Pennsylvania Consolidated & Unconsolidated Statutes
Chapter 22 - Natural Gas Competition
Section 2204 - Implementation

(a) Commencement of customer choice.--Beginning on November 1, 1999, unless the commission for good cause shown extends this period by no more than eight months, consistent with this chapter, all retail gas customers of natural gas distribution companies other than city natural gas distribution operations shall have the opportunity to purchase natural gas supply services from a natural gas supplier or their natural gas distribution company to the extent it offers such services. The choice of natural gas suppliers shall rest with the retail gas customer. The commission shall adopt orders, rules, regulations and policies as shall be necessary and appropriate to implement fully this chapter within the time frames specified in this chapter, provided that the commission may, in the context of each natural gas distribution company's restructuring proceeding, establish the time frames for implementation of specific components of each natural gas distribution company's restructuring plan.
(b) Restructuring filings.--All natural gas distribution companies in this Commonwealth, except city natural gas distribution operations, shall file with the commission, pursuant to a schedule to be determined by the commission in consultation with the natural gas distribution companies, a restructuring filing consistent with this chapter and with any orders, rules or regulations adopted by the commission. A city natural gas distribution operation shall file with the commission its restructuring filing pursuant to section 2212 (relating to city natural gas distribution operations).
(c) Commission review.--
(1) The commission shall review the restructuring filing of each natural gas distribution company and shall, after open evidentiary hearings with proper notice and opportunity for all parties to cross-examine witnesses and brief issues, issue an order accepting, modifying or rejecting such filing at the earliest date possible, but no later than nine months from the filing date.
(2) In issuing the restructuring order, the commission may consider the results of any collaborative process previously engaged in during or prior to the restructuring proceeding.
(3) If the commission modifies or rejects a restructuring filing, it shall state the specific reasons for modification or rejection and direct the natural gas distribution company to address such objections with another filing within 30 days of the entry date of the commission order modifying or rejecting the prior filing.
(4) The commission shall review the alternative filing, solicit comments and reply comments from interested parties and issue a final order within 45 days of the revised filing.
(5) The restructuring filing for a city natural gas distribution operation shall also include an initial tariff filing.
(d) Release, assignment or transfer of capacity.--
(1) A natural gas distribution company holding contracts for firm storage or transportation capacity, including gas supply contracts with Pennsylvania producers, on the effective date of this chapter, or a city natural gas distribution operation on the date the commission assumes jurisdiction over such city natural gas distribution operation, may at its option release, assign or otherwise transfer such capacity or Pennsylvania supply, in whole or part, associated with those contracts on a nondiscriminatory basis to licensed natural gas suppliers or large commercial or industrial customers on its system.
(2) Contracts which by their terms must be renewed within 150 days after the effective date of this chapter or, with respect to a city natural gas distribution operation, within 90 days after the date the commission assumes jurisdiction over such city natural gas distribution operation or contracts for which the last day for notice of renewal or nonrenewal pursuant to the notice provision of the contract has occurred or is within 150 days after the effective date of this chapter or, with respect to a city natural gas distribution operation, within 90 days after the date the commission assumes jurisdiction over such city natural gas distribution operation and which are renewed pursuant to such notice requirements shall also be subject to the provisions of this subsection.
(3) Such release, assignment or transfer shall be at the applicable contract rate for such capacity or Pennsylvania supply and shall be subject to applicable contractual arrangements and tariffs. The amount so released, assigned or transferred shall be sufficient to serve the level of the customers' requirements for which the natural gas distribution company has procured such capacity, determined in accordance with the natural gas distribution company's tariff or procedures approved in its restructuring proceedings.
(4) The licensed natural gas supplier shall accept such release, assignment or transfer of that capacity or Pennsylvania supply and enter into all applicable contracts or agreements as a condition of serving retail gas customers on the natural gas distribution company's system.
(5) On or after July 1, 2002, or, in the case of a city natural gas distribution operation, March 1, 2005, the commission shall have the authority to prevent such assignments, releases or transfers under either of the following circumstances:
(i) the natural gas distribution company, alone or together with one or more natural gas suppliers, voluntarily proposes an alternative to such assignments, releases or transfers and the commission finds such alternative to be in the public interest; or
(ii) upon the petition of the licensed natural gas supplier who desires to use alternate interstate storage or transportation capacity to serve its customers on the natural gas distribution company's system, the commission makes the following findings and issues a final order as to which all appeals have been exhausted in which:
(A) The commission finds that the alternate capacity which the natural gas supplier seeks to utilize meets the operational needs and reliability standards of the natural gas distribution company.
