PUC Seeks Comments On Rule Changes To Increase Natural Gas Market Competition

As part of its ongoing efforts to increase competition in the retail natural gas market, the Public Utility Commission this week initiated a rulemaking to change the level and forms of security needed by natural gas suppliers and revised a consumer protection guideline related to purchase of receivable programs.

 

The Commission voted unanimously to seek comments on a proposed rulemaking that will revise the security requirements for NGS licensing, lower barriers to market entry and increase supplier participation.

 

The action is the first step of the Commission's action plan to increase effective competition in the retail market for natural gas supply. The action plan was approved on September 11. This followed a Commission finding that "effective competition" did not exist in the retail natural gas supply market statewide.

 

The PUC then convened natural gas industry stakeholders to examine avenues to increase competition. The name SEARCH (Stakeholders Exploring Avenues for Removing Competition Hurdles) was adopted for these group meetings.

 

Natural gas distribution company security requirements were identified as one barrier to supplier participation in the retail process during the SEARCH process. The goal of this rulemaking is to update the Commission's existing regulations regarding security requirements to better balance the ability of NGS firms to provide adequate security with the NGDC's risk of supplier default.

 

The rulemaking specifically addresses:

 

-- The use of NGS accounts receivables in purchase of receivables programs as fulfillment of some part or all of security requirements;

 

-- The adoptions of standard language for financial instruments used for security; and

 

-- The development of reasonable criteria for NGDCs to use to establish the amount of security necessary for licensing purposes.

 

Comments are due 60 days after the publication of the Order in thePennsylvania Bulletin.

 

In separate action, the Commission voted 5-0 to adopt a motion by Vice Chairman Tyrone Christy that revises a consumer protection guideline to allow for the termination of customer service for the failure to pay NGS charges for supply service under Commission approved POR programs. This action should assist in establishing effective POR programs.

 

The Commission also extended the deadline for natural gas utilities to file POR programs until March 31, 2009, or in the alternative, to file costs of service studies in subsequent proceedings on rates.

 

The Commission indicated it will establish interim guidelines for the design and operation of POR programs in the near future, and establish a proceeding and tentative order proposing revisions to the Guidelines for Maintaining Customer Services at the same level of quality no later than the end of the first quarter of 2009.

 

According to the findings through SEARCH, the Commission has said that POR programs are perhaps the best chance to increase effective competition in Pennsylvania's retail natural gas supply services market.