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PA Bulletin, Doc. No. 96-1968

STATEMENTS OF POLICY

[52 PA. CODE CH. 69]

[26 Pa.B. 5721]

[M-960839]

Fitness of Natural Gas Marketers

   The Pennsylvania Public Utility Commission (Commission) on October 3, 1996, adopted a proposed policy statement to provide guidance to local distribution companies (LDCs) providing natural gas service in this Commonwealth with regard to uniform standards for brokers and marketers. The contact person is Jonathan Zorach, Assistant Counsel, Law Bureau, (717) 783-2812.

Public Meeting held
October 3, 1996

Commissioners present: John M. Quain, Chairperson; Lisa Crutchfield; John Hanger; David W. Rolka; and Robert K. Bloom

Corrected Proposed Policy Statement

By the Commission:

   As the gas industry unbundles and transportation service is made available to all retail customers, it is necessary for the Commission to insure that brokers and marketers operating in this Commonwealth possess the financial and technical fitness necessary to meet their contractual obligations. In order to insure such fitness and protect the public interest, this Commission believes it appropriate that the LDCs establish guidelines in their tariffs addressing these matters. The guidelines would govern the qualifications of entities seeking to transport gas through an LDC's distribution system.

   The Commission believes that the establishment of the guidelines will benefit the LDC and all of its customers. The inability of a marketer or broker to meet its financial or operational commitments potentially poses a serious threat to the operation of the gas distribution system. This inability to perform may result in an improper taking of gas belonging to other retail and transportation customers or hinder an LDC's ability to operate its distribution system in an orderly manner. While the Commission recognizes that it does not have the authority to address the issue of ''damages,'' we are charged with insuring that the LDC provides safe, reliable and adequate service to all of its customers. We believe that the issuance of the policy statement, which calls for the establishment of guidelines by the LDC in dealing with marketers, brokers, and the like, will enable the Commission to meet its statutory obligations.

   The Commission is also concerned that the guidelines not be improperly employed as a hindrance to entry into the gas supply marketplace. Our interest here goes only to insuring that all entrants be able to meet their financial and operational commitments. Firms wishing to deliver gas to retail customers through LDCs must demonstrate financial and technical fitness to meet peak demands. In addition, they must have adequate financial reserves to insure that they may provide the services they offer to the public.

   Accordingly, under the authority under sections 102, 501, 508, 1301--1304, 1317, 1318 and 1501, 66 Pa.C. S. §§ 102, 501, 508, 1301--1304, 1317, 1318, 1501, and the Commonwealth Documents Law (45 P. S. § 1201 et seq.), the Commission has authority to promulgate this proposed policy statement addressing the fitness of natural gas marketers set forth in Annex A. Therefore,

   It is Ordered that:

   1.  The proposed policy statement regarding the fitness of natural gas marketers as set forth in Annex A, is hereby promulgated for comment.

   2.  The Secretary shall submit this order and Annex A to the Governor's Budget Office for review of fiscal impact.

   3.  The Secretary shall certify this order and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.

   4.  The public is invited to submit written comments, an original and 15 copies, regarding the proposed policy statement with the Secretary of the Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265 within 30 days after publication in the Pennsylvania Bulletin. Reply comments may be submitted within 60 days after publication in the Pennsylvania Bulletin.

   5.  A copy of this order, initial views of any Commissioner and Annex A are to be served upon all jurisdictional gas utilities, the Office of Consumer Advocate and the Office of Small Business Advocate.

JOHN G. ALFORD,   
Secretary

   Fiscal Note: 57-181. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 52. PUBLIC UTILITIES

PART I. PUBLIC UTILITY COMMISSION

Subpart C.  FIXED SERVICE UTILITIES

CHAPTER 69. GENERAL ORDERS, POLICY STATEMENTS AND GUIDELINES ON FIXED UTILITIES

NATURAL GAS MARKETERS

§ 69.193. Fitness of natural gas marketers--statement of policy.

   (a)  To retain reliable service when the gas industry unbundles, the Commission seeks to insure that brokers and marketers operating in this Commonwealth possess the financial and technical fitness necessary to meet their contractual obligations. Since assurance of reliable service is a prerequisite for opening this Commonwealth's gas markets to full retail competition, providers of gas should be fully capable of providing reliable service. LDCs must address the issues of financial and technical fitness in their tariffs in order to assure the reliability of supplies to the end user.

   (b)  Firms that wish to deliver gas to retail customers shall demonstrate that they have both the financial and technical fitness to meet the peak demand of contracted customers on peak days. This demonstration of fitness is vital for any firm that wishes to serve retail customers, whether commercial or residential. To insure financial fitness, the LDC shall insure that the marketer or broker has the financial reserves necessary to provide the services it offers to the public.

   (c)  Accordingly, the LDCs may offer nondiscriminatory tariff rules subject to Commission approval governing the qualifications of marketers and brokers. These rules should be consistent with registration requirements for marketers of the Federal Energy Regulatory Commission. The tariff rules should address:

   (1)  Financial fitness, including the ability of the entity to comply with a financial penalty in the event of non- performance.

   (2)  Operational fitness, including gas reserves and the ability of the firm to meet the peak demand of contracted customers.

[Pa.B. Doc. No. 96-1968. Filed for public inspection November 22, 1996, 9:00 a.m.]


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