PROPOSED RULEMAKING
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[ 52 PA. CODE CH. 62 ]
[39 Pa.B. 6078]
[Saturday, October 17, 2009][ L-2009-2069117/57-268 ]
Natural Gas Distribution Company; Business Practices The Pennsylvania Public Utility Commission (Commission) on April 30, 2009, adopted a proposed rulemaking order which establishes standard business practices and communication standards for natural gas distribution companies (NGDCs).
Executive Summary
In its October 2005 Report to the General Assembly, the Commission found that effective competition was not in Pennsylvania's Statewide retail natural gas market, based in part on the low participation rate of natural gas suppliers (NGSs). (Docket No. I-00040103.) The lack of uniformity in NGDC business practices, operating rules and supplier tariffs was cited as a possible market barrier to supplier entry and participation.
Based on the Commission's findings, a collaborative of natural gas industry stakeholders (SEARCH) was convened to discuss ways to increase competition. The SEARCH Report suggested that standardizing NGDC operating rules, business practices, requirements, penalties and procedures could remove barriers to NGS participation. The Commission adopted this suggestion in its September 11, 2008, Final Search Order and Action Plan, Docket No. I-00040103F0002, and directed that a proposed rulemaking be initiated to revise and, when feasible, to standardize NGDC business practices, operating rules and supplier coordination tariffs.
This rulemaking sets forth proposed regulations in §§ 62.181—62.185 that direct NGDCs to submit standard supplier coordination tariffs (SCTs), and to implement standard business practices and communication standards and formats that are cost-effective and remove market barriers. Proposed regulation § 62.184 provides for NGDC recovery of reasonable costs prudently incurred directly attributable to the implementation.
____ Public Meeting held
April 30, 2009Commissioners Present: James H. Cawley, Chairperson; Tyrone J. Christy, Vice Chairperson, Concurring in result only, Statement; Robert F. Powelson; Kim Pizzingrilli; Wayne E. Gardner
Natural Gas Distribution Company Business Practices; Doc. No. L-2009-2069117
SEARCH Final Order and Action Plan for Increasing Effective Competition in Pennsylvania's Retail Natural Gas Supply Services Market; Doc. No. I-00040103F0002
Proposed Rulemaking Order By the Commission:
On September 11, 2008, the Commission adopted its Final SEARCH Order and Action Plan which was based on the discussions held by the SEARCH1 stakeholders.2 Order entered September 11, 2008 at Docket No. I-00040103F0002 (SEARCH Order). The Action Plan was designed to increase effective competition in Pennsylvania's retail natural gas market by increasing the participation of NGSs in the market. In the SEARCH Order, we directed that a proposed rulemaking be initiated to revise and, when feasible, to standardize NGDC business practices, operating rules and supplier coordination tariffs.
By this order, we issue for comment the proposed regulations that, inter alia, direct NGDCs to submit standard SCTs, and to implement standard business practices and communication standards and formats that the Commission determines to be cost-effective and that remove market barriers. The proposed regulations also provide for NGDC recovery of reasonable costs prudently incurred directly attributable to the implementation.
We also announce our intent to initiate a stakeholder process that will run concurrently with the rulemaking and will provide an additional avenue for public input. The stakeholder process will be used to develop a standard SCT, and will make recommendations for the adoption of standard business practices for the retail natural gas market.
Discussion
In the SEARCH Order's Action Plan, the Commission directed that a proposed rulemaking be prepared ''to revise and, when feasible, standardize supplier coordination tariffs and NGDC system operating rules, business practices, requirements, penalties and procedures to remove or reduce barriers to supplier participation in the retail natural gas market.'' SEARCH Order, page 32.
The order further directed that the major issues to be addressed would include:
• The elimination or revision of inflexible or unreasonable nomination rules and delivery requirements.
• The adoption of wider tolerance bandwidths, where justified, and the elimination or revision of other rules affecting system flow that do not negatively impact system reliability.
• The revision of unreasonable cash out rules and penalties.
• The adoption of best business practices related to information exchange and data transfer, including the possible standardization of NGDC business practices by the adoption of certain NAESB [North American Energy Standards Board] practices.
