Shale Daily / NGI All News Access

Pennsylvania Regulators Clarify Laser Ruling

The Pennsylvania Public Utility Commission (PUC) on Thursday denied two requests to reconsider its decision to grant public utility status to a Marcellus Shale gathering project currently under construction.

The PUC previously decided that Laser Northeast Gathering Co. LLC qualified for public utility status, but MarkWest Liberty Midstream and Resources LLC and the Pennsylvania Independent Oil and Gas Association (PIOGA) asked the PUC to reconsider that decision. The PUC has now denied those requests but agreed to a separate request from MarkWest to clarify its order (see Shale Daily, July 12; May 20).

The PUC said Laser met the qualifications for a public utility under Pennsylvania statute because it planned to offer service to any eligible customer within a specific group, in this case potential shippers.

MarkWest and PIOGA argued that Laser Northeast would still be able to tailor its customer base through the terms of its mandatory tariff contracts. MarkWest also warned that the case could create a precedent requiring other gathering companies to become public utilities. In asking for clarity, MarkWest wanted the PUC to detail precisely which facts in the Laser Northeast case led to the ruling. And MarkWest also asked the PUC to detail exactly what gathering projects in the future would not be considered public utilities.

In its clarification the PUC noted that Laser planned to "serve any and all potential customers" in the region looking to move gas on the system. Even though Laser plans to secure customers using tariff contracts, the PUC said the contracts are technical in nature and "are not meant to be exclusionary." And the PUC noted that Laser committed to expand its capacity as needed to meet increased demand in the future.

As he did in the original ruling, PUC Commissioner James Cawley issued a dissenting statement. The claim that Laser would serve "any and all potential customers" and would not use its negotiated contracts to tailor is customer base is "a bald statement not borne out by the facts," Cawley wrote, noting that the PUC couldn't test the validity of the claim because three existing contracts weren't on the record. Cawley also questioned the value of the PUC's clarification.

"Although I have no objection to the 'clarification' given, it adds nothing to existing law and does nothing to dispel that already reigns as a result of our June 14, 2011 order," Cawley wrote.

With the PUC affirming its decision that Laser is eligible for public utility status, the case now returns to an administrative law judge (ALJ) to determine if the company should get a certificate of public convenience. Laser could still operate its gathering system without the certificate but not as a public utility.

Public utility status would give Laser the power of eminent domain. The ALJ previously determined that Laser didn't qualify as a public utility (see Shale Daily, Dec. 3, 2010).

Laser began construction in February on a $50 million gathering project running about 30 miles from Susquehanna County in northeastern Pennsylvania to a connection with the Millennium interstate pipeline in New Windsor, NY. The project is expected to come online in September, with or without certification.

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