2010 Pennsylvania Code
Title 66 - PUBLIC UTILITIES
Chapter 22 - Natural Gas Competition
2212 - City natural gas distribution operations.

     § 2212.  City natural gas distribution operations.
        (a)  Application.--The provisions of this section shall apply
     only to city natural gas distribution operations.
        (b)  Commission jurisdiction.--Subject to the provisions of
     this section, commencing July 1, 2000, public utility service
     being furnished or rendered by a city natural gas distribution
     operation within its municipal limits shall be subject to
     regulation and control by the commission with the same force as
     if the service were rendered by a public utility.
        (c)  Applicability of other chapters.--Commencing July 1,
     2000, to the extent not inconsistent with this section, the
     provisions of this title, other than Chapters 11 (relating to
     certificates of public convenience), 19 (relating to securities
     and obligations) and 21 (relating to relations with affiliated
     interests), shall apply to the public utility service of a city
     natural gas distribution operation with the same force as if the
     city natural gas distribution operation was a public utility
     under section 102 (relating to definitions), provided that, upon
     request of a city natural gas distribution operation, the
     commission may suspend or waive the application to a city
     natural gas distribution operation of any provision of this
     title, including any provision of this chapter other than this
     section. Chapter 11 shall apply to a city natural gas
     distribution operation to the extent it seeks to provide natural
     gas distribution services outside of its corporate or municipal
     limits. Chapter 19 shall apply to issuances of securities for
     the benefit of a city natural gas distribution operation by an
     issuer other than a city to the extent provided in subsection
     (e) but shall not apply to issuances of securities by a city.
        (d)  Continuation of tariff.--For purposes of this section,
     prior tariff means the tariff, rate schedule and riders
     incorporated into the tariff of a city natural gas distribution
     operation on the date the commission assumes jurisdiction over
     such city natural gas distribution operation. A city natural gas
     distribution operation shall continue to provide natural gas
     supply and natural gas distribution services to its customers
     under the prior tariff and the policies or programs existing on
     the date that the commission assumes jurisdiction over the city
     natural gas distribution operation until the effective date of
     the final order entered by the commission approving the
     restructuring plan and new tariff of the city natural gas
     distribution operations unless such effective date has been
     stayed by a court of competent jurisdiction, in which event the
     prior tariff will continue in force until such stay has been
     dissolved. Where the prior tariff refers to, incorporates or
     includes a local commission, it shall be interpreted as
     referring to, incorporating or including the commission. Subject
     to subsection (s), the commission shall resolve all questions,
     disputes or conflicts arising under the prior tariff. Nothing
     contained in this section shall prevent a city natural gas
     distribution operation from requesting or, if so requested, the
     commission from approving modifications to the prior tariff at
     any time prior to the effective date of the final order
     approving the restructuring plan and new tariff.
        (e)  Securities of city natural gas distribution
     operations.--Notwithstanding any provision of this title to the
     contrary, in determining the city natural gas distribution
     operation's revenue requirement and approving overall rates and
     charges, the commission shall follow the same ratemaking
     methodology and requirements that were applicable to the city
     natural gas distribution operation prior to the assumption of
     jurisdiction by the commission, and such obligation shall
     continue until the date on which all approved bonds have been
     retired, redeemed, advance refunded or otherwise defeased.
     However, this section shall not prevent the commission from
     approving changes in the rates payable by any class of
     ratepayers of the city natural gas distribution operation so
     long as the revenue requirement and the overall rates and
     charges are not adversely affected by such changes.
