Pennsylvania Tries Again for Gas Deregulation
The usual suspects are at it again, as Pennsylvania Rep. Frank Tulli
(R-106) and Sen. Frank Piccola (R-15) reintroduced a gas deregulation bill
last Thursday. Their previous attempt to deregulate service to small commercial
and residential customers failed to pass in Pennsylvania's legislature
last fall. Unlike the last try, however, this legislation is supported
by a natural gas gross receipt tax (GRT) cut proposal from Governor Tom
Ridge, enabling the bill to jump a large hurdle it was unable to overcome
last time around (See NGI, Feb. 1).
"Over two million Pennsylvania families spend $1,100 a year on
natural gas to heat their homes, heat their water, and cook their food,"
said Piccola. " If we eliminate the natural gas tax, we can save these
families an average of $55 a year, which for many folks equals a single
month's bill." Currently, the GRT is a 5% state tax added to monthly
bills of customers whose suppliers are public utilities. The state's $200-$300
million revenue surplus helped pave the way for the proposed tax cut.
Piccola's office warned the tax cut is a separate piece of legislation
which will be attached to budgetary proposals later this year.
On the issue of LDCs remaining in the merchant function, the bill allows
LDC affiliates to remain in gas sales, but implements a code of conduct.
This gives the Pennsylvania Public Utilities Commission authority to monitor
the affiliates' behavior. "This has been pretty constant," said
Tim Merrill, a consultant at Competitive Energy Strategies. "The stakeholders
who drafted the legislation had it very clear in their minds controls were
necessary to ensure no one entity gained a market power advantage. Codes
of conduct allow for this control."
The bill also requires mandatory capacity assignment through July, 2002.
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