(B) The commission confirms that the natural gas distribution company's specific transportation and storage capacity contracts to be displaced are no longer needed to serve firm customers of the natural gas distribution company.
(C) The commission authorizes the natural gas distribution company to follow a specific, written mitigation plan approved by the commission or, if such a plan is not approved or applicable, to post the displaced capacity for release in accordance with the rules and regulations of the Federal Energy Regulatory Commission and applicable requirements of interstate pipelines.
(D) The commission authorizes the natural gas distribution company to recover the difference between the amount the natural gas distribution company is required to pay under the applicable contract terms for the capacity released, assigned or transferred pursuant to clause (C) and the amount the natural gas distribution company receives from an entity, if any, that acquires such capacity. Under no circumstances, however, shall such recovery result in shifting of costs between customer classes or in any increase in rates to customers who continue to purchase natural gas supplies from the natural gas distribution company acting in its supplier of last resort function.
(6) Prior to making the filing provided for in paragraph (5), the natural gas supplier shall meet with the natural gas distribution company to discuss the natural gas supplier's proposed alternatives to the existing gas supply or capacity contracts or to their mandatory assignment.
(7) Those natural gas distribution companies having gas supply contracts with Pennsylvania producers may address the issue of post-July 1, 2002, assignment of such contracts in their restructuring proceeding or thereafter.
(e) New and renewed capacity.--
(1) Subject to the service obligations imposed by this title, and to the extent such capacity is not needed to meet the natural gas distribution company's least-cost fuel procurement and other applicable standards pursuant to this title, prior to entering into new or renewed contracts for firm storage or transportation capacity not subject to subsection (d)(1), (2), (3) or (4), each natural gas distribution company shall offer on a nondiscriminatory basis to each natural gas supplier licensed to do business on its system, and to large volume industrial or commercial customers of the natural gas distribution company being served by such contracts, the opportunity to renew such contracts, pursuant to the rules and regulations of the Federal Energy Regulatory Commission, or to enter into other contracts for capacity.
(2) The capacity shall meet the reliability criteria of the natural gas distribution company and, in the case of large volume industrial and commercial customers being served by such contracts, shall meet their current requirements.
(3) Each natural gas distribution company shall utilize the collaborative process established pursuant to subsection (f) to address its capacity requirements.
(4) Absent the natural gas supplier or large volume industrial or commercial customer taking or providing such capacity, the natural gas distribution company shall file with and obtain approval from the commission for such contracts necessary to ensure sufficient capacity to meet current and projected customer requirements considering the commitments of natural gas suppliers.
(5) Prior to being displaced by a natural gas supplier's alternate interstate storage or transportation capacity, contracts renewed or entered into by the natural gas distribution company pursuant to this subsection shall be subject to the process set forth in subsection (d).
(f) Working group and collaborative process.--In its restructuring proceeding, a natural gas distribution company shall set forth a process to establish a working group of licensed natural gas suppliers having customers on the natural gas distribution company's system and representatives of the residential, commercial and industrial customer classes to:
(1) Meet on a scheduled basis.
(2) Seek resolution of operational and capacity issues related to customer choice.
The final determination of operational and reliability issues resides with the natural gas distribution company. In addition, the natural gas distribution company shall include in its restructuring filing a collaborative process to address broader issues relating to unbundling, customer choice and deregulation.
(g) Investigation and report to General Assembly.--Five years after the effective date of this chapter, the commission shall initiate an investigation or other appropriate proceeding, in which all interested parties are invited to participate, to determine whether effective competition for natural gas supply services exists on the natural gas distribution companies' systems in this Commonwealth. The commission shall report its findings to the General Assembly. Should the commission conclude that effective competition does not exist, the commission shall reconvene the stakeholders in the natural gas industry in this Commonwealth to explore avenues, including legislative, for encouraging increased competition in this Commonwealth.
(h) Displaced employee program.--The Department of Labor and Industry shall establish and implement a program to assist the natural gas distribution company employees who are displaced by the transition to retail competition precipitated by this chapter. The program shall be designed to assist employees in obtaining employment and shall consist of utilizing the Federal funds available for the purpose of retraining and outplacement services for such employees.
(i) Audit requirement.--Prior to the commencement of the restructuring proceeding of a city natural gas distribution operation, the commission shall provide for an independent management audit of all employees, records, equipment, contracts, assets, liabilities, appropriations and obligations related to a city natural gas distribution operation pursuant to section 516 (relating to audits of certain utilities). The city natural gas distribution operation shall have a 60-day period to submit written comments on the audit report to the commission.

Cross References. Section 2204 is referred to in sections 2203, 2206, 2211, 2212 of this title.