     Notwithstanding any provision in this title to the contrary, the
     commission shall permit the city natural gas distribution
     operation to impose, charge or collect rates or charges as
     necessary to permit the city or municipal authority formed
     pursuant to subsection (m) that issued bonds on behalf of a city
     natural gas distribution operation to comply with its covenants
     to the holders of any approved bonds. Notwithstanding any
     provision in this title to the contrary, the commission shall
     not require a city natural gas distribution operation to take
     action, or omit taking any actions, pursuant to this title if
     such action or omission would have the effect of causing the
     interest on tax-exempt bonds issued by a city or municipal
     authority formed pursuant to subsection (m) on behalf of a city
     natural gas distribution operation to be includable in the gross
     income of the holders of such bonds for Federal income tax
     purposes. For purposes of this section, approved bonds shall
     mean all bonds:
            (1)  issued by a city on behalf of a city natural gas
        distribution operation under the act of October 18, 1972
        (P.L.955, No.234), known as The First Class City Revenue Bond
        Act, or the act of December 7, 1982 (P.L.827, No.231), known
        as The City of Philadelphia Municipal Utility Inventory and
        Receivables Financing Act, that were issued and outstanding
        on the date the commission assumed jurisdiction over the city
        natural gas distribution operation;
            (2)  issued by the city after the date the commission
        assumed jurisdiction over the city natural gas distribution
        operation unless the governing body of the city, at the time
        of approval of the bond issuance, determines that such bonds
        shall not be approved bonds;
            (3)  issued by the city or a municipal authority,
        nonprofit corporation or public corporation formed pursuant
        to subsection (m) for the purpose of refunding, redeeming,
        repaying or otherwise defeasing approved bonds; or
            (4)  issued by a municipal authority formed pursuant to
        subsection (m) for purposes other than refunding, redeeming,
        repaying or otherwise defeasing approved bonds unless the
        commission determines, at the time of the registration of a
        securities certificate pursuant to section 1903 (relating to
        registration or rejection of securities certificates), that
        the bonds should not be approved bonds.
     Notwithstanding any provision of this title to the contrary, a
     city owning a city natural gas distribution operation may
     continue to issue bonds on behalf of the city natural gas
     distribution operation pursuant to The First Class City Revenue
     Bond Act and under The City of Philadelphia Municipal Utility
     Inventory and Receivables Financing Act, and any municipal
     authority formed pursuant to subsection (m) may issue bonds on
     behalf of the city natural gas distribution operation pursuant
     to the act of May 2, 1945 (P.L.382, No.164), known as the
     Municipality Authorities Act of 1945, and as otherwise provided
     by law. All documents that are required to be submitted to the
     governing body of the city by The First Class City Revenue Bond
     Act or The City of Philadelphia Municipal Utility Inventory and
     Receivables Financing Act or, in the case of an issuance of
     securities by a municipal authority, the Municipality
     Authorities Act of 1945 shall also be submitted to the
     commission for its information. Any issuance of securities by a
     municipal authority formed pursuant to subsection (m) on behalf
     of a city natural gas distribution operation, other than
     issuances of bonds for the purpose of refunding, redeeming,
     repaying or otherwise defeasing approved bonds, shall be subject
     to the provisions of Chapter 19 provided that commission
     determinations with respect to the registration of a securities
     certificate under Chapter 19 for the issuance of securities by a
     municipal authority formed pursuant to subsection (m) shall be
     determinations with respect to public debt and the commission
     shall employ its abbreviated securities certificate process to
     such issuances.
        (f)  Transfers to city.--The commission shall permit the city
     natural gas distribution operation to impose, charge or collect
     rates and charges as necessary to permit the city natural gas
     distribution operation to transfer or pay to the city that is
     the owner of the city natural gas distribution operation, on an
     annual basis, such amount as may be specified from time to time
     in the applicable ordinances of the city or agreements of the
     city approved by ordinances. If the amount so specified shall
     exceed 110% of the amount that was authorized for transfer or
     payment to the city at the close of the fiscal year of the city
     ending June 30, 2000, such additional amount shall be subject to
     review and approval of the commission, which approval shall be
     given unless such additional amount would not be just and
     reasonable.
