Despite severe reservations from powerful marketers, such asEnron and Shell Energy Services, SB 601 was introduced to thePennsylvania legislature last week, moving residential and smallcommercial gas customers one step closer to gas supply choice. Thenext step for the bill, which supporters said was the result of aworking collaborative of marketers, LDCs, and the PennsylvaniaPublic Utilities Commission (PUC), will come March 23, when theSenate Consumer Protection committee will hold a hearing on thebill.

The bill was introduced to the Senate by Sen. Jeff Piccola(R-15) and to the House by Rep. Frank Tulli (R-106) despite thedisapproving opinions of a group of parties. A source close to thesituation said Enron, along with Shell, Connectiv Energy, DTEEdison America, Green Mountain Energy Resources, and the NaturalGas Supply Association combined to submit a letter in late Februaryto PUC Commissioners John Quain and Aaron Wilson voicing theirdispleasure. They opposed the collaborative’s decisions to allowmandatory capacity assignment until 2002, to permit LDC affiliatesto market to Pennsylvania customers, and to allow metering, billingand collection services to remain bundled.

“While the current proposal contains some positive aspects,” theauthors of the letter wrote, “our review leads us to the emphaticconclusion that, if enacted, this proposal will not producebenefits — robust competition, lower prices, better service andmore innovative products — all of us are striving to deliver tothe Commonwealth’s natural gas customers and, particularly,residential and small businesses.”

In the legislation proposed by Piccola and Tulli, these issueswere not addressed to the liking of the opposing parties, accordingto the source who wished to remain anonymous. A representative fromConnectiv will testify against the legislation at the March 23hearing.

For the bill’s supporters, however, the trade-offs are worth it.”This is a compromise bill, so everybody has things that don’t sitright with them,” said Terry Murphy, a Columbia Gas of Pennsylvaniaspokesman. “But, in a more important sense, the compromisedemonstrates the underlying feeling that there should be total gasderegulation and that it is time for our state to move forward.”

Murphy said Columbia supports the bill, despite criteria whichmake it less than perfect. “The bill includes a rate cap which willfreeze 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] isnecessary. But marketers will tell you that they don’t like themandatory capacity assignment requirement in the bill that allowsLDCs to assign existing capacity until July 2002. It’s give alittle, take a little.”

Bill Boswell, a spokesman for Peoples Gas, which serves 350,000gas customers in the state, said a main reason why his companysupports the bill is because the language allows LDCs to decidewhether they should remove themselves from the gas merchantfunction. “It is an attractive option to hold. The bill permits,but does not require LDCs to exit the merchant function. Rightnow, the thinking is [Peoples] will stay in the merchant function.But who knows? Five, 10, 15 years down the line, things might bedifferent. It is nice to know that the language is already writtenin the legislation to allow us to take the initial steps.” Boswelladded representatives of Peoples Gas are scheduled to testify atthe March 23 hearing in support of the bill.

Martha Duggan, a spokesperson for Statoil Energy, said hercompany also supports the bill and looks forward to marketing gasin the new environment. “As a compromise bill, we are happy, and wethink it will work.”

She said one of the most important compromises occurred inletting LDC affiliates market gas in the state. “The bill letsaffiliates of LDCs market gas, but requires the PUC to establish acode of conduct and monitor those affiliates’ behavior. We welcomeaffiliates as another incentive to competition, as long as we bothare playing on a level field.”

National Fuel Gas, a gas utility serving 195,444 customers inPennsylvania, is another company that has spoken against the bill.It is scheduled to testify at the consumer protection hearing aswell. “We don’t want to make any specific statements yet,” said NFGspokesperson Julie Coppola. “We’re still working to make the billbetter but, as of now, we don’t support it.”

John Norris

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