PROPOSED RULEMAKING
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CH. 59]
[31 Pa.B. 805] [L-00000151]
Natural Gas Emergency Plans and Emergency Actions The Pennsylvania Public Utility Commission (Commission) on July 20, 2000, adopted a proposed rulemaking order setting forth the procedures the Commission intends to follow in managing natural gas emergencies in order to maintain gas service and minimize service disruptions. The contact persons are Ahmed Kaloko, Bureau of Conservation, Economics and Energy Planning, (717) 787-2139 and David Screven, Law Bureau, (717) 787-2126.
Executive Summary
For many years, natural gas emergency planning has been a staple of this Commonwealth's natural gas distribution companies' (NGDCs) operational considerations. Given the necessity for 100% reliability on all natural gas distribution systems, NGDCs have long planned for force majeure or other unexpected events that threatened system integrity.
On June 22, 1999, Governor Tom Ridge signed into law the Natural Gas Choice and Competition Act (act). The act revised 66 Pa.C.S. (relating to the Public Utility Code) (code) by inter alia, adding Chapter 22, relating to the restructuring of the natural gas utility industry. Nevertheless, the act is clear that even with the restructuring of the natural gas industry, the requirement for 100% reliability of all NGDC systems remains constant.
The Natural Gas Emergency Regulations are designed to address the management of natural gas emergencies in this new environment in order to maintain (or restore as quickly as possible) gas service to essential human needs customers while minimizing service disruption. The proposed regulations address a number of matters that are critical to gas emergency and gas curtailment, including: (1) emergency load shedding, (2) a call for voluntary usage reduction, (3) a call for mandatory load and usage reduction, (4) issuance of periodic reports to the media on emergency situations, (5) notice of affected customers and natural gas suppliers (NGSs), (6) customer and NGS delivery requirements that apply to emergency actions, (7) a procedure for focusing emergency measures to confined geographic areas, and (8) procedures for establishing communications. On all of these issues, the regulations provide a strong framework for addressing these issues in more detail in the context of each utility's tariff and operational procedures.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 31, 2001, the Commission submitted a copy of these proposed amendments to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House and Senate Committees. In addition to submitting the proposed amendments, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed amendments, it will notify the Department within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria that have not been met by the portion of the proposed amendments to which an objection is made. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the amendments, by the Department, the General Assembly and the Governor of objections raised.
Commissioners Present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; Nora Mead Brownell; Aaron Wilson, Jr.; and Terrance J. Fitzpatrick
Public Meeting held
July 20, 2000
Proposed Rulemaking Order By the Commission:
On June 22, 1999, Governor Tom Ridge signed into law the Natural Gas Choice and Competition Act (act). The act revised the code, by inter alia, adding Chapter 22, relating to the restructuring of the natural gas utility industry. The Pennsylvania Public Utility Commission (Commission) is the agency charged with implementing the act.
This Order sets forth the procedures the Commission intends to follow in executing its responsibilities under the Natural Gas Choice and Competition Act, as codified in 66 Pa.C.S. §§ 2201--2212.
Background
For many years, natural gas emergency planning has been a staple of this Commonwealth's NGDCs operational considerations. Given the necessity for 100% reliability on all natural gas distribution systems, NGDCs have long planned for force majeure or other unexpected events that threatened system integrity. Most plans called for orderly ways to immediately drop gas load in the threatened parts of the NGDC system. During the 1970s, when anticipated gas supply shortages appeared to become endemic and also threatened the viable operation of every local distribution company (LDC), gas supply curtailment plans were incorporated into all NGDC tariffs at the direction of the Commission. To this day, there is a requirement that curtailment plans be incorporated in the tariffs.
After the issuance of FERC Order 636 in 1992, which removed pipelines from the merchant function and made them transporters of natural gas, and the passage of the Commonwealth's Natural Gas Choice and Competition Act in 1999, the importance of revising these requirements became apparent. In this context, NGSs are responsible for bringing increased volumes of gas to NGDCs to satisfy the requirements of their customers. Nevertheless, the requirement for 100% reliability of all NGDC systems remains.