        (g)  Restructuring and tariff filings.--A city natural gas
     distribution operation shall file with the commission an initial
     tariff and a restructuring filing consistent with this chapter,
     and with any orders, rules or regulations adopted by the
     commission after the effective date of this chapter no later
     than July 1, 2002, and, unless the city natural gas operation
     agrees, no earlier than December 31, 2001, pursuant to a
     schedule to be determined by the commission in consultation with
     a city natural gas distribution operation. The commission shall
     conduct an initial rate proceeding pursuant to its procedures
     for such filings. Hearings on the tariff and restructuring
     filings shall be held within the municipal limits of the city in
     which the city natural gas distribution operation is located to
     the extent practicable.
        (h)  Restructuring proceedings.--In the restructuring
     proceeding of a city natural gas distribution operation, in
     addition to the requirements of section 2204(c) (relating to
     implementation):
            (1)  The city natural gas distribution operation shall
        file a plan to convert its existing information technology,
        accounting, billing, collection, gas purchasing and other
        operating systems and procedures to comply with the
        requirements applicable to jurisdictional natural gas
        utilities under this title and the applicable rules,
        regulations and orders. The commission shall examine the cost
        and burdens of converting existing systems and procedures of
        a city natural gas distribution operation to meet the
        requirements of this title generally applicable to natural
        gas distribution companies. If requested by the city natural
        gas distribution operation, the commission shall determine
        whether the cost of conversion of any system or procedure is
        prudent in light of the benefits to be obtained. In the event
        that the commission determines that the costs would not be
        prudent, it may waive application to the city natural gas
        distribution operation of any provision of this title or the
        commission's rules, regulations and orders as appropriate. In
        the event that the commission determines that such costs
        should be incurred, the commission shall permit the city
        natural gas distribution operation to fully recover such
        costs through a nonbypassable charge imbedded in the
        distribution rates of the city natural gas distribution
        operation.
            (2)  In its restructuring proceeding, a city natural gas
        distribution operation may propose an automatic adjustment
        mechanism or mechanisms in lieu of or as a supplement to
        section 1307 (relating to sliding scale of rates;
        adjustments) to adjust rates for fluctuations in gas and
        nongas costs, including, but not limited to, an automatic
        adjustment mechanism or mechanisms to recover the costs of
        providing programs for low-income ratepayers and other
        assisted ratepayers. The commission may approve or modify the
        automatic adjustment mechanism or mechanisms proposed by the
        city natural gas distribution operation, or the commission
        may approve a section 1307 adjustment for a city natural gas
        distribution operation. However, the automatic adjustment
        mechanism, whether section 1307 or any alternative proposed
        by the city natural gas distribution operation, utilized for
        city natural gas distribution operations must enable the city
        or municipal authority formed pursuant to subsection (m) that
        issued bonds on behalf of a city natural gas distribution
        operation to fully comply at all times with its covenants to
        the holders of any approved bonds.
        (i)  Powers of the Consumer Advocate; Small Business
     Advocate.--The Consumer Advocate shall represent the interests
     of consumers as a party, or otherwise participate for the
     purpose of representing an interest of consumers, before the
     commission in any matter properly before the commission relating
     to a city natural gas distribution operation. The Consumer
     Advocate is authorized, in addition to any other authority
     conferred on him, to represent an interest of consumers which is
     presented to him for his consideration upon petition in writing
     by a substantial number of persons who make, direct, use or are
     ultimate recipients of a product or services supplied by a city
     natural gas distribution operation. The Small Business Advocate
     shall represent the interest of small business consumers as a
     party, or otherwise participate for the purpose of representing
     an interest of small business consumers, before the commission
     in any matter properly before the commission relating to a city
     natural gas distribution operation. The Small Business Advocate
     is authorized, in addition to any other authority conferred on
     him, to represent an interest of small business consumers which
     is presented to him for his consideration upon petition in
     writing by a substantial number of small business consumers who
     make, direct, use or are ultimate recipients of a product or
     services supplied by a city natural gas distribution operation.
