Marketers lost a battle against LDCs last month when theMichigan Public Service Commission (MPSC) sided with MichiganConsolidated Gas (MichCon) and Consumers Energy in a dispute overfees charged for tracking title to gas that changes hands on theLDCs’ systems. The MPSC found it had no jurisdiction to regulatetitle transfer tracking fees. The marketers have not decidedwhether to appeal the decision.

The commission said since gas can move without title transfersand without utilities tracking transfers, the transfers are notintegral to gas transportation. “Rather, they can be viewed asseparate and distinct from the transportation service, and thetitle transfer tracking service offered by the utilities can beviewed as incidental to and not essential for the transportation ofgas.” In its order – which contradicted a staff recommendation forregulated 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 beregulated because it relates to the sale and purchase of gas, theymay find themselves, as buyers and sellers in that market, subjectto regulation by the Commission. If they assert that the market isa wholesale market not subject to Commission regulation, theargument begs the question why the Commission can or shouldregulate an ancillary service in that unregulated market. If theyargue that the title transfer service should be regulated becauseit relates to the transportation of gas, which the Commission doeshave jurisdiction to regulate, they face the arguments that thetitle transfers, by definition, do not involve any transportationof gas and are not sufficiently related to the transportationfunction to confer jurisdiction on the Commission.”

Marketers involved in the case are Dynegy, LG&ampE NaturalMarketing, Coastal Gas Marketing, Westcoast Gas Services, andAquila Energy Marketing. “We were disappointed in the commission’sdecision, and we believe there will be huge ramifications toMichigan consumers by virtue of reducing competition in themarketplace and increased pricing,” said Dynegy spokeswomanJennifer Rosser. “We also believe that this is a decision basedupon facts not appropriately accounted for in the commission. Forexample, the lack of competition to provide the title transfertracking service.” The marketers have 30 days from the June 26order to appeal to Michigan Circuit Court. Rosser said she didn’tknow whether an appeal would be made.

Consumers Energy spokesman Charles MacInnis said his company’sargument all along was marketers didn’t have to use the titletransfer tracking service. “It’s optional.” He said the companywouldn’t say the total amount it has collected in fees since theirimplementation Oct. 1, 1996, which is also when MichCon begancharging its fees. However, in June 1997, he told NGI during thefirst 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 10,000MMBtu, four-tenths of a cent for the next 40,000 MMBtu, andtwo-tenths of a cent thereafter for each title transfertransaction. MichCon charges one cent/Mcf per day.

A packet of gas can change hands as many as 15 times onConsumers, MacInnis said. “You can go from zero to one, to a dozento 15 with the same party in and out more than once in someinstances. One, two, and three is more the norm, but it canincrease significantly from there.”

Joe Fisher, Houston

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