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Compromise is Key for PA Deregulation Bill

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 bill.

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 hearing.

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."

John Norris

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