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MPSC: LDCs Can Charge For Tracking Gas Title

July 20, 1998
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MPSC: LDCs Can Charge For Tracking Gas Title

Marketers lost a battle against LDCs last month when the Michigan Public Service Commission (MPSC) sided with Michigan Consolidated Gas (MichCon) and Consumers Energy in a dispute over fees charged for tracking title to gas that changes hands on the LDCs' systems. The MPSC found it had no jurisdiction to regulate title transfer tracking fees. The marketers have not decided whether to appeal the decision.

The commission said since gas can move without title transfers and without utilities tracking transfers, the transfers are not integral to gas transportation. "Rather, they can be viewed as separate and distinct from the transportation service, and the title transfer tracking service offered by the utilities can be viewed as incidental to and not essential for the transportation of gas." In its order - which contradicted a staff recommendation for regulated title transfer fees - the MPSC said the marketers' argument put them in a dubious position on several counts.

"If they argue that the title transfer service should be regulated because it relates to the sale and purchase of gas, they may find themselves, as buyers and sellers in that market, subject to regulation by the Commission. If they assert that the market is a wholesale market not subject to Commission regulation, the argument begs the question why the Commission can or should regulate an ancillary service in that unregulated market. If they argue that the title transfer service should be regulated because it relates to the transportation of gas, which the Commission does have jurisdiction to regulate, they face the arguments that the title transfers, by definition, do not involve any transportation of gas and are not sufficiently related to the transportation function to confer jurisdiction on the Commission."

Marketers involved in the case are Dynegy, LG&ampE Natural Marketing, Coastal Gas Marketing, Westcoast Gas Services, and Aquila Energy Marketing. "We were disappointed in the commission's decision, and we believe there will be huge ramifications to Michigan consumers by virtue of reducing competition in the marketplace and increased pricing," said Dynegy spokeswoman Jennifer Rosser. "We also believe that this is a decision based upon facts not appropriately accounted for in the commission. For example, the lack of competition to provide the title transfer tracking service." The marketers have 30 days from the June 26 order to appeal to Michigan Circuit Court. Rosser said she didn't know whether an appeal would be made.

Consumers Energy spokesman Charles MacInnis said his company's argument all along was marketers didn't have to use the title transfer tracking service. "It's optional." He said the company wouldn't say the total amount it has collected in fees since their implementation Oct. 1, 1996, which is also when MichCon began charging its fees. However, in June 1997, he told NGI during the first six months of the collection period the LDC collected about $250,000 (See NGI June 16, 1997).

Consumers charges half a cent per MMBtu for the first 10,000 MMBtu, four-tenths of a cent for the next 40,000 MMBtu, and two-tenths of a cent thereafter for each title transfer transaction. MichCon charges one cent/Mcf per day.

A packet of gas can change hands as many as 15 times on Consumers, MacInnis said. "You can go from zero to one, to a dozen to 15 with the same party in and out more than once in some instances. One, two, and three is more the norm, but it can increase significantly from there."

Joe Fisher, Houston

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ISSN © 2577-9877 | ISSN © 1532-1266
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