2010 Pennsylvania Code
Title 66 - PUBLIC UTILITIES
Chapter 22 - Natural Gas Competition
2204 - Implementation.

     § 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.