The Commission approved the Interim Safety and Reliability Guidelines (Interim Guidelines) at its public meeting on October 15, 1999, at Docket No. L-00990144 for both NGDCs and NGSs to consider their respective roles in this emerging competitive environment. On April 24, 2000, at Docket No. M-00001351, the Commission adopted a proposed policy statement incorporating the Interim Guidelines into Chapter 69 (relating to general orders, policy statements and guidelines on fixed utilities) of its regulations. Likewise, natural gas emergency planning should also reflect the various roles of the participants in this new environment. The Natural Gas Emergency Regulations set forth below are designed to address the management of natural gas emergencies in this new environment in order to maintain (or restore as quickly as possible) gas service to essential needs customers while minimizing service disruption.
These proposed regulations are intended to address emergencies, which by definition, are limited to situations where available firm supply or capacity is not sufficient to meet firm service requirements. Accordingly, the interruption of interruptible services, and their subsequent restoration, are not addressed. The treatment of interruptible services raises valid issues, however, and the Commission expects NGDCs to address these issues, including electric generation facilities that use interruptible service, in the reliability plans that NGDCs are required to file with the Commission annually under 66 Pa.C.S. § 1317(c).
Discussion
Commission staff established a Collaborative Working Group as the appropriate vehicle to proceed with the implementation of gas emergency plans and curtailment under the Natural Gas Choice and Competition Act, 66 Pa.C.S. § 2201, et seq. On February 29, 2000, Commission staff convened the first meeting of the Gas Safety and Reliability Working Group addressing gas emergency plans and curtailment issues.
At the initial meeting of the working group, Commission staff identified statutory directives that applied to the working group, framed a tentative list of issues that should be addressed by the working group and established a date for the submission of informal comments. Several meetings of the working group were held between February and April 2000.
Commission staff urged the parties to identify those common issues that would be addressed in the meetings. The Office of the Consumer Advocate, the Office of Trial Staff, the Pennsylvania Gas Association, Texas Eastern Corporation, CNG Retail Services Corporation and TXU Energy Services (filed jointly with Statoil Energy) submitted informal comments on February 29, 2000.
The working group agreed that the requirements for gas emergency plans should be more than guidelines. As a result, the working group designated selected members to draft suggested regulations and this draft was delivered to the full group and considered at the meeting on May 23, 2000. Since the proposed regulations were designed to replace the Commission Gas Curtailment Guidelines (Guidelines) at §§ 69.21--69.27, the working group placed the proposed regulations in Chapter 59 (relating to gas service) on Gas Service rather than in Chapter 69. The working group agreed that the proposed regulations should be presented at public meeting for the Commission's consideration.
The Commission intends that these regulations be incorporated into its regulations at Chapter 59. The Guidelines at §§ 69.21--69.27 are to be eliminated. Additionally, since § 59.63 refers to the Guidelines at §§ 69.21--69.27, § 59.63 will also be modified to reflect the proposed changes.
The proposed regulations address a number of matters that are critical to gas emergency and gas curtailment, including: (1) emergency load shedding, (2) a call for voluntary usage reduction, (3) a call for mandatory load and usage reduction, (4) issuance of periodic reports to the media on emergency situations, (5) notice of affected customers and NGSs, (6) customer and NGS delivery requirements that apply to emergency actions, (7) a procedure for focusing emergency measures to confined geographic areas, and (8) procedures for establishing communications. On all of these issues, the regulations provide a strong framework for addressing these issues in more detail in the context of each utility's tariff and operational procedures.
During discussions in the working group sessions, a suggestion was made to include a section in the proposed regulations indicating that the Commission would issue Emergency Orders that might include substantial penalties for any customer continuing to take gas in violation of the rules found in this subchapter. The members agreed not to include this in the proposed rulemaking, but rather to solicit additional comments on the issue.
