[BETA] Fortnightly

A U.S. federal district judge in Pennsylvania will allow a jury to hear antitrust complaints lodged by heating oil dealers challenging certain promotional activities by Pennsylvania Power and Light Co., but it will exclude from jury deliberations any consideration of whether PP&L had established a "monopoly" in the home heating market.

During the period the utility had allegedly engaged in the promotional activities, its share of the entire home heating market had never exceeded 31 percent, the court said. The judge also ruled, however, that the utility possessed significant market power given its size in relation to individual oil heat dealers and the existence of significant barriers to entering the heating market.

The court said a jury must decide whether the utility had intended to monopolize the residential heating market and whether it had used its status as a monopoly provider of electricity as "leverage" to do so in violation of federal antitrust laws. It rejected a move by the utility to end the case at its preliminary stage.

(Earlier, the courts and state regulators had ruled in a series of cases that the utility could no longer use cash or the delivery of appliances to influence builders to exclude energy sources other than

electricity in new residential developments under so called "all-electric agreements." See, Yeager's Fuel, Inc., et al. v. PP&L, 22 F.3d 1260, 152 PUR4th 191 [3d Cir 1994].)

The oil dealers had claimed heat pump marketing efforts conducted by PP&L (em including cash incentives for customers and contractors, reduced electric rates, appliance rebates and subsidized advertising (em offered evidence of predatory behavior in violation of federal antitrust laws and state laws governing business conduct. The dealers claimed the utility had intended to increase market share "even if the added growth did not meet its normal rate of return." They offered as proof statements by PP&L employees such as "marketing is here to stay ... I don't think that we will ever return to the conservation days," and that PP&L would be the "only competitor left in the eight county Philadelphia market."

The court sent substantial aspects of the oil dealer's complaint to trial. It found that in entering the "all-electric" agreements with developers, the utility had used its position to establish itself in the new construction market by excluding others on some basis other than superior efficiency. Consumers were injured by this conduct, the court said, because the utility locked new homeowners into inefficient and expensive sources of heat while restraining their ability to obtain less-cost, more-efficient heating systems. A jury might find that, in light of the utility's statements and its success in convincing builders to enter the all-electric agreements, the utility intended to "monopolize the residential heating of new homes," the court concluded. Yeager's Fuel, Inc., et al. v. PP&L, Civil Action Nos. 91-5176, 92-2539, Jan. 31, 1997 (E.D.Pa.). t

Phillip S. Cross is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.

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