Gas restructuring filings made last week with the PennsylvaniaPublic Utility Commission by Penn Fuel Gas and PECO Energy Co. haveset the stage for only the fourth state in the country to providestatewide access to the retail gas market. Out of the 22 stateswith gas utilities employing pilot programs, only New Mexico, WestVirginia and New York allow gas customers statewide to choose theirgas suppliers so far. Pennsylvania regulators now say statewideunbundling will occur by July.

Eight other states, including Pennsylvania, are in variousstages of implementing statewide customers choice, according todata from the Energy Information Administration (seehttps://www.eia.doe.gov under natural gas restructuring). Momentumwas perpetuated last month, as major LDCs such as Washington GasLight, Baltimore Gas and Electric and MichCon all announcedadditions to their choice pilot programs.

The Pennsylvania PUC is considering restructuring plans foreight gas utilities, and in the coming months will adopt finalorders, statewide rules and procedures to implement choice for allresidential and other low volume consumers no later than July 1.Only T.W. Phillips Gas & Oil Co. and Carnegie Natural Gas hasnot submitted a plan. Both are scheduled to file on Feb. 2.

Despite all of the reviews, however, the only utility so far tobe granted approval for its plan has been Columbia Gas of PA. ThePUC granted Columbia approval in October. Eric Levis, the PUC’spress secretary, said an Administrative Law Judge is currentlyreviewing the plans of Equitable Gas Co. and PG Energy.

More approvals are on the way in the near future, said MarthaDuggan, the director of regulatory affairs for Statoil Energy. “Oneof the things I have been most pleasantly surprised about withthese proceedings is the added energy by everybody involved to getthem done as quickly as possible. The regulators and even theutilities have recognized that the marketers do not have the timeor the resources to participate in extended regulatory hearings.”

She added that she sees “no problems” with the July deadline andthere have been few suprises in the filings. “I think if everyonepushed, it could be done by April, but that might lead to customerconfusion or other problems. July is just right.”

Ken Lawrence, PECO Energy Distribution president, said gasderegulation was a natural progression from the state’s electricunbundling. “This change for gas consumers has been on the horizonfor the past few years. After the introduction of electric choice,it became a logical next step to offer all of our customerssupplier choice for gas, too. “While cost savings are uncertainsince gas is already a market-based commodity, the tax repealassociated with the adoption of choice gives all gas consumersimmediate benefits.”

Under the Natural Gas Act that was signed into law last June,all Pennsylvania gas utilities were supposed to be unbundled byNov. 1. According to Levis, that starting date was unreasonable.”[Deregulation] was supposed to be done Nov. 1, but the utilitiescouldn’t submit their plans fast enough, nor could we review allthe information fast enough to meet that deadline.”

Under the terms of its filing, PECO Energy proposes to”unbundle” its current firm service rates into separate components,principally: a distribution charge based on the amount of gasdelivered each month, which covers PECO’s distribution costs; abalancing service charge to cover the cost of pipeline and storagecapacity required to balance fluctuations in demand; and a salesservice charge (SSC) that is only applicable to those who continueto purchase their gas directly with PECO Energy. The SSC, ineffect, will be comparable to the “shopping credit” or “the priceto compare” familiar to electric customers who have shopped amongcompetitive suppliers.

The plan sets forth requirements necessary to maintain reliabledelivery and details obligations for alternative suppliers of gaschoice customers. It also addresses such areas as customerenrollment procedures, consumer education, billing options,universal service provisions, and transition costs.

Also under the agreement, PECO proposes to assign firm pipelinecapacity to suppliers who secure local customers based on thecustomer’s historical usage. Under the proposal, PECO will retaincontrol of storage and local peaking facilities that serve winterpeak loads and balance fluctuations in daily demands.

Reed Horting, PECO Energy vice president of gas supply andtransportation, said PECO Energy must manage the aggregated volumesof gas moving on its distribution system and adjust for the hourlyand daily fluctuations in customer demand. “This approach ensuresthat we can maintain the reliability of gas deliveries for all ofour customers,” he said.

PECO Energy will continue to deliver gas to customers, maintainthe local infrastructure and respond to emergencies, and providecustomer service like meter reading and billing. It does not supplygas to the City of Philadelphia, a service handled by PhiladelphiaGas Works (PGW). Under the Competition Act, PGW is scheduled toprovide its customers with supplier choice beginning in 2002.

John Norris

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.