PUC Lacks Authority to Impose an FCC-Style Presumptive Maximum Pole-Attachment Rate for ILECs; Complainant Bears the Burden to Prove Existing JUA Rates Unreasonable

I. Introduction

Case: FirstEnergy PA Electric Co., Aplt. v. Pennsylvania Public Utility Commission (and Verizon cross-appeal)
Court: Supreme Court of Pennsylvania
Decided: January 8, 2026

This appeal arises from a modern collision of (1) longstanding, privately negotiated Joint Use Agreements (JUAs) between traditional “pole owners” (electric utilities and incumbent telephone utilities) and (2) federal and state efforts to reduce pole-attachment prices to promote competition and broadband deployment.

Verizon (an incumbent local exchange carrier (ILEC)) and FirstEnergy (an electric distribution company and pole owner) operated under reciprocal JUAs—contracts that set per-pole rates (and netting/offset mechanisms) for joint use of each other’s poles. After the Federal Communications Commission’s “New Telecom Rate” policy evolved (2011; expanded in 2018) and after the Pennsylvania Public Utility Commission (PUC) “reverse preempted” the FCC in 2020, Verizon sought application of the New Telecom Rate to its JUAs with FirstEnergy and a refund for alleged overcharges.

The PUC granted Verizon relief under a regulatory framework that presumed ILECs should pay no more than the New Telecom Rate for post–March 11, 2019 contracts, unless the pole owner rebutted the presumption by clear and convincing evidence. The Commonwealth Court affirmed. The Pennsylvania Supreme Court vacated and remanded, holding the PUC lacked statutory authority to implement that presumption for ILEC pole-attachment complaints and that the PUC unlawfully shifted the burden of proof away from the complainant.

II. Summary of the Opinion

The Supreme Court held that Pennsylvania law—principally 66 Pa.C.S. § 332(a)—places the burden on the proponent of a rule or order (here, the complainant challenging existing rates) unless a specific statutory exception applies. The Court concluded:

• Pennsylvania lacks an express statute authorizing the PUC to create an FCC-style presumptive maximum pole-attachment rate for ILECs.
• Because FirstEnergy was not proposing a rate increase, the statutory exception in 66 Pa.C.S. § 315(a) did not apply; therefore, Verizon bore the burden to prove the existing JUA rates were unjust or unreasonable.
• The PUC erred by treating Verizon’s showing that JUAs were renewed after March 11, 2019 as sufficient to satisfy Verizon’s burden and by effectively placing the burden on FirstEnergy to prove its existing rates were just and reasonable.
• The FCC’s rate methodology may be considered as evidence of unreasonableness, but it cannot operate as a presumption under Pennsylvania law absent statutory authorization.

Remedy: the Court vacated the Commonwealth Court’s order and remanded for further proceedings consistent with the correct burden-of-proof framework. Because the first issue was dispositive, the Court did not reach customer-interest, federal-certification, refund-retroactivity, or contract-modification issues.

III. Analysis

A. Precedents Cited

1. Federal background cases (context, not controlling after reverse preemption)

• AT&T Corp. v. Iowa Util. Bd., 525 U.S. 366 (1999): cited to describe wire transmission as a “natural monopoly.” The Court uses it as industry context—why poles and access rules matter—rather than as a source of Pennsylvania agency authority.
• Ameren Corp. v. F.C.C., 865 F.3d 1009 (8thCir. 2017): cited for the historical purpose of the Pole Attachment Act (preventing incumbent utilities from obstructing access). Again, the Pennsylvania Supreme Court treats this as policy context, while emphasizing that reverse preemption means Pennsylvania is not bound to adopt federal policy choices unless state law authorizes them.

2. Pennsylvania administrative-power limits and regulation validity

• Feingold v. Bell of Pa., 383 A.2d 791 (Pa. 1977): anchors the foundational rule that agencies have only those powers granted by the Legislature (expressly or by necessary implication). The Court relies on this to evaluate whether the PUC could adopt a presumption favoring ILECs absent an enabling statute.
• Tire Jockey Serv., Inc. v. Com., Dep't. of Env't Prot., 915 A.2d 1165 (Pa. 2007): supplies the three-part test for legislative regulations—(1) within granted power, (2) proper procedure, (3) reasonable. The Court’s analysis turns on prong (1): lack of statutory power to create the presumption.