        (j)  Commencement of customer choice.--Beginning with the
     commencement of the first fiscal year of a city natural gas
     distribution operation after the order approving the
     restructuring plan of a city natural gas distribution operation
     becomes effective, all retail gas customers of city natural gas
     distribution operations shall have the opportunity to purchase
     natural gas supply services from a natural gas supplier or the
     city natural gas distribution operation to the extent it offers
     the service. After that date, the choice of natural gas
     suppliers shall rest with the retail gas customer.
        (k)  City instrumentality.--Unless and until the governing
     body of a city that owns a city natural gas distribution
     operation otherwise provides:
            (1)  a city natural gas distribution operation shall be
        deemed an instrumentality of the city that owns it and
        independently authorized to establish and maintain pension,
        welfare and other employee benefit plans for the benefit of
        those individuals who render services in connection with its
        operations; and
            (2)  for the purpose of being a participant in such plans
        or programs, those individuals who render services
        exclusively and directly related to the operations of the
        city natural gas distribution operation shall be deemed
        employees of the city natural gas distribution operation as a
        distinct entity from the city. If any pension plan
        established and maintained by or on behalf of a city natural
        gas distribution operation is or becomes subject to the act
        of December 18, 1984 (P.L.1005, No.205), known as the
        Municipal Pension Plan Funding Standard and Recovery Act, the
        provisions of Chapters 5 and 6 of that act (relating to
        financially distressed municipal pension system recovery
        programs) shall not require any pension plan of a city
        natural gas distribution operation to be aggregated with any
        pension plan established and maintained by the city.
        (l)  Assisted cities.--Notwithstanding any other provision of
     this title, no assisted city shall be required to take any
     action under this title if the effect of the action is to cause
     a variation in the financial plan of such assisted city approved
     pursuant to section 209 of the act of June 5, 1991 (P.L.9,
     No.6), known as the Pennsylvania Intergovernmental Cooperation
     Authority Act for Cities of the First Class. As used in this
     subsection, "assisted city" and "variation" shall have the
     meanings set forth or construed in the Pennsylvania
     Intergovernmental Cooperation Authority Act for Cities of the
     First Class.
        (m)  Corporate action.--A city that owns a city natural gas
     distribution operation may form a nonprofit corporation or
     public corporation or municipal authority under the Municipality
     Authorities Act of 1945 in order to own, manage, operate, lease
     or carry out natural gas supply and/or distribution services
     for, in place of or on behalf of the city natural gas
     distribution operation, provided that no such entity shall
     provide natural gas supply services outside of the municipal
     limits of the city unless licensed as a natural gas supplier.
     Notwithstanding subsections (b) and (c), if a city forms an
     entity pursuant to this section to provide natural gas supply
     services, whether inside or outside of the city, the entity
     shall be deemed an affiliated interest of the city natural gas
     distribution operation, and Chapter 21 shall apply with respect
     to that affiliated interest. A municipal authority formed
     pursuant to the authorization of this section shall not exercise
     the power of eminent domain outside of the municipal limits of
     the city in which it is seated. Any entity created under this
     section or otherwise to own, manage, operate, lease or carry out
     natural gas supply and/or distribution services for or on behalf
     of a city or a city natural gas distribution operation shall be
     deemed a local agency for purposes of 42 Pa.C.S. Ch. 85
     (relating to matters affecting government units).
        (n)  Collections.--Nothing contained in this title shall
     abrogate the power of a city natural gas distribution operation
     to collect delinquent receivables through the imposition of
     liens pursuant to section 3 of the act of May 16, 1923 (P.L.207,
     No.153), referred to as the Municipal Claim and Tax Lien Law, or
     otherwise.
        (o)  Existing customer contracts.--Notwithstanding the
     provisions of this chapter, where an agreement for natural gas
     service, evidenced by a signed writing between a city natural
     gas distribution operation and any customer, exists prior to the
     date the commission assumes jurisdiction over a city natural gas
     distribution operation, the customer shall be bound by its terms
     and conditions and shall not have the right to receive natural
     gas service from another source until the expiration of the term
     of the agreement or otherwise pursuant to the terms and
     conditions of the agreement.