The use and standardization of Electronic Bulletin Boards will also be addressed.
SEARCH Order, pages 32-33 (footnote omitted).
These issues are addressed under the corresponding sections of the rulemaking below.
§ 62.181. General.
Proposed § 62.181 sets forth the purpose of these proposed regulations and summarizes its contents. The purpose of this subchapter is to establish standard business practices, including supplier tariffs for implementation by the NGDCs. Using a common set of business practices, including standard supplier tariffs, facilitates the participation of NGSs in the retail market, reduces the potential for mistakes or misunderstandings between NGSs and NGDCs, and increases efficiency in industry operations. NGDCs are directed to implement a standard SCT, business practices and communications standards as directed by the Commission. NGDCs are authorized to recover reasonable costs prudently incurred of implementing and promoting natural gas competition in the Commonwealth.
§ 62.182. Definitions.
Terms appearing in this subchapter relating to NGDC business practices and NGDC/NGS interactions are defined.
§ 62.183. NGDC Customer Choice System Operations Plan.
Section 62.183 directs NGDCs to file system operations plans for Commission review, and to serve a copy of the plan on the Office of Consumer Advocate, the Office of Small Business Advocate, and NGSs licensed in the NGDC's service territory. Copies of the plan shall be provided to other NGSs upon request and shall be posted on the NGDC's web site. The contents of the NGDC's plan are to include an SCT, business practices and standards, and communications standards that comply with the provisions of the subchapter. The plan is also to include a copy of each standard agreement, form or contract that will be used by NGSs in operating on the system.
The customer choice system operations plan serves two purposes. First, it is a compliance filing that demonstrates that the NGDC has adopted a standard SCT and other business practices and standards consistent with the requirements of this subchapter. Second, the plan acts as a complete, single source for all the information that a supplier needs to know to conduct business and operate on the NGDC's system. Having all the necessary information in one place and having it freely accessible to all, will lower an entry barrier for NGSs contemplating market entry, and will reduce the potential for mistakes or misunderstandings between NGSs and NGDCs. In the time, it should increase efficiency in industry operations and should result in increased NGS participation in the retail natural gas market.
§ 62.184. Natural Gas Distribution Company Costs of Competition Related Activities
In the Proposed Rulemaking Order on Natural Gas Distribution Companies and the Promotion of Competitive Retail Markets, Order entered March 27, 2009 at Docket No. L-2008-2069114 (PRO), we determined that NGDCs could recover reasonable costs related to promoting competition in the retail gas market through the use of a surcharge. We also proposed the adoption of an automatic adjustment mechanism for the surcharge and determined that, because the surcharge will be paid by all customers, it would not be used in calculating the price to compare.
In our Action Plan, we concluded that the NGDCs ''should be able to recover reasonable costs that are prudently incurred in connection with the implementation of any changes designed to promote the development of effective competition in the retail market.'' Action Plan at 21. Such costs also include expenses associated with increasing customer participation in the market such as modifications to NGDC billing systems or increased consumer education activities. Id. We determined that we would allow NGDCs to recover these costs through a surcharge with an automatic adjustment mechanism. We are adopting such a mechanism today in § 62.226.However, we note that to the extent it helps promote competition, the surcharge for competition related activities benefits all customers and, therefore, it should be paid by all customers, shoppers and non-shoppers alike. Because of that, this surcharge should not be considered in the calculation of the price to compare.PRO, page 7.
Proposed § 62.184 in Annex A reiterates the language in proposed § 62.226 that authorizes NGDCs to recover reasonable costs prudently incurred in support of increasing competition through the use of surcharge with an automatic adjustment mechanism. In the event that § 62.226 is finalized while this rulemaking is pending, § 62.184 will be revised to cite to § 62.226.
§ 62.185. Supplier Coordination Tariff, Business Practices And Standards.
The SEARCH Order, quoting the SEARCH Report, discussed streamlining and/or standardizing certain business interactions between NGDCs and NGSs rather than requiring NGDCs to migrate to a preferred asset management system.
