The usual suspects are at it again, as Pennsylvania Rep. FrankTulli (R-106) and Sen. Frank Piccola (R-15) are re-introducing agas deregulation bill for small commercial and residentialcustomers. Tulli said the bill will be proposed to the legislatureearly this week. The representative hopes to have the legislationpassed through both houses by June 30.

The previous attempt to deregulate service failed to pass inPennsylvania’s legislature last fall. Unlike the last try, however,this legislation is supported by a natural gas gross receipts tax(GRT) cut proposal from Gov. Tom Ridge. Supporters believe this taxcut will enable the bill to jump a large hurdle it was unable toovercome last time around (See Daily GPI,Feb. 1).

“Over two million Pennsylvania families spend $1,100 a year onnatural gas to heat their homes, heat their water, and cook theirfood,” said Piccola. ” If we eliminate the natural gas tax, we cansave these families an average of $55 a year, which for many folksequals a single month’s bill.” Currently, the GRT is a 5% state taxadded to monthly bills of customers whose suppliers are publicutilities. The state’s $200-$300 million revenue surplus helpedpave the way for the proposed tax cut. Sen. Piccola’s office warnedthat the tax cut is a separate piece of legislation which will beattached to budgetary proposals later this year.

“The tax cut proposal helped considerably,” said Tim Merrill, aconsultant at Competitive Energy Strategies. “I don’t know if itsgoing to pass because there is still so much politics involved. Thelast attempt didn’t go anywhere because it wasn’t a cohesive effortformed with everyone’s input. This new proposal is the product of ayear and a half of all the parties involved coming to acompromise.”

Rep. Tulli said compromise is a big advantage to the bill. “Thelast bill was a basically a collection of my best thoughts on thesubject. In this new collaborative effort, we all had to give upcherished ideas in favor of a plan that has the best chance ofmoving quickly.”

On the issue of LDCs remaining in the market function, the billallows LDC affiliates to remain in the market but implements thecode of conduct that exists in state pilot programs. This gives thePennsylvania Public Utilities Commission (PUC) authority to monitorthe affiliates’ behavior. “This has been pretty constant,” Merrillsaid. “The stakeholders who drafted the legislation had it veryclear in their minds controls were necessary to ensure no oneentity gained a market power advantage. Codes of conduct allow forthis control.”

Although the bill requires mandatory capacity assignment throughJuly, 2002, marketers can enter into other contracts for new andrenewed capacity. For marketers to do that, however, the contractmust meet the reliability criteria of the LDC, which will bedetermined in a collaborative process between the PUC, LDCs andmarketers. After the 2002 date, marketers can appeal to the PUC toenter into their own contracts.

The legislation allows LDCs to avoid the responsibility of beingsupplier of last resort if they choose and if they can find anothersupplier to take the function, Tulli said. The bill leaves theissue of related services, such as metering and billing, for thePUC to decide on a case-by-case basis.

The bill is already meeting some resistance. National Fuel Gas(NFG), a gas utility serving 730,000 customers in New York andPennsylvania, has said it is against the bill. “Right now, we’reopposed to the legislation,” said an NFG spokesperson. “But becausewe are still in the collaborative and discussing how to make thebill better, we don’t want to give our specific disputes.”

When it is introduced, the bill will go to the Consumer AffairsCommittee of the General Assembly and the and the Senate ConsumerProtection and Professional Licensure Committee.

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