PROPOSED RULEMAKING
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CH. 62]
[L-00030162]
Permanent Standards of Conduct
[34 Pa.B. 2071] The Pennsylvania Public Utility Commission, on September 18, 2003, adopted a proposed rulemaking order which sets forth standards of conduct governing the relationships among natural gas distribution companies and affiliated natural gas suppliers.
Executive Summary
Sections 62.141 and 62.142 of the Commission's regulations establish permanent standards of conduct to govern the relationships between natural gas distribution companies (NGDCs) and their affiliated natural gas suppliers (NGSs). The regulations have the effect of transforming what had been binding interim standards into a permanent code of conduct, thus satisfying the Commission's statutory mandate to create permanent standards pursuant to the Natural Gas Choice and Competition Act, 66 Pa.C.S. §§ 2201--2212.
By Order entered on September 18, 2003 at Docket No. L-00030162, the Commission adopted a Proposed Rulemaking Order to add 52 Pa. Code §§ 62.141 and 62.142. The Commission held that adopting the binding interim guidelines without substantive change into formal and permanent regulations would be the best course of action. Further, this was consistent with the recommendation of the industry working group which had originally been formed to draft the binding interim standards of conduct. Those in the working group stated that the industry has approximately 3 years of operating experience under the binding interim guidelines and have successfully adjusted thereto. The Commission is confident that under the regulations, consumers of natural gas will be able to shop for gas that is marketed on a level playing field for all market participants.
Although the Commission is adopting permanent standards of conduct, the Commission shall leave in place its policy statements found at 52 Pa. Code §§ 69.191--69.192. The Commission does so because there will remain a number of local NGDCs which, because of their small size, are not subject to the Competition Act, which is a prerequisite to the applicability of these regulations. In this way, all customers shall be protected from unfair market conditions when buying gas from an affiliated supplier.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 6, 2004, the Commission submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House and Senate Committees. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections shall specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Commission, the General Assembly and the Governor of comments, recommendations or objections raised.
Public Meeting held
September 18, 2003Commissioners Present: Terrance J. Fitzpatrick, Chairperson; Robert K. Bloom, Vice Chairperson; Aaron Wilson, Jr.; Glen R. Thomas; Kim Pizzingrilli
Permanent Standards of Conduct Pursuant to 66 Pa.C.S. § 2209(b); Doc. No. M-00991249 F0004; L-00030162
Proposed Rulemaking Order By the Commission:
The Natural Gas Choice and Competition Act, 66 Pa.C.S. §§ 2201--2212 (Competition Act), was signed into law by former Governor Tom Ridge on June 22, 1999. The Competition Act revised the Public Utility Code, 66 Pa.C.S. §§ 101, et. seq., to restructure the natural gas industry to allow the retail sale of natural gas in an open market. Today we are initiating a rulemaking proceeding to adopt regulations governing the relationships between Natural Gas Distribution Companies (NGDCs) and their affiliated Natural Gas Suppliers (NGSs). We initiate this rulemaking to comply with the Legislature's directive, explained below, and to ensure that consumers of natural gas will be able to shop for gas that is marketed on a level playing field for all market participants.
The Competition Act allows individual customers to choose from independent suppliers of gas which are not necessarily affiliated with the local gas utility. Additionally, the Competition Act in section 2209(a) requires the Pennsylvania Public Utility Commission (Commission) to establish interim Standards of Conduct governing natural gas distribution companies and their affiliated natural gas suppliers.
On November 22, 1999, the Commission fulfilled the requirements of section 2209(a) and adopted binding interim Standards of Conduct. Binding Interim Standards of Conduct Pursuant to 66 Pa.C.S. § 2209(a), Docket No. M-00991249 F0004, Final Order, entered November 22, 1999, as amended, Order entered March 30, 2000. Pursuant to the Competition Act, the Standards of Conduct are to remain in effect until the Commission promulgates regulations setting forth permanent Standards of Conduct governing these same activities. 66 Pa.C.S. § 2209(b). Now that the industry has three years of operating experience under the Binding Interim Standards of Conduct, the Commission believes it is appropriate to adopt permanent Standards of Conduct.
To this end, we reconvened the working group that assisted us in drafting the Interim Standards of Conduct. The working group convened on April 28, 2003, and consisted of representatives from natural gas distribution companies, natural gas suppliers, the Office of Consumer Advocate, other interested parties and our staff. The working group indicated that the Interim Standards of Conduct are working well and that they are now invested in the current regulatory framework. Therefore, we propose to carry out the mandate of 66 Pa.C.S. § 2209(b) and establish regulations governing the relationship among natural gas distribution companies, their natural gas suppliers, and the rest of the natural gas industry. These proposed regulations are substantially the same as the binding Interim Standards of Conduct.