Requiring all NGDCs to migrate to a preferred model for managing system assets would require comprehensive legislative changes and subsequent Commission proceedings to ensure due process related to property rights. However, certain business practices governing interactions between the suppliers and the NGDC can be tailored to operate within the preferred model. SEARCH Report, page 13. This preferred model would streamline and/or standardize certain interactions between the NGSs and NGDCs involving gas supply management on the NGDC system.SEARCH Order, pages 27-28.
It was determined that these best business practices could be defined and memorialized in a generic supplier's tariff, or promulgated in Commission regulations. SEARCH Report, page 13.
A suggested approach to achieve some level of standardization was through the adoption of business practices and forms that were developed by the North American Energy Standards Board (NAESB). The reason for this approach was that changes to NGDC business practices would require less time to implement and would result in lower costs to the NGDCs and their customers because of the previous work that NAESB had already completed in this area. SEARCH Report, page 14.
NAESB3 is a nonprofit, standards development organization accredited by the National Standards Institute.4 NAESB develops definitions, standards and principles for the wholesale and retail natural gas industry through an open and balanced process involving all stakeholders—NGDCs, NGSs, pipeline operators, consumer representatives and regulatory agencies. NAESB standards and definitions for the wholesale natural gas industry have been adopted by the FERC as regulations and are required to be included or incorporated into interstate pipeline tariffs.
The suggestion to use NAESB standards for developing standards for the Pennsylvania retail market was based on the work of a subgroup of the SEARCH Inter-Company Activity Subgroup. This technical subgroup, which was comprised of representatives from NGDCs, NGSs and pipelines, reviewed each NAESB standard and business practice and identified agreement and disagreement on eight operational issues that included NAESB wholesale gas nomination standards and retail business practices in nine areas: (1) market participant interactions; (2) creditworthiness; (3) billing and payments; (4) distribution company/supplier disputes; (5) Electronic Data Interexchange and Internet Electronic Delivery Mechanisms; (6) Quadrant Specific Electronic Delivery Mechanism; (7) contracts; (8) customer information and customer enrollment, (9) drop and account maintenance. SEARCH Report, p. 13.
This subgroup's work clearly demonstrates that standardizing business practices requires resolution of many complicated and interrelated issues. Commission working groups and other stakeholder processes have been very successful in developing proposed regulations and technical standards where the issues are complex and consensus is not easily reached. Therefore, we believe that the most efficient way to develop a standard SCT and best business practices is through the use of a stakeholder process.
Accordingly, we plan to utilize a stakeholder process in conjunction with this rulemaking. This process will proceed concurrently with the proposed rulemaking and will provide another avenue for public input.
To initiate this stakeholder process, we will issue for comment a draft SCT and draft best business practices for use in Pennsylvania's retail markets. This straw man proposal will be based on comments and other documents submitted in the SEARCH5 process and in our investigation into natural gas competition at Docket No. I-00040103. NAESB standards that are cost-effective and that remove barriers to market entry and participation will be incorporated in the straw man proposal as well as the specific rules related to nomination and delivery requirements that are included in proposed § 62.185(c)(3) in Annex A.
After comments and reply comments are submitted to the straw man proposal, we will schedule a technical conference to receive additional input. We intend to complete the stakeholder process no later than August 1, 2009.
In regard to the instant proposed rulemaking, § 62.185(a) is a general statement related to the scope of the section. It states that the Commission may adopt best business practices and standards that facilitate supplier participation in the retail market and may direct NGDC and NGS compliance with the standards. It also states that NAESB standards and model agreements that are cost effective and remove market barriers for suppliers will be considered for adoption.
Proposed § 62.185(b) addresses SCTs. The section states that the Commission may establish and revise the standard SCT, and will direct NGDCs to implement an SCT based on the standard SCT that conforms to the NGDC's customer choice system operations plan. The NGDC's existing SCT, if any, will remain in effect until the Commission approves an SCT or tariff supplement that complies with this regulation.
