Legislators Burn Midnight Oil to Pass PA Gas Bill
Working into the early hours of Thursday morning, the
Pennsylvania General Assembly finally pushed through a statewide
gas restructuring bill in the last session before the assembly
broke for summer vacation. Under the Natural Gas Choice and
Competition Act, gas will become a price-deregulated commodity for
residential and small commercial customers on Nov. 1. Governor Tom
Ridge, who has already voiced his support for the bill, has 10 days
to sign it into law.
"We've already seen the dramatic savings Pennsylvanians are
enjoying through electric choice, which could approach $1 billion
as Pennsylvanians 'shop for power,'" Ridge said. "Now we can give
natural gas customers the ability to choose their natural gas
suppliers and enjoy the benefits of competition."
House Bill 1331 passed the House 141 to 58 and passed the Senate
43 to seven. The final vote was held after 2 a.m. Thursday morning.
Once signed, the bill will freeze LDC rates from the time it is
enacted until Jan. 1, 2001. It requires mandatory capacity
assignment until July 2002. LDC affiliates are allowed to market in
their parent company's service area, but the bill requires PUC to
create and enforce a strict LDC affiliate code of conduct. The bill
allows, but does not mandate, LDCs to exit the merchant function.
Also added on as a late amendment, management of Philadelphia
Gas Works will be transferred from the Gas Commission, a panel of
city government-elected officials, to the PUC. By switching the
leadership of Philadelphia's gas distributor, the legislature hopes
the ineffective and economically-troubled company can turn around
(See Daily GPI, June 10).
A central component of the bill was the inclusion of the
elimination of the Gross Receipts Tax (GRT), a separate piece of
legislation proposed by Ridge which had previously been approved by
the legislature (See Daily GPI
Feb.1). With the elimination of the GRT, Ridge's camp estimates 2
million families will save $82 million next year. The repeal goes into
effect Jan 1, 2000.
"...Today, there are about 2 million Pennsylvanians who rely on
natural gas to heat their homes. And they're paying taxes on that
essential commodity. That's an unfair tax. And now it's gone."
The bill was forged from the results of a statewide
collaborative made up of all interested marketers, labor parties,
LDCs and regulators. The collaborative's leader, PUC Commissioner
John Quain, received nearly universal praise from all sides for his
objectivity and fairness. "Chairman Quain did a good job of
balancing all of the interests represented during the collaborative
process that led to the passage of [the act]," Dave Smith, senior
vice president of National Fuel Gas said.
National Fuel Gas, an LDC for 195,444 customers in the state, had
been one of the bill's staunchest detractors (See Daily GPI, March 22). Throughout the
legislative hearings, the company had argued that the bill does not
address reliability or stranded cost issues well enough. Smith,
however, said the company has grown more comfortable with the bill's
requirements. "Surely no one party expected to get everything they
sought for during this process, but the legislation, as presented last
night, does balance the interests of all parties while maintaining the
intended purpose of bringing choice to all customers in Pennsylvania."
Statoil Energy has been active in many of the Pennsylvania LDCs'
pilot programs as a marketer, and although the bill does not create
the perfect situation, the company is eager to increase its
presence in the state.
"Quain did a good job of listening to everybody," said Martha
Duggan, Statoil vice president of regulatory and government
affairs. "Although the mandatory capacity assignment requirement is
tough to swallow, it does provide a structure to the unbundling
process, which we believe is a good thing. The attitude we're
taking is that capacity assignment won't last forever. The bill
also leaves the deregulation of metering and billing to the PUC. We
would have liked to have seen that included in the legislation, but
again, it won't stay regulated forever."
Like many other LDCs, Columbia Gas of Pennsylvania (CPA) already
has a restructuring plan in mind. "This is what we've been getting
ready for since we first offered choice as a pilot program in
1996," said John Quinn, manager of regulatory policy. CPA serves
Many utilities will just extend their pilot programs to
incorporate all their customers, said National Fuel Gas
spokesperson Julie Coppola. "Our program is all ready to go, and I
think the other utilities will have no problem getting their plans
HB 1331, however, did not have an easy road to approval. Thrown
in with a host of other issues and legislation, the bill was not
approved until the very last second. "The vote was clear, but it
almost didn't get done," said Terry Murphy, CPA's senior vice
president. "It was first passed as a Senate bill. After Senate
approval, the House added a bundle of amendments that didn't have
much to do with gas restructuring. When it left the House earlier
this week, the Senate cleaned it up, but had to send it back to the
House for approval. All this passing back and forth had some people
worried it wouldn't get done before they left for their break."