We note that, although we are proposing new regulations governing the conduct of natural gas distribution companies, we shall leave in place our policy statements found at 52 Pa. Code §§ 69.191--69.192. We adopted these two policy statements prior to the passage of the Competition Act. Once the proposed regulations are effective, they will have the force of law and will supercede the policy statements with respect to those NGDCs which are subject to the Competition Act. Nonetheless, there will remain a number of local natural gas distribution companies which, because of their small size, are not subject to the Competition Act and, therefore, these regulations. We leave these policy statements in place so that the customers of these companies shall have protection from unfair market conditions when buying gas from an affiliated supplier.
The proposed regulations, which are adopted directly from the binding interim Standards of Conduct and the Competition Act, successfully address all of the statutory requirements delineated in 66 Pa.C.S. § 2209(c). We invite comments from interested parties on these regulations. It is important that these regulations help to promote and not impede the open market for natural gas.
Accordingly, under section 501 of the Public Utility Code, 66 Pa.C.S. § 501, and sections 201--204 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201--1204) and regulations promulgated thereunder in 1 Pa. Code §§ 7.1--7.4, we amend the regulations in 52 Pa. Code §§ 62.141--62.142 as noted above and as set forth in Annex A; Therefore,
It Is Ordered That:
1. The proposed rulemaking at the L-docket will consider the regulations set forth in Annex A.
2. The Secretary shall submit this order and Annex A to the Office of Attorney General for review as to form and legality and to the Governor's Budget Office for review of fiscal impact.
3. The Secretary shall submit this order and Annex A for review and comment to the Independent Regulatory Review Commission and Legislative Standing Committees.
4. The Secretary shall certify this order and Annex A, and deposit them with the Legislative Reference Bureau to be published in the Pennsylvania Bulletin. The Secretary shall specify publication of the order.
5. An original and 15 copies of any comments referencing the docket number of the proposed regulations be submitted within 30 days of publication in the Pennsylvania Bulletin to the Pennsylvania Public Utility Commission, Attn: Secretary, P. O. Box 3265, Harrisburg, PA 17105-3265. Copies of all comments must also be submitted to the contact persons identified herein at the same address.
6. The contact persons for this rulemaking are Lawrence F. Barth, Law Bureau, (717) 772-8579 and Blair Hopkin, Law Bureau, (717) 783-6152.
7. A copy of this order and Annex A shall be served upon the Energy Association of Pennsylvania, all jurisdictional natural gas utilities, the Office of Trial Staff, the Office of Consumer Advocate and the Office of Small Business Advocate.
JAMES J. MCNULTY,
SecretaryFiscal Note: 57-229. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 62. NATURAL GAS SUPPLY CUSTOMER CHOICE
Subchapter E. STANDARDS OF CONDUCT Sec.
62.141. Definitions. 62.142. Standards of conduct. § 62.141. Definitions.
The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:
Affiliated NGS--
(i) An NGS engaging in marketing activities related to natural gas supply services by the marketing division or marketing operation of an NGDC.
(ii) The term does not include a utility's marketing department or division to the extent that it informs existing or prospective customers of the availability and price of the regulated sales service that utility furnishes in its role as supplier of last resort.
Commission--The Pennsylvania Public Utility Commission.
NGDC--Natural gas distribution company--A public utility or city natural gas distribution operation that provides natural gas distribution services and which may provide natural gas supply services and other services. For purposes of this standard of conduct, the term does not include:
(i) A public utility subject to the jurisdiction of the Commission which has annual gas operating revenues of less than $6 million per year, except:
(A) When the public utility voluntarily petitions the Commission to be included within the definition of NGDC.
(B) When the public utility seeks to provide natural gas supply services to retail gas customers outside its service territory.
(ii) A natural gas public utility subject to the jurisdiction of the Commission that is not interconnected to an interstate gas pipeline by means of a direct or indirect connection through the distribution system of another natural gas public utility or through a natural gas gathering system.
NGS--Natural gas supplier--
(i) An entity other than an NGDC, but including NGDC marketing affiliates without regard to structural relationship, which provides natural gas supply services to retail gas customers utilizing the jurisdictional facilities of an NGDC. The term includes:
(A) An NGDC that provides natural gas supply services outside its certificated service territories.
