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        PRIOR PRINTER'S NO. 1551                      PRINTER'S NO. 2032

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1331 Session of 1999


        INTRODUCED BY RAYMOND, APRIL 20, 1999

        AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
           JUNE 14, 1999

                                     AN ACT

     1  Relating to notification of condemnation proceedings by a public  <--
     2     utility.
     3  AMENDING TITLE 66 (PUBLIC UTILITIES) OF THE PENNSYLVANIA          <--
     4     CONSOLIDATED STATUTES, PROVIDING FOR SUPPLY CHOICE FOR
     5     CUSTOMERS OF NATURAL GAS UTILITIES AND FOR RESTRUCTURING OF
     6     THE NATURAL GAS UTILITY INDUSTRY AND FOR UTILITY INDUSTRY
     7     RESTRUCTURING.

     8     The General Assembly of the Commonwealth of Pennsylvania
     9  hereby enacts as follows:
    10  Section 1.  Notification of condemnation.                         <--
    11     A public utility or pipeline company possessing the authority
    12  to condemn real property must provide written notice of its
    13  intent to condemn any real property to all municipalities in
    14  which the real property is located at least 120 days prior to
    15  initiating any action under the act of June 22, 1964 (Sp.Sess.,
    16  P.L.84, No.6) known as the Eminent Domain Code.
    17  Section 2.  Exception.
    18     A public utility or pipeline company is not required to
    19  provide the notice required under section 1 where it is acting
    20  in response to an emergency.

     1  Section 3.  Effective date.
     2     This act shall take effect in 60 days.
     3     SECTION 1.  SECTIONS 1307(F) AND (G), 1317 AND 1318 OF TITLE   <--
     4  66 OF THE PENNSYLVANIA CONSOLIDATED STATUTES ARE AMENDED TO
     5  READ:
     6  § 1307.  SLIDING SCALE OF RATES; ADJUSTMENTS.
     7     * * *
     8     (F)  RECOVERY OF NATURAL GAS COSTS.--
     9         (1)  NATURAL GAS [DISTRIBUTORS] DISTRIBUTION COMPANIES,
    10     AS DEFINED IN SECTION 2202 (RELATING TO DEFINITIONS), WITH
    11     GROSS INTRASTATE ANNUAL OPERATING REVENUES IN EXCESS OF
    12     $40,000,000 MAY FILE TARIFFS REFLECTING ACTUAL AND PROJECTED
    13     INCREASES OR DECREASES IN THEIR NATURAL GAS COSTS AND THE
    14     TARIFFS SHALL HAVE AN EFFECTIVE DATE SIX MONTHS FROM THE DATE
    15     OF FILING. THE COMMISSION SHALL PROMULGATE REGULATIONS
    16     ESTABLISHING THE TIME AND MANNER OF SUCH FILING, BUT, EXCEPT
    17     FOR ADJUSTMENTS PURSUANT TO A TARIFF MECHANISM AUTHORIZED IN
    18     THIS TITLE, NO SUCH NATURAL GAS [UTILITY] DISTRIBUTION
    19     COMPANY SHALL VOLUNTARILY FILE MORE THAN ONE SUCH TARIFF IN A
    20     12-MONTH PERIOD: PROVIDED, THAT [NOTHING]:
    21             (I)  NOTHING CONTAINED HEREIN SHALL PROHIBIT ANY
    22         PARTY FROM ADVISING THE COMMISSION THAT THERE HAS BEEN OR
    23         THERE IS ANTICIPATED TO BE A SIGNIFICANT DIFFERENCE
    24         BETWEEN THE NATURAL GAS COSTS TO THE [UTILITY] NATURAL
    25         GAS DISTRIBUTION COMPANY AND THE COSTS REFLECTED IN THE
    26         THEN EFFECTIVE TARIFF OR THE COMMISSION FROM ACTING UPON
    27         SUCH ADVICE.
    28             (II)  A NATURAL GAS DISTRIBUTION COMPANY MAY ALSO
    29         FILE A TARIFF TO ESTABLISH A MECHANISM BY WHICH SUCH
    30         NATURAL GAS DISTRIBUTION COMPANY MAY FURTHER ADJUST ITS
    19990H1331B2032                  - 2 -

