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Marketers, LDCs Face Off in Maine Proceeding

Marketers, LDCs Face Off in Maine Proceeding

Comments filed with the Maine Public Utility Commission show marketers are opposed to all but the minimum registration requirements to participate in retail gas competition, while the state's new LDCs would like a significant amount of commission oversight, particularly in the small customer market. The comments were in response to the PUC's Notice of Inquiry (NOI) into the Regulation of Gas Marketers, which was issued late last month.

The commission intends to get a head start on the rapidly changing gas industry in the state. Maine's gas infrastructure is expected to see exponential growth over the next five years as two new major pipelines, the Portland Natural Gas Transmission System and Maritimes and Northeast Pipeline, and three new distribution companies, CMP Natural Gas, Bangor Gas and Mid-Maine Gas, install a significant amount of new long-haul and distribution pipeline.

The NOI also noted LDC Northern Utilities is proposing to expand unbundled service to all commercial and industrial customers soon and to residential customers over the next few years. In addition, the commission has approved or is reviewing rate proposals for the new start-up LDCs that propose to offer unbundled services to varying extents. "Consequently," the PUC said, "the time is right to explore the public necessity for oversight of gas marketers proposing to sell gas to consumers within the state."

Enron disliked even the mention of the word "regulation" in the NOI title. "The process of restructuring natural gas in Maine is, in part, about deregulating potentially competitive services, not about regulating services or marketers as suggested by the title of this [NOI]." Enron said industrial gas customers have been transporting gas for several years without marketer registration or regulation and without an incidence of customer dissatisfaction or marketer failure. Operational requirements in LDC tariffs and terms and conditions of the private agreements between marketers and customers are sufficient to guarantee reliable service and should continue to be so, Enron argued. Furthermore, the marketer suggests there be minimal registration requirements for gas marketers serving residential customers. The name, address and phone numbers of the company, as well as a copy of the articles of incorporation should suffice, Enron said.

Northern Utilities, on the other hand, believes all marketers should be licensed by the state and should be required to meet each LDC's financial qualifications standards. Licensing, Northern said, "introduces a level of credibility that will help ease consumers' initial concerns...," minimizes inefficiencies by making it possible for gas marketers to prepare only one application to the state rather than one to each LDC, and would satisfy LDCs that need to ensure marketers can fulfill their contractual obligations.

CMP Natural, another state LDC, called for even more oversight. Although it said commission oversight may not be needed in the large customer market, CMP suggested a significant amount of marketer regulation in the residential and small commercial markets.

Despite warning the PUC that erecting "unnecessary barriers to entry" could "impede growth and development of a robust gas market," CMP Natural offered some regulatory suggestions that marketers said will stifle competition. One such item was the suggestion that a marketer registration process include "an application fee, or a posting of a security that would be sufficient to show good faith on the part of the marketer."

"No, no, no, no," said Martha Duggan, director of regulatory affairs at Statoil Energy, a potential retail marketer in the state. "An application fee is just a pure barrier to entry." Statoil, along with Enserch Energy, jointly recommended minimal registration requirements, but conceded there may need to be licensing of residential marketers, including a requirement that marketers demonstrate adequate financial and technical capability. However, the two marketers suggested the PUC redirect its attention to regulation of utility marketing affiliates, which potentially could receive subsidies from utility firm rate payers.

The commission is expected to review whether to request further comment, initiate more formal proceedings, or pursue legislation in the upcoming session.

Rocco Canonica

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