3. Pennsylvania ratemaking presumptions and burden allocation for existing rates

• Duquesne Light Co. v. Pub. Serv. Comm'n, 117 A. 63 (Pa. 1922) (Duquesne Light I): cited for the presumption that an existing rate is just and reasonable. The Court treats this as consistent with placing the burden on challengers of existing rates.
• Shenango Twp. Bd. of Sup'rs v. Pa. Pub. Util. Comm'n, 686 A.2d 910 (Pa. Cmwlth. 1996): emphasized for the “very heavy burden” on complainants seeking to evade an existing tariff provision—requiring a drastic change in facts/circumstances.
• Duquesne Light Co. v. Pa. Pub. Util. Comm'n, 715 A.2d 540 (Pa. Cmwlth. 1998) (Duquesne Light II): reaffirmed that the customer bears the burden to show an existing rate is no longer reasonable; absent such showing, prior findings remain prima facie.

4. Unreasonable discrimination under 66 Pa.C.S. § 1304

• Welch v. Pa. Pub. Util. Comm'n, 464 A.2d 568 (Pa. Cmwlth. 1983): sets a stringent showing for discriminatory rates—utility “bent on collecting more than a reasonable rate” from complainant to supply a deficiency from inadequate rates charged to others.
• Park Towne v. Pa. Publ. Util. Comm'n, 433 A.2d 610 (Pa. Cmwlth. 1981): quoted within Welch and used to illustrate Pennsylvania’s traditional approach to “unreasonable preference” claims.

5. “Polestar” concept and skepticism toward non-cost ratemaking drivers

• Lloyd v. Pa. Pub. Utility Comm'n, 904 A.2d 1010 (Pa. Cmwlth 2006): cited for the statement that cost-of-service is the “polestar,” and for criticism of ratemaking analyses that allow other considerations to “trump” cost-of-service. The Court uses Lloyd to frame FirstEnergy’s objection to a presumption-based framework untethered to the statutory burden.

6. Preemption and anti-commandeering principles (used to reject “federal policy imports”)

• Dooner v. DiDonato, 971 A.2d 1187 (Pa. 2006): applied to explain the presumption against preemption and the contours of field/conflict preemption. The Court uses this to support the proposition that Pennsylvania is not required to implement federal policy choices once it reverse-preempts.
• Gustafson v. Springfield, Inc., 333 A.3d 651 (Pa. 2025): quoted for the anti-commandeering principle (federal government cannot command States to administer a federal regulatory program). This reinforces that the PUC’s adoption of FCC presumptions is optional—and therefore must independently rest on state statutory authority.

7. Prior PUC posture and the present controversy

• Re Pittsburgh TeleCommunications, Inc., 64 Pa.P.U.C. 257 (1987): cited to show the PUC historically disclaimed jurisdiction over pole attachments absent implementing rules and only “to the extent permitted by then-effective law.” The Court uses this to underscore the need for actual Pennsylvania statutory authorization for the specific tool (a presumption) the PUC adopted.
• Verizon Pa. LLC v. Pa. Pub. Util. Comm'n, 303 A.3d 219 (Pa. Cmwlth. 2023): the decision under review, including the majority’s affirmance and President Judge Cohn Jubelirer’s dissent. The Supreme Court expressly aligns with the dissent’s burden-shifting critique.
• Metro. Edison Co. v. Pennsylvania Pub. Util. Comm'n, 320 A.3d 84 (Pa. 2024): cited in the allocatur issue framing; not reached on the merits because the burden-of-proof issue was dispositive.

B. Legal Reasoning

1. The central doctrinal move: burden-of-proof is statutory, not regulatory

The Court treats the dispute as one of agency power and burden allocation, not a mere policy disagreement about telecommunications infrastructure. Pennsylvania’s default rule, 66 Pa.C.S. § 332(a), assigns the burden to “the proponent of a rule or order.” The Code provides a targeted exception in 66 Pa.C.S. § 315(a)—placing the burden on the utility only in “proposed increase in rates” proceedings.

Because Verizon initiated a complaint challenging existing JUA rates and FirstEnergy was not proposing an increase, the Court holds the default applies: Verizon bore the burden to prove the existing rates were unjust or unreasonable. A regulation that effectively flips that burden cannot be sustained absent statutory authority authorizing that flip.

2. Reverse preemption does not create new state power

Reverse preemption under 47 U.S.C. § 224(c) allows a state to take over regulation from the FCC. The Court emphasizes that this mechanism does not:

• obligate the state to import federal presumptions or federal “preference” policies; or
• expand the state commission’s authority beyond what Pennsylvania’s Legislature has granted.

The PUC’s own stance—disclaiming that it is bound by FCC precedent—bolstered the Court’s conclusion that the PUC must justify its chosen framework by state law, not by federal regulatory convenience.