        (p)  License application and issuance.--A city natural gas
     distribution operation may apply for a license pursuant to the
     procedures under section 2208 (relating to requirements for
     natural gas suppliers). Subject to the requirement that it
     qualify for and obtain a natural gas supplier's license under
     section 2208, a city natural gas distribution operation is
     authorized to engage in the business of a natural gas supplier
     outside its municipal or corporate limits.
        (q)  Commission assessment.--In order to ensure that the
     commission will be able to carry out its obligations with
     respect to city natural gas operations, the chief executive
     officer of a city natural gas distribution operation shall file,
     no later than March 31, 2000, a sworn statement showing its
     gross intrastate operating revenues for the immediately
     preceding fiscal year in the same manner as required by section
     510(b) (relating to assessment for regulatory expenses upon
     public utilities). The commission shall use such revenues in
     accordance with the procedures set forth in section 510(b) and
     shall bill, no earlier than July 1, 2000, each city natural gas
     distribution operation its proportional share of the
     commission's expenses pursuant to section 510(b)(4). A city
     natural gas distribution operation shall pay the resulting
     assessment in accordance with and subject to the provisions
     contained in section 510.
        (r)  Senior citizens.--
            (1)  The commission may approve a program designed to
        provide discounted rates for natural gas distribution and
        supply services to senior citizens residing in the service
        territory of a city natural gas distribution operation
        provided that such rates and the terms of such program are
        just and reasonable.
            (2)  Individual ratepayers who, as of the date the
        initial tariff of a city natural gas distribution operation
        becomes effective pursuant to subsection (d), are properly
        receiving discounted gas rates pursuant to the terms of a
        program specifically designed to provide assistance to senior
        citizens contained in the prior tariff shall be entitled to
        continue to receive such discount under the terms of the
        prior tariff unless and until the program is modified by
        ordinance of the governing body of the city, in which event
        such individuals shall be entitled to receive only the
        discount provided under the terms of the modified program, as
        it may be further modified by ordinance from time to time
        thereafter.
            (3)  Nothing in this title shall require the commission
        to approve the continuation of the program identified in
        paragraph (2) in whole or part for any person other than an
        individual identified in paragraph (2).
        (s)  Powers preserved.--Nothing contained in this title shall
     be construed to abrogate or limit the executive or legislative
     powers of a city that owns a city natural gas distribution
     operation to legislate or otherwise determine the powers,
     functions, budgets, activities and mission of the city natural
     gas distribution operation or any related entity created under
     subsection (m), including, but not limited to, the ownership,
     governance, management or control thereof. Nothing in this title
     shall limit or prevent the proper city officials and agencies
     from conducting audits and examinations of the financial affairs
     of the city natural gas distribution operation in accordance
     with their official duties.
        (t)  Proprietary information.--Proprietary information, trade
     secrets and competitively sensitive information of a city
     natural gas distribution operation shall not be public records
     for purposes of the act of June 21, 1957 (P.L.390, No.212),
     referred to as the Right-to-Know Law, and shall not be subject
     to mandatory public disclosure. Nothing in this section shall
     exempt a city natural gas distribution operation from providing
     information to the commission pursuant to its obligation under
     sections 501 (relating to general powers), 504 (relating to
     reports by public utilities), 505 (relating to duty to furnish
     information to commission; cooperation in valuing property) and
     506 (relating to inspection of facilities and records).

        References in Text.  The act of June 21, 1957 (P.L.390,
     No.212), referred to as the Right-to-Know Law, referred to in
     subsec. (t), was repealed by the act of Feb. 14, 2008 (P.L.6,
     No.3), known as the Right-to-Know Law.
        Cross References.  Section 2212 is referred to in sections
     102, 2204, 2211 of this title.