Proposed § 62.185(c) states that the Commission may establish business practices as necessary to implement the Act, and may direct their adoption by NGDCs and NGSs. The NGDC's implementation of business practices and standards will be included in the NGDC's customer choice system operations plan.
Proposed § 62.185(c)(3) sets forth proposed standards on five technical subjects: imbalance trading, tolerance bands, cash out and penalties, nominations, and capacity. Because of the complexity of each of the subjects, we recognize that it may not be feasible to draft a regulation that can be applied in every situation. For this reason, we will instruct the stakeholders to consider developing best practices for use by NGDCs in addition to regulations for these subjects.
Proposed § 62.185(d) addresses communication standards and formats. This section states that the Commission may establish and revise electronic data communication standards and formats and may direct their implementation by NGDCs and NGSs. Standards and formats may be implemented for nominations and delivery requirements and customer enrollment, usage and billing and payments.
Additionally, proposed § 62.185(d) makes the NGDC responsible for testing and certifying NGSs on the approved communications standards. Also, this proposed section states that the Commission, after notice and opportunity to be heard, may direct an NGDC to install and upgrade a billing system, electronic bulletin board, software and other communication or data transmission equipment and facilities to implement established electronic data communications standards and formats.
In regard to the implementation of proposed § 62.185(d), we will convene a separate working group of technical experts to establish electronic data communication standards and formats. NGDC participation in the working group will be made mandatory. The working group will be led by Commission staff and will make recommendations in regard to the standards and formats that should be adopted. In making these recommendations, consideration should be given to incorporating NAESB standards that are cost-effective and that remove barriers to market entry for suppliers.
The stakeholder collaborative will also be assigned the task of developing a plan, including a time frame, for implementation of electronic data communications standards and formats. The plan should identify priorities for implementation, including interim steps that should be taken immediately to rectify market barriers in information exchange (Information Exchange and Data Transfer). The technical working group will carry out its work in accordance with this plan.
Conclusion
The use of a common set of business practices and supplier coordination tariffs not only will increase efficiency in industry operations, but also, and most importantly, will facilitate the entry and participation of NGSs in the retail natural gas supply market. The purpose of this proposed rulemaking is to develop and to codify these standards for Pennsylvania's natural gas retail market. The scope of, and the time frame for this undertaking is ambitious, and its completion will require the commitment and cooperation of all industry stakeholders. We are convinced that the effort will be worthwhile as the resulting market place will better support supplier participation and thus, will increase competition for natural gas supply. We anticipate and appreciate your comments on this proposed rulemaking.
Accordingly, pursuant to §§ 501, 504 and 2201—2212 of the Public Utility Code, 66 Pa.C.S. §§ 501, 504 and 2201—2212; sections 201 and 202 of the act of July 31, 1968, (P. L. 769 No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder at 1 Pa. Code §§ 7.1, 7.2, and 7.5; section 204(b) of the Commonwealth Attorneys Act (71 P. S. § 732.204(b)); section of the Regulatory Review Act (71 P. S. § 745.5); and section 612 of The Administrative Code of 1929 (71 P. S. § 232), and the regulations promulgated thereunder in 4 Pa. Code §§ 7.231—7.234, we are proposing to amend our regulations as set forth in Annex A, attached hereto;
Therefore, it is Ordered That:
1. A rulemaking docket shall be opened to amend the regulations in 52 Pa. Code Chapter 62 (relating to natural gas supply customer choice) by adding §§ 62.181—62.185 as 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 comments to the Independent Regulatory Review Commission and the 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.
5. An original and 15 copies of written comments referencing the docket number of the proposed regulations be submitted within 45 days of publication in the Pennsylvania Bulletin to the Pennsylvania Public Utility Commission, Attn.: Secretary, P. O. Box 3265, Harrisburg, PA 17105-3265. Reply comments may be submitted in the same manner no later than 15 days after the end date for filing comments. To facilitate posting, all filed comments shall be forwarded by means of electronic mail to Patricia Krise Burket at pburket@state.pa.us, Annunciata Marino at annmarino@state.pa.us and Cyndi Page at cypage@ state.pa.us.