3. No Pennsylvania analog to the federal pole-rate presumption

Federal law expressly authorizes pole-attachment rate ceilings and formulas (e.g., 47 U.S.C. § 224(d)), implemented through regulations such as 47 C.F.R. § 1.1406 and the ILEC complaint presumption in 47 C.F.R. § 1.1413. The Court finds no comparable Pennsylvania statutory grant authorizing the PUC to create a presumptive maximum pole-attachment rate favoring ILECs.

The Court notes the ALJ’s attempt to rely on 66 Pa.C.S. § 3011(6) (broad telecom policy language) is, at most, “weak support” and not a targeted pole-attachment authorization—especially because § 3011 is telecom-focused and does not speak to shifting costs onto electric utilities via presumptions.

4. The FCC rate can be evidence, but not a Pennsylvania presumption

The Court’s compromise is important: it does not bar the PUC from considering the FCC’s New Telecom Rate methodology at all. It holds: the FCC’s presumptive maximum rate “can be evidence of unreasonableness,” but “cannot function as a presumption under Pennsylvania law.” This preserves the possibility of using federal benchmarks while restoring Pennsylvania’s statutory burden rules.

5. Why the Court flagged § 1304 (unreasonable preference) even though it did not decide the “rate level” question

The Court points to 66 Pa.C.S. § 1304 as “arguably” undercutting the PUC’s desire to adopt FCC rules that are “explicitly based on a federal policy” of preferring communications attachers. While not a holding on the ultimate “proper rate,” this signals that Pennsylvania’s non-discrimination statute may constrain adoption of federally preference-driven rate outcomes absent a Pennsylvania legislative choice.

C. Impact

• Immediate procedural effect: In ILEC pole-attachment complaints involving existing contract rates, the PUC cannot rely on a post–March 11, 2019 renewal date to trigger a presumption; the complainant must prove unjustness or unreasonableness under Pennsylvania law.
• Constraint on PUC rulemaking by incorporation: The decision places a hard limit on “wholesale adoption” of federal regulatory frameworks where the framework changes burdens or creates presumptions not authorized by Pennsylvania’s enabling statutes.
• Contract and refund consequences (practically, though not fully adjudicated here): Because the PUC’s liability findings depended on the presumption framework, refunds and mandated rate reductions premised on that presumption are destabilized and must be reconsidered on remand under the correct burden allocation.
• Legislative invitation: If Pennsylvania wants an FCC-like pole-attachment presumption for ILECs, the General Assembly—not the PUC—must supply explicit authority.
• Broader administrative-law signal: The Court reinforces that regulations failing the “within granted power” prong of Tire Jockey Serv., Inc. v. Com., Dep't. of Env't Prot. will be invalid even if procedurally proper and arguably reasonable as policy.

IV. Complex Concepts Simplified

• Reverse preemption: Federal law lets a state “take over” pole-attachment regulation from the FCC if the state certifies it regulates those matters. It is a choice to regulate, not a grant of new powers beyond state law.
• Presumptive maximum rate: A default ceiling the pole owner is presumed not allowed to exceed unless it proves special facts. The Court held Pennsylvania’s PUC cannot create this presumption for ILECs without state statutory authorization.
• Burden of proof: Who must prove what. Under 66 Pa.C.S. § 332(a), the party seeking an order generally bears the burden. Only in a utility’s proposed rate increase does the utility bear the burden (66 Pa.C.S. § 315(a)).
• “Just and reasonable” rates: A legal standard for utility charges. The decision does not fix what the correct pole-attachment rate is; it decides who must prove the existing rate is unlawful.
• Cost of service / “polestar”: Pennsylvania ratemaking often centers on the utility’s cost to provide service. The Court used “polestar” cases mainly to underscore that Pennsylvania law traditionally demands proof and analysis before displacing existing rates—rather than automatic results driven by contract-renewal dates.
• ILEC vs CLEC: ILECs are incumbent local phone carriers (historical monopolists). CLECs are competitors. Federal policy often aims to prevent incumbents from disadvantaging entrants—policy that cannot be imported into Pennsylvania presumptions without state authority.

V. Conclusion

The new, controlling principle is procedural but highly consequential: in Pennsylvania pole-attachment disputes over existing rates, the PUC cannot adopt or apply an FCC-style presumption that shifts the burden to the pole owner—absent clear statutory authorization. The complainant must prove the existing rate is unjust or unreasonable under 66 Pa.C.S. § 332(a), and federal benchmarks may inform that showing only as evidence, not as binding presumptions.

In the broader legal context, the decision is a firm reaffirmation of Pennsylvania’s separation-of-powers constraints on administrative agencies: policy goals—such as broadband expansion—cannot supply missing statutory authority, and reverse preemption cannot be used to smuggle federal presumptions into state law where the Legislature has not granted the power to do so.