(B) A municipal corporation, its affiliates or any joint venture, to the extent that it chooses to provide natural gas supply services to retail customers located outside of its corporate or municipal limits, as applicable, other than:
(I) As provided prior to July 1, 1999, the effective date of 66 Pa.C.S. Chapter 22 (relating to natural gas competition), under a certificate of public convenience if required under this title.
(II) Total natural gas supply services in de minims amounts.
(III) Natural gas supply services requested by, or provided with the consent of, the public utility in whose certificated territory the services are provided.
(IV) Natural gas supply services provided to the municipal corporation itself or its tenants on land it owns or leases, or is subject to an agreement of sale or pending condemnation, as of September 1, 1999, to the extent permitted by applicable law independent of 66 Pa.C.S. Chapter 22.
(ii) The term excludes an entity to the extent that it provides free gas to end-users under the terms of an oil or gas lease. Notwithstanding any other provision of 66 Pa.C.S. (relating to the Public Utility Code), an NGS that is not an NGDC is not a public utility as defined in 66 Pa.C.S. § 102 (relating to definitions) to the extent that the NGS is utilizing the jurisdictional distribution facilities of an NGDC or is providing other services authorized by the Commission.
§ 62.142. Standards of conduct.
(a) General requirements. NGDCs and NGSs shall comply with the following requirements:
(1) An NGDC shall apply its tariffs in a nondiscriminatory manner to its affiliated NGS and a nonaffiliated NGS.
(2) An NGDC may not apply a tariff provision in a manner that would give its affiliated NGS an unreasonable preference over other NGSs with regard to matters such as scheduling, balancing, transportation, storage, curtailment, capacity release and assignment, nondelivery and other services provided to its affiliated NGS.
(3) Mandatory tariff provisions may not be waived by an NGDC for an NGS absent prior approval of the Commission.
(4) When a tariff provision is not mandatory or provides for waivers, an NGDC shall grant the waivers without preference to its affiliated NGS or nonaffiliated NGS.
(5) An NGDC shall maintain a chronological log of tariff provisions for which it has granted waivers. Entries must include the name of the party receiving the waiver, the date and time of the request, the specific tariff provision waived and the reason for the waiver. The chronological log must be open for public inspection during normal business hours.
(6) An NGDC shall process requests for distribution services promptly and in a nondiscriminatory fashion with respect to other requests received in the same or a similar period. An NGDC shall maintain a chronological log showing the processing of requests for transportation services. The chronological log must be open for public inspection during normal business hours.
(7) If an NGDC provides a distribution service discount, fee waiver or rebate to its favored customers, or to the favored customers of its affiliated NGS, the NGDC shall offer the same distribution service discount, fee waiver or rebate to other similarly situated customers. Offers may not be tied to an unrelated service, incentive or offer on behalf of either the NGDC or its affiliated NGS. A chronological log must be maintained showing the date, party, time and rationale for the action. The chronological log must be open for public inspection during normal business hours.
(8) Subject to customer privacy or confidentiality constraints, an NGDC may not disclose, directly or indirectly, any customer proprietary information to its affiliated NGS unless authorized by the customer. To the extent that an NGDC does disclose customer information without customer authorization, it shall contemporaneously provide this same information to other similarly situated NGSs in a similar fashion so as not to selectively disclose, delay disclosure or give itself or its affiliated NGS an advantage related to the disclosure. A chronological log must be maintained showing the date, party, time and rationale for the disclosure. The chronological log must be open for public inspection during normal business hours.
(9) An NGDC shall reasonably allocate to its affiliated NGS the costs or expenses for general administration or support services provided to its affiliated NGS.
(10) NGDCs may not condition or tie the provision of a product, service or price agreement by the NGDC, including release of interstate pipeline capacity, to the provision of a product or service by its affiliated NGS.
(11) An NGDC may not give its affiliated NGS preference over a nonaffiliated NGS in the provision of goods and services including processing requests for information, complaints and responses to service interruptions. An NGDC shall provide comparable treatment in its provision of goods and services without regard to a customer's chosen NGS.
(12) An NGDC and its affiliated NGS shall maintain separate books and records. Transactions between the NGDC and its affiliated NGS may not involve cross-subsidies. Shared facilities must be fully and transparently allocated between the NGDC function and the affiliated NGS function. The NGDC accounts and records must be maintained so that the costs incurred on behalf of an affiliated NGS are clearly identified.