     1         RATES FOR NATURAL GAS SALES ON A REGULAR, BUT NO MORE
     2         FREQUENT THAN MONTHLY, BASIS TO REFLECT ACTUAL OR
     3         PROJECTED CHANGES IN NATURAL GAS COSTS REFLECTED IN RATES
     4         ESTABLISHED PURSUANT TO PARAGRAPH (2), SUBJECT TO ANNUAL
     5         RECONCILIATION UNDER PARAGRAPH (5). IN THE EVENT THAT THE
     6         NATURAL GAS DISTRIBUTION COMPANY ADJUSTS RATES MORE
     7         FREQUENTLY THAN QUARTERLY, IT SHALL ALSO OFFER RETAIL GAS
     8         CUSTOMERS A FIXED RATE OPTION WHICH RECOVERS NATURAL GAS
     9         COSTS OVER A 12-MONTH PERIOD, SUBJECT TO ANNUAL
    10         RECONCILIATION UNDER PARAGRAPH (5). THE COMMISSION SHALL,
    11         WITHIN 60 DAYS OF THE EFFECTIVE DATE OF THIS
    12         SUBPARAGRAPH, PROMULGATE RULES OR REGULATIONS GOVERNING
    13         SUCH ADJUSTMENTS AND FIXED RATE OPTION, BUT THE
    14         COMMISSION SHALL NOT PROHIBIT SUCH ADJUSTMENTS OR FIXED
    15         RATE OPTION.
    16         (2)  THE COMMISSION SHALL CONDUCT AN INVESTIGATION AND
    17     HOLD A HEARING OR HEARINGS, WITH NOTICE, TO [INVESTIGATE]
    18     REVIEW THE TARIFFS AND CONSIDER THE PLANS FILED PURSUANT TO
    19     SECTION 1317 (RELATING TO REGULATIONS OF NATURAL GAS COSTS).
    20     WHERE THERE HAS BEEN AN INDICATION OF CONSUMER INTEREST, THE
    21     HEARING SHALL BE HELD IN THE SERVICE TERRITORY OF THE NATURAL
    22     GAS [DISTRIBUTOR] DISTRIBUTION COMPANY. PRIOR TO THE
    23     EFFECTIVE DATE OF THE FILING, THE COMMISSION SHALL ISSUE AN
    24     ORDER ESTABLISHING THE RATE TO BE CHARGED TO REFLECT SUCH
    25     [INCREASES OR DECREASES] CHANGES IN NATURAL GAS COSTS. [RATES
    26     ESTABLISHED UNDER THIS SUBSECTION DO NOT CONSTITUTE EITHER A
    27     SLIDING SCALE OF RATES OR AN AUTOMATIC ADJUSTMENT SUBJECT TO
    28     THE PROHIBITIONS IN SUBSECTIONS (A) AND (B).] THE COMMISSION
    29     SHALL ANNUALLY REVIEW AND APPROVE PLANS FOR PURPOSES OF
    30     RELIABILITY AND SUPPLY. SUCH RATES, HOWEVER, ARE SUBJECT TO
    19990H1331B2032                  - 3 -

     1     THE [KINDS] TYPES OF AUDITS, REPORTS AND PROCEEDINGS REQUIRED
     2     BY SUBSECTION (D).
     3         (3)  WITHIN 60 DAYS FOLLOWING THE END OF SUCH 12-MONTH
     4     PERIOD AS THE COMMISSION SHALL DESIGNATE, EACH [PUBLIC
     5     UTILITY] NATURAL GAS DISTRIBUTION COMPANY SUBJECT TO THIS
     6     SUBSECTION SHALL FILE WITH THE COMMISSION A STATEMENT WHICH
     7     SPECIFIES FOR SUCH PERIOD:
     8             (I)  THE TOTAL REVENUES RECEIVED PURSUANT TO THIS
     9         SECTION.
    10             (II)  THE TOTAL [GAS EXPENSE] NATURAL GAS COSTS
    11     INCURRED.
    12             (III)  THE DIFFERENCE BETWEEN THE AMOUNTS SPECIFIED
    13         BY SUBPARAGRAPHS (I) AND (II).
    14             (IV)  [EVIDENCE EXPLAINING HOW ACTUAL] HOW ACTUAL
    15         NATURAL GAS COSTS INCURRED DIFFER FROM THE NATURAL GAS
    16         COSTS ALLOWED UNDER PARAGRAPH (2) AND WHY SUCH
    17         DIFFERENCES OCCURRED.
    18             (V)  HOW THESE NATURAL GAS COSTS ARE CONSISTENT WITH
    19         A LEAST COST PROCUREMENT POLICY AS REQUIRED BY SECTION
    20         1318 (RELATING TO DETERMINATION OF JUST AND REASONABLE
    21         [NATURAL] GAS COST RATES).
    22     SUCH REPORT SHALL BE A MATTER OF PUBLIC RECORD AND COPIES
    23     THEREOF SHALL BE MADE AVAILABLE BY THE [GAS DISTRIBUTOR]
    24     NATURAL GAS DISTRIBUTION COMPANY TO ANY PERSON UPON REQUEST.
    25     COPIES OF THE REPORTS SHALL BE FILED WITH THE OFFICE OF
    26     CONSUMER ADVOCATE AND THE OFFICE OF SMALL BUSINESS ADVOCATE
    27     AT THE SAME TIME AS THEY ARE FILED WITH THE COMMISSION.
    28         (4)  THE COMMISSION SHALL HOLD A PUBLIC HEARING ON THE
    29     SUBSTANCE OF SUCH STATEMENT SUBMITTED BY A [UTILITY] NATURAL
    30     GAS DISTRIBUTION COMPANY AS REQUIRED IN PARAGRAPH (3) AND ON
    19990H1331B2032                  - 4 -

