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PSC Says Supplier Licenses Cannot Be Transferred; Transfer (Purchase) Of Customers Must Involve Licensed Entity

September 20, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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In adopting final new rules applicable to natural gas supplier licensing, the District of Columbia PSC said that natural gas supplier licenses may not be transferred, and opined on how any purchase of customer books should be executed in light of this finding.

In its order, the PSC stated, "A license granted to a Natural Gas Supplier by Commission order is particular to that Licensee solely. Accordingly, transfer of that license is not permissible. If a Licensee wishes to sell or merge its business with another supplier or company, and includes the transfer of its customers in the transaction, the acquiring supplier or company must either be an already licensed Natural Gas Supplier or, if it is not, must file an application with the Commission for a Natural Gas Supplier license."

Although the PSC adopted new electric supplier rules as well, the PSC did not make a similar pronouncement regarding electric supplier licenses in its order.

The final natural gas licensing rules, while not identical to the electric rules, implicate many of the same issues and provisions as the electricity rules discussed in our related story today (click here).

Notably, the natural gas rules set forth a broad definition of natural gas supplier, which must obtain a license from the PSC

Under the final rules, a Natural Gas Supplier is defined as, "A licensed Person, broker, or marketer, who generates natural gas; sells natural gas; or purchases, brokers, arranges or markets natural gas for sale to customers."

"Broker" is defined as, "A Person who acts as an agent or intermediary in the sale and purchase of natural gas but who does not take title to natural gas."

There is no specific exclusion for "nontraditional marketers" (affinity groups, etc.) from the gas licensing requirement

The final rules set forth that gas supplier licenses do not expire, but are subject to a five year review. A Natural Gas Supplier that has been licensed for more than five (5) years from the effective date of the rules shall submit an application for review by the Commission pursuant to the licensing requirements and procedures set forth in §§ 4701 and 4702 within ninety (90) days from the effective date of the rules

Similar to the electric rules, the gas license rules include a broad definition of "customer", which ostensibly encompasses large C&Is under certain obligations

The final gas rules define customer as, "A purchaser of natural gas in whose name a service account exists with the Natural Gas Company or Natural Gas Supplier. The term excludes the nonresidential occupant or tenant of a nonresidential Rental Unit of a building where the owner, lessee, or manager manages the internal distribution system serving the building and supplies natural gas solely to occupants of the building for use by the occupants."

While the PSC specifically referenced the definition of "customer" as including small commercial customers in an order adopting the rules, nothing in the rules themselves appear to include this limit, and the term appears to encompass large C&Is as well

With such definition of customer, the gas rules obligate suppliers to, "post on the Internet or on the Licensee's website adequate and accurate information about its services and rates for its Customers." Such language ostensibly requires suppliers (a term, which as noted above, includes brokers and other intermediaries) to post "adequate" information on rates for large C&I customers on their website. What constitutes adequate information is not defined.

The final rules provide that, "A Licensee, both new and existing, who has not initially started serving Customers shall file a notice with the Commission within three (3) business days before the Licensee begins soliciting or marketing to Customers directly or through an authorized representative in the District of Columbia. This is a one-time initial notice prior to the Licensee beginning its marketing to or soliciting of District of Columbia Customers. The notice shall include the name of the Licensee’s designated contact person for pricing information if the Licensee is serving Customers and the URL address of the Licensee’s website. All door-to-door sales representatives and agents of the Licensee shall be required to present photo identification to Customers as part of the solicitation process. In addition, the Licensee is required to maintain a record of the identity of each sales representative and marketing agent or representative active in the District of Columbia, including the company photo identification, and make it available upon request to the Commission."

Again, due to the use of the term "Customer" for such one-time marketing notice, this includes service to commercial customers. Specifically, the PSC in its order adopting the rules (but not the rule itself) said that such notice includes small C&Is, but the broader definition of "customer" suggests the one-time notice requirement would apply to suppliers who only serve large C&Is as well

The Commission deleted the requirement that a Licensee provide the Commission with a copy of its flyers, consumer pamphlets, scripts and other proposed marketing material at the time of notification of impending service.


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