The Commission already has adequate authority to issue Emergency Orders and to impose such penalties asare appropriate for violations. In order to continue the collaborative process, however, the Commission will consider comments concerning the use of Emergency Orders to address issues raised by a customer's continued consumption of gas in violation of the proposed rules, particularly in situations where the NGDC is unable to discontinue service. To the extent that comments demonstrate a need for further Commission directives on these issues, we will initiate a separate proceeding at the appropriate time.
To ensure the continued safety and reliability of natural gas service in this Commonwealth, the Commission proposes to amend Chapter 59 by amending § 59.63, adding §§ 59.71--59.75, which establishes regulations for natural gas emergency plans and curtailment safety and reliability, and eliminating §§ 69.21--69.27 of the Commission's regulations. Accordingly, under section 501 of the code, and the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202), and regulations promulgated thereunder at 1 Pa. Code §§ 7.1--7.4, the Commission amends the regulations as noted to read as set forth in Annex A;
Therefore, It Is Ordered That:
(1) A rulemaking docket shall be opened to promulgate regulations for gas emergency plans as set forth in Annex A.
(2) The Secretary shall submit a copy of this order and Annex A to the Office of Attorney General for preliminary review as to form and legality.
(3) The Secretary shall submit a copy of this order, together with Annex A, to the Governor's Budget Office for review of fiscal impact.
(4) The Secretary shall submit this order and Annex A for review and comments by the designated standing committees of both houses of the General Assembly, and for review and comments by IRRC.
(5) The Secretary shall certify this order and Annex A and deposit them with Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
(6) Within 30 days of this order's publication in the Pennsylvania Bulletin, any interested person may submit an original and 15 copies of written comments to the Office of the Secretary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA, 17105-3265. One copy of a diskette containing the comments in electronic format should also be submitted. A copy of written comments shall be served upon the Commission's Bureau of Conservation, Economics and Energy Planning. Reply comments will be due 15 days from the last date of the 30-day comment period.
(7) A copy of this order and Annex A shall be served upon the Office of Consumer Advocate, the Office of Small Business Advocate, the Office of Trial Staff, all jurisdictional natural gas distribution companies and all licensed natural gas suppliers, and provided to all interested persons.
JAMES J. MCNULTY,
SecretaryFiscal Note: 57-218. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PENNSYLVANIA PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
Chapter 59. GAS SERVICE
REPORTING AND CURTAILMENT OF SERVICE § 59.63. [Curtailment tariffs] Natural gas emergency plans.
As part of its officially filed tariff, each jurisdictional gas utility shall have on file with the Commission [detailed procedures for the curtailment of service] natural gas emergency plans. The [curtailment tariffs] plans shall be under Commission [guidelines] requirements [contained at] §§ [69.21--69.27 (relating to gas curtailment)] 59.71--59.75 (relating to gas emergency plans).
GAS EMERGENCY PLANS (Editor's Note: Sections 59.71--59.75 are new. The text has been presented in regular type to enhance readability.)
§ 59.71. Definitions.
The following words and terms, when used in this section and in §§ 59.72--59.75, have the following meanings, unless the text clearly indicates otherwise:
Alternate fuel--Any fuel other than natural gas.
Alternate fuel capability--The installed and operable ability to use any fuel other than natural gas on a time sensitive basis.
Commercial use--Gas usage by customers engaged primarily in the sale of goods and services including consumption by office buildings, institutions and government agencies.
Essential human needs use--Gas usage in any building where persons normally dwell including residences, apartment houses, dormitories, hotels, hospitals and nursing homes.
Firm service--Natural gas service offered to consumers under tariffs or contracts that anticipate no interruption.
Industrial use--Gas usage by customers engaged primarily in a process which creates or changes raw or unfinished materials into another form or product including the generation of electric power.
Interruptible service--Natural gas services that can be temporarily discontinued under terms and conditions specified by tariff or contract.
NGDC--Natural gas distribution company.
NGS--Natural gas supplier.
