Shale Daily / NGI All News Access

ALJ: Pennsylvania Gathering Project Not a Utility

The Pennsylvania Public Utilities Commission (PUC) should deny an application from Laser Northeast Gathering Co. LLC to be deemed a public utility with the ability to exercise the right of public domain for its proposed gathering and transportation pipeline in Susquehanna County, PA, according to an administrative law judge's (ALJ) recommendation to the PUC.

Laser Northeast is not a public utility as defined by the state's Public Utility Code and has not proved entitlement to a certificate of public convenience, ALJ Susan D. Colwell wrote in her recommended decision.

"A gathering system designed to serve the producers of natural gas by transporting the gas to a designated transmission line is constructed only to serve specific individuals," and is therefore not a service "to or for the public" according to the Public Utility Code, Colwell said in her decision.

The PUC is expected to make a final decision in the case next year. Pennsylvania grants franchises to public utilities, regulates their rates and extends the right of eminent domain along with the franchise. In the past intrastate pipelines or gathering lines have not come under the mantle of public utilities.

If the PUC were to grant utility status to Laser Northeast, the pipeline could also come under rate regulation. However, "it doesn't mean their rates have to be regulated like a utility. This commission is very pro-competition. In other industries there has been light-handed regulation," said attorney Daniel Clearfield with the Harrisburg, PA office of Eckert, Seamans, Cherin & Mellot, LLC. In some instances the PUC does not regularly monitor an industry but simply acts on complaints, he said.

Clearfield said the commission would not be bound by the ALJ decision. "It has no binding effect whatsoever. The commission gets to decide the case on a clean record."

And Laser plans to proceed with the project regardless of the PUC's decision, a company spokesman told Shale Daily Thursday.

"Laser Northeast does not need to be a public utility in order to construct and operate our Susquehanna gathering system," the spokesman said. "Laser is moving forward with the project. We hope to commence construction shortly, once all final permits are received, and expect to be in operation during the second quarter of 2011."

Laser's gathering project is proposed to run 21 miles from Susquehanna County to the New York border, then extend another nine miles within Broome County, NY, to a connection with interstate Millennium Pipeline in New Windsor. The cost of the project is estimated at $50 million.

Laser was acquired by Delphi Midstream Partners LLC in July (see Daily GPI, July 13).

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