NGI The Weekly Gas Market Report
Gas restructuring filings made this week with the PennsylvaniaPublic Utility Commission by Penn Fuel Gas, Carnegie Natural andPECO Energy Co. have set the stage for only the fourth state in thecountry to provide statewide access to the retail gas market. Outof the 22 states with gas utilities employing pilot programs, onlyNew Mexico, West Virginia and New York allow gas customersstatewide to choose their gas suppliers so far. Pennsylvaniaregulators now say statewide unbundling will occur by July.
Other states are near the finish line as well. Eight other states,including Pennsylvania, are in various stages of implementingstatewide customers choice, according to data from the EnergyInformation Administration (see https://www.eia.doe.gov under natural gas restructuring). Last month, Maryland,Washington D.C. and Michigan all announced major deregulationprograms (see Daily GPI, Nov. 2).
The Pennsylvania PUC is considering restructuring plans for 10gas utilities, and in the coming months will adopt final orders,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. has not submitted a plan. T.W.is scheduled to file on Feb. 2.
Despite all of the reviews, however, the only utility so far to begranted approval for its plan has been Columbia Gas of PA. The PUCgranted Columbia approval in October (see Daily GPI, Oct. 18). Eric Levis, the PUC’s presssecretary, said an Administrative Law Judge is currently reviewing theplans of Equitable Gas Co. and PG Energy.
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 (seeDaily GPI, June 18), all Pennsylvaniagas utilities were supposed to be unbundled by Nov. 1. According toLevis, that starting date was unreasonable. “[Deregulation] wassupposed to be done Nov. 1, but the utilities couldn’t submit theirplans fast enough, nor could we review all the information fast enoughto 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, for the company’s gassupply & transportation, said PECO Energy must manage theaggregated volumes of gas moving on its distribution system andadjust for the hourly and daily fluctuations in customer demand.”This approach ensures that we can maintain the reliability of gasdeliveries for all of our 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.
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