Plant protection use--Minimum usage of natural gas required to prevent physical harm to an industrial or commercial consumer's facility, or danger to personnel at the facility, when the protection cannot be afforded through the use of an alternate fuel. Plant protection use includes usage necessary for the protection of the material in process as would otherwise be destroyed, but does not include deliveries required to maintain production.
Residential use--Gas usage in a residential dwelling or unit for space heating, air conditioning, cooking, water heating or other domestic purpose.
§ 59.72. Natural gas emergency planning.
(a) By ______ (Editor's Note: The blank refers to a date 90 days from the effective date of adoption of this proposal.) or a later date as may be determined by the Commission, each NGDC shall file with the Commission a natural gas emergency plan reflecting its unique operational characteristics and design criteria. Each plan shall contain simplified and understandable rules and regulations so that all of the NGDC's customers and all NGSs licensed to provide services to their customers can have a responsive action plan in place to protect themselves and their property in the event of a crisis. NGDCs shall file revisions to their plans when and as appropriate, or as directed by the Commission.
(b) As part of their emergency planning, NGDCs are encouraged to make contractual or informal arrangements with their transportation customers, sales customers and others to obtain supplies or, as an alternative, to implement usage reductions, so that resorting to firm service reductions under § 59.73 (relating to emergency action) can be avoided, or the severity of supply or capacity disruption can be mitigated. The purpose of these arrangements is to provide a means to minimize the potential of supply shortfalls that threaten public health and safety, and not to make up for inadequate performance by individual parties.
(c) Each natural gas emergency plan shall include provisions addressing:
(1) Emergency load shedding.
(2) Voluntary usage reductions, for example, reducing space or water heating temperatures to levels specified by the NGDC.
(3) Mandatory usage reductions for certain customers consistent with § 59.73(c).
(4) Issuance of periodic reports to the media concerning the existing natural gas emergency.
(5) Notice to affected customers and NGSs of the expected initiation of emergency actions under § 59.73.
(6) Customer and NGS delivery requirements that apply during the term of emergency action under § 59.73, regardless of customer-specific usage reductions that arise or may arise from end-use curtailments.
(7) A procedure for focusing emergency measures to confined geographic or operational portions, segments or zones of the NGDC system where a natural gas emergency exists.
(8) Procedures for establishing communications with electric system control area operators, if the NGDC provides gas service to electric generation stations.
(d) Each natural gas emergency plan should specify the procedures the NGDC shall use to provide notices to affected customers, their NGSs and NGDCs. Notice to the public concerning usage reductions should be designed to avoid confusion in geographical areas served by more than one NGDC.
§ 59.73. Emergency action.
(a) An emergency exists whenever the aggregate demand of firm service customers on an NGDC's system or confined segment of the system exceeds or threatens to exceed the gas supply or capacity that is actually and lawfully available to the NGDC to meet the demands, and the actual or threatened excess creates an immediate threat to the NGDC's system operating integrity with respect to Priority 1 customers as defined in subsection (j).
(b) If, in the sole judgement of the NGDC, there is sufficient time, the NGDC will use reasonable business and operational efforts to: interrupt all interruptible services, issue operational flow orders, and call for voluntary usage reductions by all customers before taking any action under subsection (c). The NGDC shall take these three actions sequentially to the extent feasible.
(c) In the event of an emergency under subsection (a), the NGDC may require each commercial and industrial retail and transportation customer that is not a Priority 1 customer under subsection (i) to reduce its consumption of gas.
(1) The reduction required shall be determined by the utility without regard to priorities of use, as necessary to minimize the potential threat to public health and safety.
(2) The minimum authorized usage may not be lower than the minimum usage of firm service necessary for plant protection use.
(3) When all other service has been curtailed except for Priority 1 service and the NGDC continues to be unable to meet Priority 1 requirements, the NGDC will exercise its judgment as to any further curtailment that may be necessary and will utilize measures designed to minimize harm to customers if curtailments to plant protection use are found to be necessary.
(4) Consistent with its responsibility to maintain system integrity at all times, the NGDC shall restore service as soon as practicable to any gas-fired electric generation facility that is deemed critical to electric system reliability by the electrical system's control area operator.