     1     ANY RELATED MATTERS.
     2         (5)  THE COMMISSION, AFTER HEARING, SHALL DETERMINE THE
     3     PORTION OF THE [COMPANIES] COMPANY'S NATURAL GAS DISTRIBUTION
     4     ACTUAL NATURAL GAS COSTS IN THE PREVIOUS 12-MONTH PERIOD
     5     WHICH MEET THE STANDARDS SET OUT IN SECTION 1318. THE
     6     COMMISSION SHALL, BY ORDER, DIRECT EACH [GAS UTILITY] NATURAL
     7     GAS DISTRIBUTION COMPANY SUBJECT TO THIS SUBSECTION TO REFUND
     8     TO ITS [PATRONS ANY] CUSTOMERS GAS REVENUES COLLECTED
     9     PURSUANT TO PARAGRAPH (2) WHICH EXCEED THE AMOUNT OF ACTUAL
    10     [GAS EXPENSES] NATURAL GAS COSTS INCURRED CONSISTENT WITH THE
    11     STANDARDS IN SECTION 1318 AND TO RECOVER FROM ITS [PATRONS]
    12     CUSTOMERS ANY AMOUNT BY WHICH THE ACTUAL [GAS EXPENSES,]
    13     NATURAL GAS COSTS, WHICH HAVE BEEN INCURRED CONSISTENT WITH
    14     THE STANDARDS IN SECTION 1318, EXCEED THE REVENUES COLLECTED
    15     PURSUANT TO PARAGRAPH (2). ABSENT GOOD REASON TO THE
    16     CONTRARY, THE COMMISSION SHALL ISSUE ITS ORDER WITHIN SIX
    17     MONTHS FOLLOWING THE FILING OF THE STATEMENT DESCRIBED IN
    18     PARAGRAPH (3). REFUNDS TO [PATRONS] CUSTOMERS SHALL BE MADE
    19     WITH INTEREST, [WHICH SHALL BE THE AVERAGE RATE OF INTEREST
    20     SPECIFIED FOR RESIDENTIAL MORTGAGE LENDING BY THE SECRETARY
    21     OF BANKING IN ACCORDANCE WITH THE ACT OF JANUARY 30, 1974
    22     (P.L.13, NO.6), REFERRED TO AS THE LOAN INTEREST AND
    23     PROTECTION LAW,] AT THE LEGAL RATE OF INTEREST PLUS TWO
    24     PERCENT, DURING THE PERIOD OR PERIODS FOR WHICH THE
    25     COMMISSION ORDERS REFUNDS[:], AND RECOVERIES FROM CUSTOMERS
    26     SHALL INCLUDE INTEREST AT THE LEGAL RATE OF INTEREST:
    27     PROVIDED, THAT NOTHING CONTAINED HEREIN SHALL LIMIT THE
    28     APPLICABILITY OF ANY DEFENSES, PRINCIPLES OR DOCTRINES WHICH
    29     WOULD PROHIBIT THE COMMISSION'S  INQUIRY INTO ANY MATTERS
    30     THAT WERE DECIDED FINALLY IN THE COMMISSION'S ORDER ISSUED
    19990H1331B2032                  - 5 -

