Compromise is Key for PA Deregulation Bill
Despite severe reservations from powerful marketers, such as
Enron and Shell Energy Services, SB 601 was introduced to the
Pennsylvania legislature last week, moving residential and small
commercial gas customers one step closer to gas supply choice. The
next step for the bill, which supporters said was the result of a
working collaborative of marketers, LDCs, and the Pennsylvania
Public Utilities Commission (PUC), will come March 23, when the
Senate Consumer Protection committee will hold a hearing on the
The bill was introduced to the Senate by Sen. Jeff Piccola
(R-15) and to the House by Rep. Frank Tulli (R-106) despite the
disapproving opinions of a group of parties. A source close to the
situation said Enron, along with Shell, Connectiv Energy, DTE
Edison America, Green Mountain Energy Resources, and the Natural
Gas Supply Association combined to submit a letter in late February
to PUC Commissioners John Quain and Aaron Wilson voicing their
displeasure. They opposed the collaborative's decisions to allow
mandatory capacity assignment until 2002, to permit LDC affiliates
to market to Pennsylvania customers, and to allow metering, billing
and collection services to remain bundled.
"While the current proposal contains some positive aspects," the
authors of the letter wrote, "our review leads us to the emphatic
conclusion that, if enacted, this proposal will not produce
benefits -- robust competition, lower prices, better service and
more innovative products -- all of us are striving to deliver to
the Commonwealth's natural gas customers and, particularly,
residential and small businesses."
In the legislation proposed by Piccola and Tulli, these issues
were not addressed to the liking of the opposing parties, according
to the source who wished to remain anonymous. A representative from
Connectiv will testify against the legislation at the March 23
For the bill's supporters, however, the trade-offs are worth it.
"This is a compromise bill, so everybody has things that don't sit
right with them," said Terry Murphy, a Columbia Gas of Pennsylvania
spokesman. "But, in a more important sense, the compromise
demonstrates the underlying feeling that there should be total gas
deregulation and that it is time for our state to move forward."
Murphy said Columbia supports the bill, despite criteria which
make it less than perfect. "The bill includes a rate cap which will
freeze LDC rates from the time the bill is passed until Jan. 1,
2001. Now obviously, as an LDC, we don't think [the rate cap] is
necessary. But marketers will tell you that they don't like the
mandatory capacity assignment requirement in the bill that allows
LDCs to assign existing capacity until July 2002. It's give a
little, take a little."
Bill Boswell, a spokesman for Peoples Gas, which serves 350,000
gas customers in the state, said a main reason why his company
supports the bill is because the language allows LDCs to decide
whether they should remove themselves from the gas merchant
function. "It is an attractive option to hold. The bill permits,
but does not require LDCs to exit the merchant function. Right
now, the thinking is [Peoples] will stay in the merchant function.
But who knows? Five, 10, 15 years down the line, things might be
different. It is nice to know that the language is already written
in the legislation to allow us to take the initial steps." Boswell
added representatives of Peoples Gas are scheduled to testify at
the March 23 hearing in support of the bill.
Martha Duggan, a spokesperson for Statoil Energy, said her
company also supports the bill and looks forward to marketing gas
in the new environment. "As a compromise bill, we are happy, and we
think it will work."
She said one of the most important compromises occurred in
letting LDC affiliates market gas in the state. "The bill lets
affiliates of LDCs market gas, but requires the PUC to establish a
code of conduct and monitor those affiliates' behavior. We welcome
affiliates as another incentive to competition, as long as we both
are playing on a level field."
National Fuel Gas, a gas utility serving 195,444 customers in
Pennsylvania, is another company that has spoken against the bill.
It is scheduled to testify at the consumer protection hearing as
well. "We don't want to make any specific statements yet," said NFG
spokesperson Julie Coppola. "We're still working to make the bill
better but, as of now, we don't support it."