6. A copy of this order and Annex A shall be served on all jurisdictional natural gas distribution companies, all licensed natural gas suppliers, the Office of Consumer Advocate, the Office of Small Business Advocate and all other parties that filed comments at the Docket No. I-00040103.
7. The Director of Operations shall implement the stakeholder process to create a standard supplier coordination tariff; to develop best business practices for use in natural gas retail markets and to establish a plan for the implementation of electronic data communications standards and formats as set forth in this order.
8. The Director of Operations, with the assistance of the Bureau of Fixed Utility Services and other bureaus as may be necessary, shall initiate a working group to establish electronic data communication standards and formats as set forth in this order.
9. The contact persons for this proposed rulemaking are Patricia Krise Burket, Law Bureau, (717) 787-3464 (legal) and Annunciata Marino, (717) 772-2151 (technical).
By the Commission
JAMES J. MCNULTY,
Secretary
Statement of Vice Chairperson Tyrone J. Christy Before the Commission for consideration is the initiation of a proposed rulemaking proceeding to promulgate regulations that are designed to encourage increased natural gas supply competition among our jurisdictional NGDCs and licensed NGSs. The genesis of this rulemaking is the Commission's Report to the General Assembly on Pennsylvania's Retail Natural Gas Supply Market that was released in October 2005. In that report, the Commission determined that effective competition did not exist in Pennsylvania's retail natural gas market, and subsequently reconvened the stakeholders in the natural gas industry to identify existing barriers to competition. In our SEARCH Final Order and Action Plan issued on September 11, 2008, the Commission identified several initiatives to eliminate these barriers to competition. The rulemaking before us today addresses the standardization of NGDC business practices, operating rules and supplier coordination tariffs (SCT).
Besides issuing these proposed regulations for comment, the Commission also is initiating a stakeholder process to run concurrently with the proposed rulemaking. The purpose of this group is to develop a standard SCT and to make recommendations for the adoption of standard business practices for the retail natural gas market. In order to begin this process the Commission intends to issue a draft SCT and a draft ''best business practices'' plan for comments and reply comments. A technical conference then will be held to finalize these proposed documents. Additionally, the Commission intends to convene a separate technical working group for the purpose of establishing communication standards.
My main concerns as we embark on this process are the potential cost ramifications of some of the proposed changes in operational rules and practices. Changes are being proposed with regard to imbalance trading, tolerance bands, cash-out rules, nominations and capacity access. Throughout this proposed rulemaking it is stated that only those practices and standards determined to be cost-effective by the Commission will be implemented. ''Cost effective'' is not defined by the Order, and therefore can be subjective. While some provisions may be deemed cost effective to alternative suppliers, they could be detrimental to non-shopping customers. The Order further states that the proposed regulations will limit NGDC cost recovery to reasonable costs prudently incurred that are directly attributable to the implementation of these changes. In order to provide for recovery of these potential costs, the proposed regulations will establish an automatically adjusted surcharge mechanism to be paid by all customers, whether they decide to exercise their right to choose or not. As such, this charge will not be included within the NGDC's price to compare. Also, as the proposed surcharge is to be determined within each NGDC's annual 1307(f) proceeding, these proceedings will become more complicated in the future, potentially increasing the costs of all parties participating in the adjudication of these cases, including the Commission.
What this means in plain English is that we potentially are imposing new non-bypassable costs on Pennsylvania gas consumers so that we can create a more competitive environment for alternative suppliers. If the goal of competition is to level the playing field and provide consumers with choices that could result in cost savings, then I would support such charges. However, if the end results of leveling the playing field is simply to add new non-bypassable costs that otherwise would not have been incurred, then I would be less inclined to support such charges. Alternative gas suppliers have a significant hurdle here to demonstrate that savings are possible with retail natural gas choice in the residential sector, particularly when the NGDCs are required by statute to procure their gas supply under a Commission approved least cost procurement standard with no provision for a profit on that cost. While both NGDCs and alternative suppliers generally obtain natural gas from the same market, alternative suppliers must earn a profit on that gas—otherwise they would not be in business. The alternative suppliers must find enough efficiencies somewhere in their gas procurement practices to earn a profit while undercutting what has been blessed as a least cost gas procurement by the NGDC.
