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Pennsylvania PUC Launches Probe of State’s Retail Natgas Market
The Pennsylvania Public Utility Commission (PUC) launched an investigation Thursday into the competitiveness of the state’s retail natural gas market to determine what steps state regulators should take in order to make improvements.
At a meeting Thursday morning, the PUC voted 5-0 to approve a joint motion submitted by commissioners Pamela Witmer and James Cawley that calls for any interested parties to answer eight questions regarding the market’s competitiveness.
“Given the tremendous natural gas resources that exist in the Commonwealth, there is great excitement over the potential to grow the use of natural gas,” Witmer and Cawley said. “We believe that the time is right for the PUC to renew its inquiry and initiate a formal investigation into the current status of Pennsylvania’s retail natural gas market to assess whether effective competition exists and make recommendations for improvements to ensure that consumers have more opportunities to realize the benefits of Pennsylvania’s abundant natural resources.”
In 1999, then-Gov. Tom Ridge signed the Natural Gas Choice and Competition Act into law, giving retail gas customers the ability to choose their natural gas supplier. But despite several regulatory changes enacted by the PUC since then, the commission said that less than 13% of retail gas customers currently buy their gas from a competitive supplier.
“This causes us great concern because we believe that there are more opportunities for customers to benefit from robust competition in the retail natural gas market,” Witmer and Cawley said, adding that less than 13% was a “dismal” figure. “To that end, our action today launches a process to assess whether effective competition exists and make recommendations for improvements to ensure that a properly functioning and workable competitive retail natural gas market operates in the Commonwealth.”
Among the eight questions posed by the PUC, retail customers are asked their opinion of the market’s competitiveness; if current natural gas rates set by distribution companies are properly structured; if the market’s current design inhibits customer choice; and if distribution companies should continue in the role of supplier of last resort.
Retail customers are also asked if they believe distribution companies and suppliers should be encouraged to partner with exploration and production companies currently targeting the Marcellus Shale.
“This is a new investigation. We’re taking a more critical look at the retail markets and what we can do,” PUC spokeswoman Jennifer Kocher toldNGI on Thursday. “We want to see if we need regulation changes in order to create a more robust market.”
The PUC set Dec. 12 as the deadline for submitting answers to the eight questions. The commission’s Office of Competitive Markets Oversight will then review the comments and make recommendations.
In an October 2005 report, the PUC concluded that the retail natural gas market in Pennsylvania was not competitive (see Daily GPI, Oct. 7, 2005). The commission was then required by law to convene a natural gas stakeholders working group, which began meeting regularly from 2006 to the present. The commission proposed regulatory changes in 2009 and 2011 (see Daily GPI, Oct. 17, 2011; March 27, 2009).
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