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PA PUC May Get New Line-up
The fate of open access for natural gas and electricityregulation in the Commonwealth of Pennsylvania may be largelydecided this week if, as rumored, Gov. Tom Ridge names areplacement for trail-blazing Public Utilities Commissioner JohnHanger.
Several candidates have been rumored, including Pittsburgh’s TimMerrill, who was a gas marketer before there was such a thing, andthe Mayor Aaron Wilson of Chester, PA, who supported Peco Energy inits face-off last year with Enron over electric restructuring.Beyond failing to make a timely reappointment of Hanger when histerm ran out April 1, the governor has given no indication of thepersuasion of the new commissioner.
Hanger, one of the leaders of the successful fight for electricrestructuring in the state, has been serving a six-month graceperiod and will remain a commissioner until a replacement is named.He helped formulate the restructuring legislation, and then was theleader on a 3-2 commission vote rejecting the original Peco Energyrestructuring settlement under the law. He also was a major figurein putting together the final settlement, which was approved by thecommission last week. The settlement significantly pared Peco’sstranded cost recovery and opened the market for others to compete.The Commission still must deal with the restructuring of otherutilities in the state under the new law.
On the gas side, the PUC currently is helping write thelegislation to bring about statewide open access. PUC Chairman JohnM. Quain recently said consensus natural gas deregulationlegislation being drafted by industry, consumer and governmentrepresentatives should reach the floor for a vote this fall. But asone of the candidates for the PUC post pointed out, passinglegislation is just half the battle. The other half is how the PUCimplements it. (While the PUC chairman supports free enterprise inhis speeches, he sided with Peco on the critical vote.)
“There are so many things you can’t – and shouldn’t – put intolegislation,” Merrill said. “The commission is the real crux. It’san extremely critical decision-making body. They make it happen.”Merrill also said that although he was aware he was in contention,he doubted he would get the nomination since he’s basically in thesame competitive camp as Hanger. “He got out in front and he’sgetting cut off. It’s just sad. I’ve got basically the samephilosophy [as Hanger], and I’ve been pushing it a lot more years.Possibly I’m more of a consensus-builder and more aware that youcan’t just run full speed ahead. You have to develop the ideas;give people time.”
Merrill said he believed some distributors in the state are waryof the changes approaching the gas industry. “I don’t think anyonestill is for the ‘status quo,’ but they’re afraid of the pace ofchange.”
Meanwhile, Pennsylvania has become “the land of opportunity” forelectricity consumers, and they are taking advantage of it,Commissioner Hanger told the general session at GasMart/Power’98earlier this month. While the legislation initially opened up264,000 slots for choice in the state, in the first two weeks906,000 signed up. The state had to hold a lottery to choose whowould get to choose. Those slots are worth a savings of up to $400this year for the lucky consumers.
“By January 16th we had over 1,300 MW of electricity being soldin Pennsylvania through the competitive market,” exceeding thefirst phase goal of 5% of peak demand, Hanger said. “I’m going totry to make the case that Pennsylvania is different from moststates – that we’ve got the most customer shopping, the mostmegawatts traded in the retail electric market.
Key features of the Pennsylvania electric restructuring law arethat it provides for one/third of all customers having theopportunity to choose by Jan. 1, 1999, two-thirds with choice byJan. 1, 2000 and 100% choice by Jan. 1, 2001. Rates are capped butthere is no mandatory rate cut and no fixed requirement on strandedcosts.
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