Therefore, I request parties to consider addressing in their comments, which are due within 45 days of publication in the Pennsylvania Bulletin, and in their reply comments due 15 days thereafter, the potential costs involved in the implementation of the directives within this rulemaking. I believe it is incumbent upon the Commission to determine beforehand the economic effect of these proposals.
Because of my concern over the unknown magnitude and nature of these potential costs, I will concur in the result only of this proceeding for the purpose of seeking comments from interested parties.
TYRONE J. CHRISTY,
Vice ChairpersonFiscal Note: 57-268. 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 F. NATURAL GAS DISTRIBUTION COMPANY BUSINESS PRACTICES (Editor's Note; Proposed §§ 62.181 and 62.185 are new and are printed in regular type to enhance readability.)
§ 62.181. General.
The use of a common set of business practices, including standard supplier tariffs, facilitates the participation of NGSs in the retail market, reduces the potential for mistakes or misunderstandings between NGSs and NGDCs, and increases efficiency in industry operations. This subchapter requires NGDCs to implement a standard supplier coordination tariff, business practices and communication standards and formats as directed by the Commission. NGDCs are authorized to recover reasonable and prudently incurred costs of implementing and promoting natural gas competition in this Commonwealth.
§ 62.182. Definitions.
The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:
Asset management—A function of the system operations of an NGDC relative to daily NGS and pipeline interactions relating to nominations, capacity, storage, delivery, balancing, reconciliation, penalties, forecasts and customer requirements, to assure safe, reliable natural gas service to the end user.
Balancing—The act of equalizing receipts and deliveries of gas into or withdrawals from an interstate gas pipeline or an NGDC's distribution system. Balancing may be accomplished daily, monthly or seasonally, with fees or penalties generally assessed for excessive imbalances.
Business practices—The use of a common set of formats, definitions and standards relating to business operations.
Capacity—The maximum quantity of natural gas that can be produced, transported, stored, distributed, or used in a given period of time under specified conditions.
Cash out—A generic term used to describe the corrective measures taken when an NGS's imbalance of natural gas supply in the system exceeds the prescribed tolerance.
City gate—The site where an NGDC receives and measures gas from a pipeline company.
Electronic bulletin board—A computer system that provides current natural gas information on nominations, interruptions, rates and other items.
Gas daily average—Index price for natural gas as published daily by Platts Gas Daily.
Imbalance—When an NGS receives or delivers a quantity of natural gas, then delivers or redelivers a larger or smaller quantity of natural gas to another party.
Intraday cycle—Under NAESB pipeline industry standards, one of two nomination cycles that permit a nomination to be made on the day of gas flow.
NAESB—North American Energy Standards Board—NAESB is a nonprofit standards development organization which develops business practice standards and communications and e-commerce protocols for the wholesale and retail natural gas industry.
NGDC—Natural gas distribution company—A natural gas distribution company as defined in 66 Pa.C.S. § 2202 (relating to definitions).
NGS—Natural gas supplier—A supplier as defined by 66 Pa.C.S. § 2202.
Nominations—A precise listing of the quantities of gas to be transported during any specified time period. A nomination includes all custody transfer entities, locations, compressor fueled and other volumetric assessments, and the precise routing of gas through the pipeline network. Nominations often create contract rights and liabilities.
OFO—Operational flow order—An order issued by an NGDC as defined in § 69.11 (relating to definitions).
PGC—Purchased gas cost—Natural gas costs which are collected, with adjustments, by NGDCs from their customers under 66 Pa.C.S. § 1307 (relating to sliding scale of rates; adjustments).
SCT—Supplier coordination tariff—The formal rules and regulations of an NGDC for providing NGS service to customers. It contains a compilation of all of the effective rate schedules of a particular company and the general terms and conditions of service.
Storage—Storing gas that has been transferred from its original location in underground reservoirs. Gas is usually stored in the summer for winter delivery reducing peak winter pipeline requirements. Storage can be in either the market or producing areas.
