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Third Time's the Charm? Pennsylvania May Open Retail Gas Market Investigation (Again) The Pennsylvania PUC may launch an investigation into the retail natural gas market, PUC Vice Chair John Coleman said during the annual DNV KEMA retail energy executive forum.
If so, it would be the third such investigation in a decade.
Despite two prior comprehensive investigations into the status of retail gas competition, the current shopping activity in the Pennsylvania gas market is "anemic," to repeat a term used by Coleman.
Coleman said that the PUC is looking into whether to launch a retail natural gas market investigation, "similar to what we've done with the RMI [retail market investigation for electricity]"
Hopefully, for retail gas suppliers, any forthcoming natural gas market investigation departs from the electric RMI (and the two earlier gas market investigations) and actually brings change to the market, not empty rhetoric and delegation to lawmakers. However, Pennsylvania is 0-for-3 when its comes to enacting transformative change in these types of proceedings.
Some history.
Consistent with a legislative directive, the PUC, in October 2005, issued a report on the status of retail natural gas competition, and concluded that, "effective competition did not exist on a statewide basis."
That result triggered a PUC obligation under the law to reconvene the stakeholders to explore avenues, including legislative, for increasing competition. This led to the SEARCH Initiative (Stakeholders Exploring Avenues for Removing Competition Hurdles), at Docket I-00040103F0002.
The SEARCH proceeding led to a final order issued in September 2008 that did not include transformative change. Most notably, the order only encouraged utilities to offer purchase of receivables, but did not require it (while the PUC noted certain statutory language "may" prohibit the PUC from requiring utilities to offer POR, it did not endorse this conclusion nor did its order state the reason for not mandating POR was a lack of authority).
The SEARCH proceeding final order led the initiation of a rulemaking (L-2008-2069114) to address several issues, notably the formulation of the Price to Compare. While the rulemaking ultimately led to a limited amount of unbundling, the scope of unbundling was much narrower than originally proposed, and did not include administrative, legal, and similar costs related to the administration of firm storage and transportation capacity.
Additionally, the rulemaking maintained the so-called "migration rider" (e-factor) as a component of the Price to Compare, which is seen as confusing to customers, and acts as a barrier to apples-to-apples comparisons between competitive supply and default service.
Furthermore, the rulemaking, while not mandating POR, did mandate that any voluntary POR programs shall include several design elements which hinder retail supplier investment. Notably, the PUC adopted an all-in requirement for POR, and also mandated that all POR programs shall include a discount for uncollectibles -- even at utilities where the PUC had previously allowed uncollectibles to be addressed in base rates for both default service and competitive supply customers.
Finally, the rulemaking did not materially address barriers relating to the current capacity release policies.
As noted above, these changes have failed to appreciably jumpstart the state's retail gas market.
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March 27, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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