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Pennsylvania Tries Again for Gas Deregulation

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.

John Norris

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