Timely cycle—Under NAESB pipeline standards, the initial nomination cycle where a nomination is due 12:30 p.m. prior to the day of gas flow.
Tolerance band—A range of acceptable values for the measured difference between the gas volume that is nominated to be delivered in a certain time frame and the gas volume that is delivered during that time frame by an NGS.
Uniform electronic transactions—Standard formats that allow all parties to develop the business process and automated systems needed to facilitate the exchange of business information in the energy industry in this Commonwealth.
§ 62.183. NGDC customer choice system operations plan.
(a) An NGDC shall file a customer choice system operations plan for Commission review to comply with this subchapter.
(b) The NGDC shall serve copies of the plan on the Office of Consumer Advocate, the Office of Small Business Advocate, and NGSs registered in the NGDC's service territory. Copies of the plan shall be provided upon request and shall be made available to the public on the NGDC's web site.
(c) A customer choice system operations plan must include the following elements:
(1) An SCT that complies with this subchapter.
(2) Business practices and standards that comply with this subchapter.
(3) Communication standards that comply with this subchapter.
(4) Copies of standard agreements, forms or contracts that will be used by NGSs.
§ 62.184. NGDC cost recovery.
(a) As part of its next annual filing under 66 Pa.C.S. § 1307(f) (relating to sliding scale of rates; adjustments), an NGDC may include a proposed tariff rider to establish a nonbypassable reconcilable surcharge filed within the requirements of 66 Pa.C.S. § 1307 designed to recover the reasonable and prudently incurred costs of implementing and promoting natural gas competition within this Commonwealth.
(b) The surcharge shall be calculated annually and adjusted to account for past over- or under-collections in conjunction with the 1307(f) process to become effective with new PGC rates.
(c) The surcharge shall be recovered on a per unit basis on each unit of commodity which is sold or transported over its distribution system without regard to the customer class of the end user.
(d) Before instituting the surcharge, an NGDC shall remove the amounts attributable to promoting retail competition from its base rates. This may be done through a 66 Pa.C.S. § 1308 (relating to voluntary changes in rates) rate case filed not less than 5 years after first seeking recovery through a 66 Pa.C.S. § 1307 nonbypassable mechanism.
(e) Until an NGDC which seeks a nonbypassable recovery of its costs of promoting retail competition files a base rate case under 66 Pa.C.S. § 1308(d), the NGDC shall eliminate the effect of recovery of these costs in base rates through the filing of a credit to its base rates equal to the amount in base rates. This may be accomplished through the use of a revenue neutral adjustment clause that would credit base rates for the costs associated with promoting retail competition that are currently reflected in base rates. Costs would be fully recoverable through a nonbypassable reconcilable surcharge. The adjustment clause would be established through the filing of a fully allocated cost of service study and a proposed tariff rider in the NGDC's proceeding, under 66 Pa.C.S. § 1307(f). The credit and surcharge shall be adjusted at least annually through the 66 Pa.C.S. § 1307(f) process.
(f) The revenue neutral adjustment clause rider shall remain in effect until establishment of new base rates under 66 Pa.C.S. § 1308(d) which include a fully allocated cost of service study to remove these costs from base rates.
(g) The surcharge shall be subject to audit.
§ 62.185. Supplier coordination tariff, business practices and standards.
(a) General. The Commission may adopt best business practices and standards that will facilitate supplier participation in the retail natural gas market and will direct NGDCs and NGSs to comply with the practices and standards. NAESB standards and model agreements that are determined to be cost-effective and which remove market barriers for supplier participation will be considered for adoption.
(b) Supplier coordination tariff. The Commission may establish a standard SCT and will direct that an NGDC implement an SCT that conforms to the standard SCT. The standard SCT may be revised in accordance with Commission orders, policies and regulations. The current version of the standard SCT will be made available on the Commission web site.
(1) An NGDC shall implement an SCT based on a standard format SCT that is consistent with its customer choice system operations plan.
(2) The NGDC shall file an SCT in accordance with Commission orders, policies and regulations. When the NGDC has an existing SCT, the NGDC shall file a tariff supplement.
