Pennsylvania Approves Peoples-Equitable Merger With Retail Market Enhancements

The Pennsylvania PUC adopted a non-unanimous settlement which authorizes the merger of Peoples Natural Gas and Equitable Gas, and related transactions, and contains various measures to improve the retail market.

Among other things, in the settlement Peoples agrees that in order to encourage and support customer choice, the Company's upstream pipeline capacity and certain gas commodity supplies shall be made available for release by Peoples and Equitable Divisions to suppliers serving priority one customers.

Consistent with its current methodology, all demand related costs for its gas supply contracts shall be assessed to all retail customers and P-1 transportation customers. Peoples further agrees that the actual pipeline capacity path upstream of Peoples, other than the Allegheny Valley Connector (AVC) system, shall be designated by the Company from its available capacity and Peoples will endeavor to accommodate a P-1 supplier's request for particular upstream pipeline capacity on a first-come first-served basis. To the extent that the P-1 supplier receives an assignment of Peoples' Equitrans Sunrise pipeline capacity, Peoples shall also provide P-1 suppliers with an option to purchase from Peoples firm gas supplies under the Peoples and Equitable - EQT NAESB Agreements. This will allow P-1 suppliers to purchase supplies at DTI South Point prices.

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All existing upstream interstate receipt and delivery points that flow in and out of the AVC, including Truittsburg and Rural Valley, will be maintained and not taken out of service by Equitrans.

Peoples agrees to assign and release AVC storage to NP-1 suppliers of the Peoples Division at a rate of $.83/Mcf. Peoples agrees that this release rate will not be subject to change until the effective date of new rates resulting from Peoples' next base rate case.

In order to address the perceived change in balancing flexibilities and increase in cash-out risk as a result of the transfer of the storage assets, Peoples agrees to offer to NP-1 suppliers of the Peoples Division a new service that will allow NP-1 suppliers, at the end of the calendar month following the monthly trading period, to transfer in-place AVC storage volumes with Peoples using the NP-1 supplier's assigned and available storage capacity. Peoples agrees to work with NP-1 suppliers to develop allowable parameters governing such storage transfers with the intent to provide NP-1 suppliers with a similar level of balancing flexibilities currently provided to NP-1 suppliers today.

Peoples agrees that within one year of the date of closing, it will review and seek to revise the Purchase of Receivables program of Equitable and take steps necessary to make it consistent, in design and rate structure, with that of the Peoples Division. To the extent the adoption of certain aspects of Peoples' Purchase of Receivables Program requires billing system modifications for the Equitable Division, those aspects of the Peoples' Purchase of Receivables Program will not be implemented until the planned conversion of the Equitable Division to Peoples' billing system.

Peoples agrees that within 30 days following closing, it will provide Aged Receivables reporting on behalf of suppliers that are receiving commodity billing services from the Peoples Division.

Additionally, Peoples agrees that following closing, it will begin a review of the existing transportation program process on Equitable and convene a collaborative, that will include all interested stakeholders, within 12 months following closing to develop a strategy to promote retail supply competition in the Peoples/Equitable service areas.

Peoples agrees that this collaborative will consider the adoption of a local gas aggregation service on Equitable and changes to the Equitable Division balancing provisions. Peoples further agrees to a target filing date of possible tariff changes resulting from this collaborative within three months following the date the collaborative is convened.

Peoples agrees that within six months following closing, Peoples will implement an Energy Choice outreach program for Equitable customers and begin using the Peoples' Electronic Data Transfer/Electronic Bulletin Board/Nominations System and related processes.

Peoples agrees that within 6 months of approval of the settlement it will convene a collaborative, to include input of interested stakeholders, to discuss all aspects of a proposed new and moving customer referral program within 12 months of Closing that is substantially similar to those approved by the Commission in the recent Retail Markets Investigation. If there is substantial agreement among the stakeholders, Peoples will file a proposed new and moving customer referral program with the Commission within 14 months of closing.

Docket A-2013-2353647