MPSC: LDCs Can Charge For Tracking Gas Title
Marketers lost a battle against LDCs last month when the
Michigan Public Service Commission (MPSC) sided with Michigan
Consolidated Gas (MichCon) and Consumers Energy in a dispute over
fees charged for tracking title to gas that changes hands on the
LDCs' systems. The MPSC found it had no jurisdiction to regulate
title transfer tracking fees. The marketers have not decided
whether to appeal the decision.
The commission said since gas can move without title transfers
and without utilities tracking transfers, the transfers are not
integral to gas transportation. "Rather, they can be viewed as
separate and distinct from the transportation service, and the
title transfer tracking service offered by the utilities can be
viewed as incidental to and not essential for the transportation of
gas." In its order - which contradicted a staff recommendation for
regulated title transfer fees - the MPSC said the marketers'
argument put them in a dubious position on several counts.
"If they argue that the title transfer service should be
regulated because it relates to the sale and purchase of gas, they
may find themselves, as buyers and sellers in that market, subject
to regulation by the Commission. If they assert that the market is
a wholesale market not subject to Commission regulation, the
argument begs the question why the Commission can or should
regulate an ancillary service in that unregulated market. If they
argue that the title transfer service should be regulated because
it relates to the transportation of gas, which the Commission does
have jurisdiction to regulate, they face the arguments that the
title transfers, by definition, do not involve any transportation
of gas and are not sufficiently related to the transportation
function to confer jurisdiction on the Commission."
Marketers involved in the case are Dynegy, LG&E Natural
Marketing, Coastal Gas Marketing, Westcoast Gas Services, and
Aquila Energy Marketing. "We were disappointed in the commission's
decision, and we believe there will be huge ramifications to
Michigan consumers by virtue of reducing competition in the
marketplace and increased pricing," said Dynegy spokeswoman
Jennifer Rosser. "We also believe that this is a decision based
upon facts not appropriately accounted for in the commission. For
example, the lack of competition to provide the title transfer
tracking service." The marketers have 30 days from the June 26
order to appeal to Michigan Circuit Court. Rosser said she didn't
know whether an appeal would be made.
Consumers Energy spokesman Charles MacInnis said his company's
argument all along was marketers didn't have to use the title
transfer tracking service. "It's optional." He said the company
wouldn't say the total amount it has collected in fees since their
implementation Oct. 1, 1996, which is also when MichCon began
charging its fees. However, in June 1997, he told NGI during the
first six months of the collection period the LDC collected about
$250,000 (See NGI June 16, 1997).
Consumers charges half a cent per MMBtu for the first 10,000
MMBtu, four-tenths of a cent for the next 40,000 MMBtu, and
two-tenths of a cent thereafter for each title transfer
transaction. MichCon charges one cent/Mcf per day.
A packet of gas can change hands as many as 15 times on
Consumers, MacInnis said. "You can go from zero to one, to a dozen
to 15 with the same party in and out more than once in some
instances. One, two, and three is more the norm, but it can
increase significantly from there."
Joe Fisher, Houston