PMC Property Group, Inc. v. Public Utilities Regulatory Authority
189 Conn.App. 268, 207 A.3d 114 (2019)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Billing tenants for a proportionate share of electricity used by a central building system, calculated based on individual usage of the system's output (e.g., thermal energy), constitutes electric submetering. Courts will defer to a regulatory agency's technical definition of such a term, even if not time-tested, when the issue involves extremely complex and technical regulatory matters that call for the agency's expertise.
Facts:
- PMC Property Group, Inc. (PMC) owns and manages a multi-family apartment building, and Energy Management Systems, Inc. (EMS) provides billing services for PMC.
- In 2011, PMC renovated the building and installed a central HVAC system with seven outdoor compressor units, which are powered by electricity billed to PMC through a single master meter.
- The system includes sensors and software to measure the individual thermal (heating and cooling) usage of each of the 65 residential apartments.
- Each apartment also has its own separate electric meter from The United Illuminating Company for its general electricity use, distinct from the central HVAC system.
- Starting in March 2012, PMC, through EMS, began billing each tenant for a proportionate share of the electricity consumed by the seven central HVAC compressor units.
- This proportionate share was calculated based on the individual thermal usage measured within each tenant's apartment.
Procedural Posture:
- The Office of Consumer Counsel and the state attorney general filed a joint petition requesting the Public Utilities Regulatory Authority (PURA) to investigate PMC's billing practices.
- After a hearing, PURA issued a decision finding that PMC had engaged in unauthorized submetering and ordered PMC to stop the practice and refund the tenants.
- PMC and EMS, the plaintiffs, appealed PURA's decision to the Superior Court, which is a state trial court.
- The Superior Court affirmed PURA's decision, concluding that the agency had not acted unreasonably or abused its discretion.
- PMC and EMS, as appellants, then appealed the Superior Court's judgment to the Connecticut Appellate Court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a landlord's method of measuring individual tenants' thermal HVAC use and billing them a proportionate share of the electricity cost for the central HVAC units constitute unauthorized electric submetering under Connecticut law?
Opinions:
Majority - Harper, J.
Yes. The landlord's billing method constitutes unauthorized electric submetering. The court held that judicial deference to the Public Utilities Regulatory Authority's (PURA) definition of submetering was appropriate, even though the definition was not time-tested for this specific technology, because the issue involved complex and technical regulatory matters requiring agency expertise. The court reasoned that the defining characteristic of submetering is the nature of the cost being billed—electricity—not the intermediate form of energy being measured, such as thermal use. Because PMC used a system of meters and software to allocate and bill tenants for the electricity used by the central HVAC compressors, it was engaging in the submetering of electricity, which is prohibited without PURA's prior approval.
Analysis:
This decision strengthens the doctrine of judicial deference to administrative agencies, particularly in cases involving new and complex technologies. It establishes that an agency's interpretation of a statute need not be 'time-tested' to receive deference if the subject matter is highly technical and falls within the agency's specialized expertise. The ruling also provides a functional definition of 'submetering,' focusing on the ultimate cost passed to the consumer rather than the specific metrics used for allocation. This prevents entities from circumventing utility regulations through sophisticated technical arrangements that achieve the same result as traditional submetering.
