Pa. PUC to Launch New Rulemaking on Standardized Supplier Coordination Tariff

The Pennsylvania PUC will continue to work on standardizing natural gas distribution companies' (NGDC) supplier coordination tariffs, but will do so in a new rulemaking as the current rulemaking was approaching its automatic withdrawal date (L-2009-2069117).

The PUC in 2009 originally proposed regulations which would require a standard supplier coordination tariff, and which proposed standards on five technical subjects: imbalance trading, tolerance bands, cash out and penalties, nominations, and capacity.

Among other things, the proposed rules would have required LDCs to "facilitate" imbalance trading among retail suppliers, and would have established a minimum tolerance band of 10%.

Since the end of the public comment period in December 2009, the PUC has not taken any action on the draft rules, and the Independent Regulatory Review Commission expressed various concerns. By law, if an agency does not deliver a final-form regulation within two years from the close of the public comment period, the regulation is deemed withdrawn and the rulemaking ends. The rulemaking on standardizing LDC business practices was set to have expired on December 16, 2011.

Rather than allowing the rulemaking to automatically expire, the PUC adopted an order this morning to discontinue the instant rulemaking, but also directing that a new rulemaking addressing the same issues shall be opened within six months.

"[B]ecause this Commission has a duty to oversee the competition in the retail natural gas market, we prefer to be proactive. In our judgment, certain efficiencies can be achieved by standardizing some NGDC business practices that will benefit all participants in the retail market. The SEARCH stakeholders have invested considerable time and effort in their review of the issues related to NGDC business practices and it seems inefficient not to use their work as a platform upon which to build. For this reason, we believe that the better course of action is to discontinue this rulemaking and direct that a new rulemaking on NGDC business practices and standards, including system operating rules and supplier tariffs, be commenced within six months from the entry date of this order."

"The use by NGDCs of a common set of business practices and standards should increase efficiency in industry operations and may increase the participation of NGSs [suppliers] in the retail natural gas supply market," the PUC said.

The PUC further said that it would answer the Independent Regulatory Review Commission's concerns in the new rulemaking. Such concerns included the lack of data provided by the PUC to support the need for standardizing NGDC business practices, and the lack of quantification of the potential costs for NGDCs and their ratepayers in implementing the various proposals in the rulemaking.