(3) The NGDC's current supplier tariff or supplement shall remain in effect until the Commission approves an SCT or tariff supplement filed in compliance with this section.
(c) Business practices and standards. The Commission may establish best business practices and standards as necessary to implement the provisions of 66 Pa.C.S. Chapter 22 (relating to natural gas competition), and may direct their implementation by NGDCs and NGSs.
(1) An NGDC's implementation of business practices and standards shall be consistent with its customer choice system operations plan.
(2) An NGDC's business practices and the process by which they are adopted may not undermine existing negotiated settlements with NGSs, may not compromise the safety, efficiency, security and reliability of system operations, and may not be discriminatory.
(3) An NGDC shall implement the following standards:
(i) Imbalance trading. An NGDC shall facilitate NGS imbalance trading. An NGS's customers' natural gas usage shall be balanced against NGS deliveries on the same monthly schedule. For computational purposes relating to balancing, an NGDC shall eliminate separate pooling for an NGS's interruptible customers so they are deemed to be in the same operating pool.
(ii) Tolerance bands. A tolerance band shall provide for a deviation in the volume of gas delivered of at least 10% of the volume nominated by the NGS, thus establishing a tolerance band that spans 90% to 110% of the volume of gas nominated.
(iii) Cash out and penalties. An NGDC shall cash out imbalances that fall within the 10% tolerance band at 100% of the gas daily average at the applicable index for the pool level. Outside the 10% tolerance band, a multiplier of 110% for under-deliveries and 90% for over deliveries shall apply, except during periods of gas shortage requiring the issuance of an OFO to protect the safe and reliable operation of the NGDC system.
(iv) Nominations. An NGDC shall support all four NAESB nominations cycles and support the timely cycle and at least one intraday cycle.
(v) Capacity. An NGDC shall provide full access to pipeline and storage capacity and will support daily nominations and delivery requirements that reflect current pool consumption conditions.
(d) Communication standards and formats. The Commission may establish electronic data communication standards and formats and may direct their implementation by NGDCs and NGSs. Standards and formats may be implemented for nominations and delivery requirements and customer enrollment, usage and billing and payments.
(1) An NGDC shall be responsible for NGS testing and certification in regard to approved electronic data communication standards and formats.
(2) The Commission may, subject to notice and an opportunity to be heard, direct an NGDC to install and upgrade a billing system, electronic bulletin board, software and other communication or data transmission equipment and facilities to implement established electronic data communications standards and formats.
(3) Communication standards and formats shall be revised in accordance with Commission orders, policies and regulations. ______
1 SEARCH is an acronym for ''Stakeholders Exploring Avenues for Removing Competition Hurdles.''
2 The Stakeholders had been convened in accordance with 66 Pa.C.S. § 2204(g) (relating to investigation and report to General Assembly) based on the Commission finding that ''effective competition'' did not exist in the retail natural gas market. See Investigation into the Natural Gas Supply Market: Report to the General Assembly on Competition in Pennsylvania's Retail Natural Gas Supply Market, Order entered at Docket No. I-00040103. The SEARCH Report was drafted by Commission staff as a neutral overview of the discussions regarding the possible avenues to increase competition in Pennsylvania's retail natural gas supply market. The final version of the report was released as a companion to the SEARCH Final Order and Action Plan.
3 NAESB is a successor to the Gas Industry Standards Board (GISB), an organization that was incorporated in 1994 to develop business practice standards and communications and e-commerce protocols for the interstate natural gas industry. GISB's best known work involved the development of electronic transfer mechanism EDM standards which have been adopted for use in Pennsylvania's electric generation market.
4 The American National Standards Institute oversees the creation, promulgation and use of thousands of standards and guidelines that directly impact businesses.
5 The Statement and Combined Assessment Report on Market Participant Interactions, prepared for the Commission by the Inter-Company Activity NAESB Subgroup, dated October 31, 2006, shall also be considered in regard to uniform electronic communications transactions.
[Pa.B. Doc. No. 09-1931. Filed for public inspection October 16, 2009, 9:00 a.m.]
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