Marketers, LDCs Face Off in Maine Proceeding
Comments filed with the Maine Public Utility Commission show
marketers are opposed to all but the minimum registration
requirements to participate in retail gas competition, while the
state's new LDCs would like a significant amount of commission
oversight, particularly in the small customer market. The comments
were in response to the PUC's Notice of Inquiry (NOI) into the
Regulation of Gas Marketers, which was issued late last month.
The commission intends to get a head start on the rapidly
changing gas industry in the state. Maine's gas infrastructure is
expected to see exponential growth over the next five years as two
new major pipelines, the Portland Natural Gas Transmission System
and Maritimes and Northeast Pipeline, and three new distribution
companies, CMP Natural Gas, Bangor Gas and Mid-Maine Gas, install a
significant amount of new long-haul and distribution pipeline.
The NOI also noted LDC Northern Utilities is proposing to expand
unbundled service to all commercial and industrial customers soon
and to residential customers over the next few years. In addition,
the commission has approved or is reviewing rate proposals for the
new start-up LDCs that propose to offer unbundled services to
varying extents. "Consequently," the PUC said, "the time is right
to explore the public necessity for oversight of gas marketers
proposing to sell gas to consumers within the state."
Enron disliked even the mention of the word "regulation" in the
NOI title. "The process of restructuring natural gas in Maine is,
in part, about deregulating potentially competitive services, not
about regulating services or marketers as suggested by the title of
this [NOI]." Enron said industrial gas customers have been
transporting gas for several years without marketer registration or
regulation and without an incidence of customer dissatisfaction or
marketer failure. Operational requirements in LDC tariffs and terms
and conditions of the private agreements between marketers and
customers are sufficient to guarantee reliable service and should
continue to be so, Enron argued. Furthermore, the marketer suggests
there be minimal registration requirements for gas marketers
serving residential customers. The name, address and phone numbers
of the company, as well as a copy of the articles of incorporation
should suffice, Enron said.
Northern Utilities, on the other hand, believes all marketers
should be licensed by the state and should be required to meet each
LDC's financial qualifications standards. Licensing, Northern said,
"introduces a level of credibility that will help ease consumers'
initial concerns...," minimizes inefficiencies by making it
possible for gas marketers to prepare only one application to the
state rather than one to each LDC, and would satisfy LDCs that need
to ensure marketers can fulfill their contractual obligations.
CMP Natural, another state LDC, called for even more oversight.
Although it said commission oversight may not be needed in the
large customer market, CMP suggested a significant amount of
marketer regulation in the residential and small commercial
Despite warning the PUC that erecting "unnecessary barriers to
entry" could "impede growth and development of a robust gas
market," CMP Natural offered some regulatory suggestions that
marketers said will stifle competition. One such item was the
suggestion that a marketer registration process include "an
application fee, or a posting of a security that would be
sufficient to show good faith on the part of the marketer."
"No, no, no, no," said Martha Duggan, director of regulatory
affairs at Statoil Energy, a potential retail marketer in the
state. "An application fee is just a pure barrier to entry."
Statoil, along with Enserch Energy, jointly recommended minimal
registration requirements, but conceded there may need to be
licensing of residential marketers, including a requirement that
marketers demonstrate adequate financial and technical capability.
However, the two marketers suggested the PUC redirect its attention
to regulation of utility marketing affiliates, which potentially
could receive subsidies from utility firm rate payers.
The commission is expected to review whether to request further
comment, initiate more formal proceedings, or pursue legislation in
the upcoming session.