  By claiming and


       8
         Notably, the Code does not define the term “base rate,” and Section 1308(d) of the Code
provides a detailed process for base rate proceedings using the defined term “rate” therein. 66
Pa.C.S. § 1308(d).
                                              14
concluding that the term “rates” as used in Section 1301.1(a) of the Code is
ambiguous and does not include DSIC, the PUC and NAWC simply disregard the
binding statutory definition under the guise of pursuing statutory intent. Sections
1353(b)(4),(5), 1357(b),(c), and 1358(b)(1) of the Code specifically include the term
“base rate.” See 66 Pa.C.S. §§ 1353(b)(4),(5), 1357(b),(c), 1358(b)(1). It is clear
from the General Assembly’s use of the term “base rate” in those Code sections that
the General Assembly knew how to differentiate between “base rates” and “rates”
and did so in drafting the legislation. In Section 1301.1(a) of the Code, it used the
defined term, “rate[s].” 66 Pa.C.S. § 102. That term in the first two sentences of
Section 1301.1(a) of the Code is not ambiguous because it is defined to include
“[e]very . . . charge . . . whatsoever of any public utility[.]” 66 Pa.C.S. § 102
(emphasis added). In order for this Court to conclude that Section 1301.1(a) of the
Code is ambiguous, it would have to assign a meaning to the word “rates” different
from the General Assembly’s explicit definition, which this Court may not do.9 See
Pa. Associated Builders; Lobiondo; Lower Swatara; Massini.
               As the ALJ clearly explained in his Recommended Decision:

               The plain language of Section 1301.1 [of the Code] requires
               that the impact of any tax deductions and credits related to
               an expense or investment that is allowed to be included in a
               public utility’s rates for ratemaking purposes shall be
               included in the computation of current or deferred income
               tax expense to reduce rates. Use of the word ‘shall’ in
               statutes is generally accepted as imperative or mandatory
               and must be given a compulsory meaning as denoting
               obligation. I agree with [the] OCA that Act 40 now
               requires the inclusion of federal and state income tax
               deductions in the DSIC rate charged to customers.

       9
         Nor may this Court insert or read into Section 1301.1(a) of the Code the word “base”
before the word “rates.” “This Court has consistently held that courts may not supply words
omitted by the legislature as a means of interpreting a statute. This Court’s duty to interpret statutes
does not include the right to add words or provisions that the legislature has left out.” Rogele, Inc.
v. Workers’ Comp. Appeal Bd.(Mattson), 969 A.2d 634, 637 (Pa. Cmwlth. 2009) (citations omitted).
                                                  15
Although [NAWC] argued that Act 40 addresses
consolidated income tax expense for base rate purposes,
that this is not a base rate proceeding, that the DSIC rate is a
surcharge mechanism for the recovery of the costs related to
the repair, improvement, and replacement of eligible
property outside of a rate case, and that surcharges are not
part of a base rate proceeding, the language of the
aforementioned code provisions are clear:
      If an expense or investment is allowed to be
      included in a public utility’s rates for
      ratemaking purposes, the related income tax
      deductions and credits shall also be included in
      the computation of current or deferred income
      tax expense to reduce rates.
66 Pa.C.S. § 1301.1(a). As previously noted, the term ‘rate’
is defined to include charges, such as the DSIC. Although
this may not be a base rate proceeding, the language is
clear, and Section 1301.1 [of the Code] applies.
[NAWC] also argues that the legislative history behind Act
40 demonstrates that the purpose of [Act 40] was to
eliminate the consolidated tax adjustment. However, there
is nothing in the plain language of the statute to suggest
this. On the contrary, Subsection (a) of Section 1301.1 [of
the Code] says if an expense or investment is allowed to be
included in a utility’s rates for ratemaking purposes then the
related income tax deductions and credits must also be
included. Subsection (a) then articulates the opposite: if the
expense or investment is not allowed to be included in a
utility’s rates for ratemaking purposes, any related income
tax deductions and credits cannot be included. The third
and fourth sentences in subsection (a) then articulate how
those deductions and credits should be calculated. This
language is clear and unambiguous.
The rules of statutory construction require 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.’ [1 Pa.C.S. § 1921(b).]
In this case, the language of Section 1301.1 [of the Code]
is clear and free from all ambiguity and therefore the
letter of the statute cannot be disregarded.


                              16
             NAWC’s reliance on legislative history as a reason to
             adopt its position in this proceeding is incorrect. Where
             the plain language of the statute is discernible, as is the
             case here, there is no need to look to the legislative
             history. As the rules of statutory construction further
             require, ‘when the words of the statute are not explicit, the
             intention of the General Assembly may be ascertained by
             considering, among other matters: . . . . (7) the
             contemporaneous legislative history.’        [1 Pa.C.S. §
             1921(c)(7).] In this case, however, the words of Section
             1301.1 [of the Code] are explicit and, therefore, there is
             no need to look to the contemporaneous legislative
             history to ascertain the intention of the General
             Assembly.

Recommended Decision at 59-60 (emphasis added; footnotes omitted). This Court
discerns no error in the ALJ’s analysis.
             For all of the above reasons, the PUC’s April 2018 Order is reversed,
and this matter is remanded to the PUC to require NAWC to revise its tariffs and
DSIC calculation pursuant to Section 1301.1(a) of the Code.



                                       ___________________________
                                       ANNE E. COVEY, Judge




                                           17
            IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Tanya J. McCloskey, Acting                  :
Consumer Advocate,                          :
                       Petitioner           :
                                            :
                   v.                       :
                                            :
Pennsylvania Public Utility Commission,     :      No. 1183 C.D. 2018
                         Respondent         :



                                      ORDER

            AND NOW, this 11th day of July, 2019, the Pennsylvania Public Utility
Commission’s (PUC) April 26, 2018 order is reversed, and the matter is remanded to
the PUC for the purpose of requiring Newtown Artesian Water Company to revise its
tariffs and Distribution System Improvement Charge calculation in accordance with
Section 1301.1 of the Public Utility Code, 66 Pa.C.S. § 1301.1.
            Jurisdiction is relinquished.


                                       ___________________________
                                       ANNE E. COVEY, Judge