(d) Mandatory reductions under subsection (c) shall be for a period specified by the NGDC until further notice. The NGDC may change a customer's authorized usage, upon notice, at any time during an emergency.
(e) Mandatory reductions under subsection (c) shall be for a maximum duration of 5 business days unless extended by Commission order. As an alternative to extending mandatory reductions under subsection (c), the Commission may order the NGDC to initiate priority-based curtailments under subsection (f).
(f) In determining whether to order the NGDC to initiate priority-based curtailments, the Commission will examine whether the NGDC did the following:
(1) Interrupted all interruptible services.
(2) Issued operational flow orders.
(3) Called for voluntary usage reductions by all customers.
(g) Upon issuance of an order to initiate priority-based curtailments, the NGDC shall provide all affected customers the maximum notice possible, via telephone, fax or electronic data interchange, specifying the curtailment percentage of the customer's firm gas service and resulting allowance as may be the case.
(h) Upon issuance of an order to initiate priority-based curtailments, the available gas supplies to the NGDC should be prorated among its customers in accordance with the following priorities of use:
(1) Customers in a higher priority will not be curtailed until all customers falling into a lower category have been restricted to plant protection use levels, unless operational circumstances or physical limitations warrant a different result.
(2) Where only a partial restriction of a classification is required, implementation should be pro rata.
(3) The pro rata rationing, to the extent practical under the circumstances, will be based on a method set forth in the NGDC's tariff.
(i) Following are the priority categories, listed in descending order, pertaining to the curtailment of firm services:
(1) Priority 1. Service for essential human needs use.
(2) Priority 2. Firm services not included in essential human needs use.
(j) As part of its natural gas emergency plan, an NGDC may divide any or all of the priority of use categories in subsection (i) into subcategories.
§ 59.74. Utility liability.
(a) Each NGDC may restrict or discontinue service in accordance with this section and §§ 59.71--59.73 and 59.75 without thereby incurring any penalty or liability for any loss, injury or expense that may be sustained by the customer except when the restriction or discontinuation of service is as a result of the NGDC's willful or wanton misconduct.
(b) NGDC liability for actions taken under § 59.73 (relating to emergency action), or to a regulation, policy statement, directive or order issued by the Commission or an emergency order issued by the Governor shall be governed by the following principles:
(1) If an NGDC appropriates natural gas during an emergency action, the NGDC will compensate the applicable entity, whether the customer or the customer's NGS, for the cost of lost, firm gas service. The compensation, in the aggregate, shall equal but not exceed the greater of: the city gate cost of the appropriated natural gas, including transportation charges up to the NGDC's city gate, or the reasonable cost actually paid by the customer for delivered substitute energy, as documented to the NGDC. NGDCs may provide compensation in kind only at the discretion of the affected customer or NGS.
(2) The NGDC will have the right to discontinue service, for the duration of an emergency, to a customer that continues to take gas in violation of the rules found in this subchapter.
§ 59.75. Penalties for unauthorized takes.
The tariff, operating practices, and billing periods of the NGDCs and their suppliers differ significantly. Therefore, each NGDC is permitted to utilize its own appropriate billing periods for calculating pipeline transportation, storage service, and balancing or other penalties and its own tariffed procedure for imposing those penalties on customers who take gas service and NGSs who operate in a manner that is contrary to the rules and regulations of this chapter.
CHAPTER 69. GENERAL ORDERS, POLICY STATEMENTS AND GUIDELINES ON FIXED UTILITIES
[GAS CURTAILMENT] (Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the text of §§ 69.21--69.27 (relating to gas curtailment), which currently appears in 52 Pa. Code pages 69-16.2--69.21, serial pages (271646)--(271650), (201989), (201990), (263695), (263696) and (201993).)
§§ 69.21--69.27. (Reserved).
[Pa.B. Doc. No. 01-220. Filed for public inspection February 9, 2001, 9:00 a.m.]
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