(13) NGDC employees who have responsibility for operating the distribution system, including natural gas delivery or billing and metering, may not be shared with an affiliated NGS, and their offices shall be physically separated from the offices used by those working for the affiliated NGS. NGDC employees may transfer to an affiliated NGS provided the transfer is not used as a means to circumvent these standards of conduct.
(14) Neither the NGDC nor its affiliated NGS may directly, or by implication, falsely and unfairly represent to a customer, NGS or third party that an advantage may accrue to a party through use of the NGDC's affiliates or subsidiary, such as:
(i) The Commission-regulated services provided by the NGDC are of a superior quality when services are purchased from its affiliated NGS.
(ii) The merchant services for natural gas are being provided by the NGDC when they are in fact being provided by an affiliated NGS.
(iii) The natural gas purchased from a nonaffiliated NGS may not be reliably delivered.
(iv) Natural gas must be purchased from an affiliated NGS to receive Commission-regulated services.
(15) When an affiliated NGS markets or communicates to the public using the NGDC name or logo, it shall include a legible disclaimer that states that:
(i) The affiliated NGS is not the same company as the NGDC.
(ii) The prices of the affiliated NGS are not regulated by the Commission.
(iii) A customer does not have to buy natural gas or other products from the affiliated NGS to receive the same quality of service from the NGDC.
(16) When an affiliated NGS advertises or communicates verbally through radio or television to the public using the NGDC name or logo, the affiliated NGS shall include at the conclusion of the communication a legible disclaimer that includes all of the disclaimers in paragraph (15)(i)--(iii).
(17) Except in competitive bid situations, an NGDC may not:
(i) Jointly market or jointly package its Commission-regulated services with the services of an affiliated NGS.
(ii) Offer or provide to its affiliated NGS products or services, including bill inserts in its NGDC bills, promoting an affiliated NGS's services or a link from the NGDC's website, unless the NGDC offers or provides the products or services to nonaffiliated NGSs on the same terms and conditions.
(18) An NGDC may not offer or sell natural gas commodity or capacity to its affiliated NGS without simultaneously posting the offering electronically on a source generally available to the market or by otherwise making a sufficient offer to the market. The NGDC shall maintain a chronological log of these public disseminations. The chronological log must be open for public inspection during normal business hours.
(19) An NGDC shall establish and file with the Commission complaint procedures for dealing with alleged violations of the standards of conduct, with the exception of paragraph (9), which is exclusively under the purview of the Commission. These procedures shall be developed in consultation with interested parties during consideration of tariffs guided by this section and § 69.191 (relating to general). The Commission may grant an exception to these requirements if warranted by the facts or circumstances.
(20) An NGDC shall keep a chronological log of any complaints filed, excepting those filed to paragraph (9), regarding discriminatory treatment of NGSs. This chronological log must include the date and nature of the complaint and the resolution of the complaint. The chronological log must be open for inspection during normal business hours.
(b) Dispute resolution procedures. In addition to the procedures in subsection (a)(19):
(1) When a dispute between an NGDC, an affiliated NGS or a nonaffiliated NGS alleging a violation of the standards of conduct provisions occurs, the NGS shall provide the NGDC or affiliated NGS, as applicable, a written notice of dispute that includes the names of the parties and customers, if any, involved and a brief description of the matters in dispute.
(2) Within 5 days of an NGDC's or affiliated NGS's receipt of a notice of dispute, a designated senior representative of each party shall attempt to resolve the dispute on an informal basis.
(3) If the representatives are unable to resolve the dispute by mutual agreement within 30 days of receipt, they shall refer the complaint to the Commission's Office of Administrative Law Judge for mediation. A party may request mediation prior to that time if informal resolution is not productive.
(4) If mediation is not successful, the Office of Administrative Law Judge will convert the matter to a formal proceeding before a Commission administrative law judge.
(5) A party may file a complaint concerning the dispute with the Commission under relevant provisions of 66 Pa.C.S. (relating to the Public Utility Code).
(6) Parties alleging violations of the standards of conduct may pursue their allegations through the Commission's complaint procedures. A complainant bears the burden of proof consistent with 66 Pa.C.S. § 332 (relating to procedures in general) in regard to the allegations and may request penalties for violations under 66 Pa.C.S. § 3301 (relating to civil penalties for violations).
(c) Adoption as company policy. An NGDC and its affiliated NGS shall formally adopt and implement these provisions as company policy and take appropriate steps to train and instruct employees in their content and application.
[Pa.B. Doc. No. 04-651. Filed for public inspection April 16, 2004, 9:00 a.m.]
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