PUC Denies Waiver Sought By Retail Supplier In Connection With Acquisition

September 15, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Pennsylvania PUC denied a petition from IGS Energy related to licensing as a result of a series of transactions related to the acquisition of customers, from Dominion Energy Solutions, by its joint venture with Dominion Energy

As previously reported, IGS had said in its petition that, by the end of 2021, Dominion Energy, Inc. will contribute 100% of its equity interests in retail supplier Dominion Energy Solutions, Inc. (DES) to Wrangler Retail Gas Holdings, Inc. (Wrangler), the previously reported joint venture owned 80% by Interstate Gas Supply, Inc. and 20% by Dominion Energy, Inc.

Such transaction will represent all of the remaining retail energy marketing operations of Dominion Energy Solutions, which primarily consists of natural gas customers in Pennsylvania.

After this latest contribution, Wrangler will subsequently transfer such customers to IGS Retail, LLC (IGS Retail), a wholly owned subsidiary of Wrangler. Further details concerning the various transactions were filed under seal

IGS Energy filed a petition seeking authorization that would essentially allow IGS to serve these customers under its existing license (held by Interstate Gas Supply, Inc.), rather than being required to obtain a new, separate license for the various entities involved in the transaction (including the currently unlicensed entity IGS Retail), which would also require the operation of separate pools, with separate financial security requirements.

The PUC in its order said, "Based on the definition of Natural Gas Supplier provided in Section 2202, IGS Retail would qualify as a Natural Gas Supplier subject to licensure under Section 2208 and the Commission’s applicable regulations."

"IGS Retail would sell natural gas to retail gas customers utilizing the jurisdictional facilities of a natural gas distribution company. IGS asks that we waive the requirement for IGS Retail to be licensed, despite the fact that IGS Retail would meet the definition of an NGS, because IGS commits to managing the customer relationship for IGS Retail," the PUC noted

The PUC said that, "'Agencies are creatures of statute and, thus, only have the authority to act pursuant to their official duties as established by their enabling legislation.' Dep't of Health v. Off. of Open Recs, 4 A.3d 803, 814 (Pa. Cmwlth. 2010). Section 2208 provides that no entity 'shall engage in the business of a natural gas supplier unless it holds a license issued by the commission.' 66 Pa.C.S. § 2208(a). The Commission is required to deny applications unless it finds that the entity is fit, willing, and able to provide the proposed service and follow the Commission’s regulations. As the Commission is bound to this legislative mandate, it may not permit an entity that would fit the definition of an NGS to provide service without an NGS license."

"This Commission does not take lightly the legal relationship between natural gas customers and the Natural Gas Suppliers that serve them. While IGS claims that it will be fully responsible for all aspects of customer service for the customers including call center activities, billing, enrollments, and termination of service, ultimately, that responsibility would be governed by the contractual relationship between the customer and IGS Retail. And, aside from its bare assertions, IGS does not provide a legal basis which would make IGS liable for IGS Retail’s liabilities. Parent companies like IGS and Wrangler, as well as the subsidiaries they control, 'are not free to blur the lines of the capacity in which they act as it may suit them.' Mortimer v. McCool, 255 A.3d 261, *21 (Pa. July 21, 2021)," the PUC said

"Furthermore, IGS provides no timeframe for the end of the waiver it is seeking. For the Commission to grant a waiver in these circumstances would require it to waive the entirety of its Chapter 62 NGS licensing requirements for an unknown period. It is well-established that when a petitioner seeks waiver, it bears the burden of justifying the waiver, the waiver should be narrowly sought, and waivers are generally temporary. IGS has failed to meet its burden on these issues and the Commission therefore cannot grant a waiver of its regulations," the PUC said

"Lastly, while DES is licensed throughout the Commonwealth, a Commission review of IGS’ license history does not indicate that at any point IGS has been granted a license to provide service in the territories of the natural gas distribution companies of Peoples Gas Company, LLC, or that of Valley Energy, Inc. Because DES is licensed in all service territories and customer classes, IGS may not serve all of DES’ customers without seeking to amend its license to include the service territories of Peoples Gas Company, LLC, and Valley Energy, Inc. Notwithstanding any other issue, this precludes the requested relief of amending IGS’ license to include Wrangler and its subsidiaries as a joint venture partner under a single license held by IGS," the PUC said

Docket P-2021-3026755

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