The Pennsylvania Supreme Court has agreed to review whether the Pennsylvania Public Utility Commission's record-high fine against an energy distribution company that allegedly overcharged customers during the 2014 polar vortex was impermissibly excessive.

The court granted allocatur Dec. 13 in HIKO Energy v. Pennsylvania Public Utility Commission.

In June, a sharply divided en banc panel of the Commonwealth Court ruled 4-3 that a nearly $2 million civil penalty the PUC imposed against electric distribution company HIKO Energy was not excessive, even though it was the highest penalty that the PUC had ordered in its nearly 80-year history.

The distribution company had been hit with a $1.8 million fine for allegedly hiking prices on 5,700 customers after energy prices rose dramatically in the winter of 2014. The prices rose above the company's guaranteed rates.

Although the distribution company contended that the penalty was up to 80 times higher than penalties the PUC approved in similar cases, the Commonwealth Court majority said HIKO Energy was relying on cases that had been settled, rather than fully litigated, and the fine against the company was not excessive given the conduct.

“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,” 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.”

Simpson was joined by Judges Patricia McCullough, Michael Wojcik and Julia Hearthway.

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.

Judges Renee Cohn Jubelirer and Anne Covey joined Leavitt.

In its one-page Dec. 13 order granting allocatur, the Supreme Court agreed to examine three issues: “(1) Whether the $1,836,125.00 penalty was so grossly disproportionate to the penalties the commission has approved for similar or more egregious conduct as to violate the excessive fines clause of the Pennsylvania and U.S. constitutions. (2) Whether the $1,836,125.00 penalty impermissibly punished HIKO for litigating the complaint for a civil penalty instead of settling it. (3) Whether the commission abused its discretion in imposing an unprecedented civil penalty, which was not supported by substantial evidence.”

According to Simpson's opinion, before the sustained low temperatures Pennsylvania saw during the 2014 winter, sales of electricity to HIKO Energy were about $0.08. Those prices, however, increased about 300 percent to nearly $0.28 by January 2014, and remained above $0.13 through March. As a result, the distribution company's CEO, Harvey Klein, determined it wouldn't be possible for HIKO Energy to stay in business if it honored the six-month introductory rate price it guaranteed to certain customers, according to Simpson.

Simpson said that more than 5,700 customers were overcharged about $1.8 million during that time period, an average of about $124 per customer.

Along with challenging the fine as excessive, the company also said the fine was levied because the company had litigated the case, and that the penalty had been incorrectly calculated.

Simpson, however, rejected the argument that HIKO's decision to litigate the matter resulted in the PUC levying the fine, and said the company also did not present evidence that clearly disputed the PUC's findings regarding the number of violations.

D. Alicia Hickok of Drinker, Biddle & Reath, who represented HIKO Energy, could not immediately be reached for comment.

A PUC spokesman declined to comment.