     1     UNDER PARAGRAPH (2).
     2         (6)  THE COMMISSION SHALL REQUIRE THAT CUSTOMERS
     3     TRANSFERRING FROM SALES TO TRANSPORTATION SERVICE BE SUBJECT
     4     TO THE OVER OR UNDER COLLECTION ADJUSTMENT PROVIDED FOR IN
     5     PARAGRAPH (5) AND SHALL REQUIRE FURTHER THAT CUSTOMERS
     6     TRANSFERRING FROM TRANSPORTATION SERVICE TO SALES SERVICE NOT
     7     BE SUBJECT TO THE OVER OR UNDER COLLECTION ADJUSTMENT FOR AN
     8     APPROPRIATE PERIOD FOLLOWING EITHER SUCH TRANSFER.
     9     (G)  DEFINITION.--AS USED IN THIS SECTION, [THE TERM "NATURAL
    10  GAS" INCLUDES NATURAL GAS, LIQUEFIED NATURAL GAS, SYNTHETIC
    11  NATURAL GAS AND ANY NATURAL GAS SUBSTITUTES.] THE TERMS "NATURAL
    12  GAS COSTS" AND "GAS COSTS" INCLUDE THE DIRECT COSTS PAID BY A
    13  NATURAL GAS DISTRIBUTION COMPANY FOR THE PURCHASE AND THE
    14  DELIVERY OF NATURAL GAS TO ITS SYSTEM IN ORDER TO SUPPLY ITS
    15  CUSTOMERS. SUCH COSTS MAY INCLUDE COSTS PAID UNDER AGREEMENTS TO
    16  PURCHASE NATURAL GAS FROM SELLERS; COSTS PAID FOR TRANSPORTING
    17  NATURAL GAS TO ITS SYSTEM; COSTS PAID FOR NATURAL GAS STORAGE
    18  SERVICE FROM OTHERS, INCLUDING THE COSTS OF INJECTING AND
    19  WITHDRAWING NATURAL GAS FROM STORAGE; ALL CHARGES, FEES, TAXES
    20  AND RATES PAID IN CONNECTION WITH SUCH PURCHASES, PIPELINE
    21  GATHERING, STORAGE AND TRANSPORTATION; AND COSTS PAID FOR
    22  EMPLOYING FUTURES, OPTIONS AND OTHER RISK MANAGEMENT TOOLS.
    23  "NATURAL GAS" AND "GAS" INCLUDE NATURAL GAS, LIQUIFIED NATURAL
    24  GAS, SYNTHETIC NATURAL GAS AND ANY NATURAL GAS SUBSTITUTES.
    25  § 1317.  REGULATION OF NATURAL GAS COSTS.
    26     (A)  GENERAL RULE.--IN EVERY RATE PROCEEDING INSTITUTED BY A
    27  NATURAL GAS DISTRIBUTION UTILITY, PURSUANT TO SECTION 1307(F)
    28  (RELATING TO SLIDING SCALE OF RATES; ADJUSTMENTS), EACH SUCH
    29  UTILITY SHALL BE REQUIRED TO [PROVIDE] SUPPLY TO THE COMMISSION
    30  SUCH INFORMATION, TO BE ESTABLISHED BY COMMISSION REGULATION
    19990H1331B2032                  - 6 -

     1  WITHIN 120 DAYS OF THE PASSAGE OF THIS SECTION, THAT WILL PERMIT
     2  THE COMMISSION TO MAKE SPECIFIC FINDINGS AS TO WHETHER THE
     3  UTILITY IS PURSUING A LEAST COST FUEL PROCUREMENT POLICY,
     4  CONSISTENT WITH THE UTILITY'S OBLIGATION TO PROVIDE SAFE,
     5  ADEQUATE AND RELIABLE SERVICE TO ITS CUSTOMERS. SUCH INFORMATION
     6  SHALL INCLUDE, BUT NEED NOT BE LIMITED TO, INFORMATION, DATA AND
     7  STATEMENTS REGARDING:
     8         (1)  THE UTILITY'S PARTICIPATION IN RATE PROCEEDINGS
     9     BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION WHICH AFFECT
    10     THE UTILITY'S GAS COSTS.
    11         (2)  THE UTILITY'S EFFORTS TO NEGOTIATE FAVORABLE
    12     CONTRACTS WITH GAS SUPPLIERS AND TO RENEGOTIATE EXISTING
    13     CONTRACTS WITH GAS SUPPLIERS OR TAKE LEGAL ACTIONS NECESSARY
    14     TO RELIEVE THE UTILITY FROM EXISTING CONTRACT TERMS WHICH ARE
    15     OR MAY BE ADVERSE TO THE INTERESTS OF THE UTILITY'S
    16     RATEPAYERS.
    17         (3)  THE UTILITY'S EFFORTS TO SECURE LOWER COST GAS
    18     SUPPLIES BOTH WITHIN AND OUTSIDE OF THE COMMONWEALTH,
    19     INCLUDING THE USE OF TRANSPORTATION ARRANGEMENTS WITH
    20     PIPELINES AND OTHER GAS DISTRIBUTION COMPANIES.
    21         (4)  THE SOURCES AND AMOUNTS OF ALL GAS SUPPLIES WHICH
    22     HAVE BEEN WITHHELD OR HAVE BEEN CAUSED TO BE WITHHELD FROM
    23     THE MARKET BY THE UTILITY AND THE REASONS WHY SUCH GAS IS NOT
    24     TO BE UTILIZED.
    25     (B)  INTEGRATED GAS COMPANIES.--IN THE CASE OF A NATURAL GAS
    26  DISTRIBUTION UTILITY WHICH PURCHASES ALL OR PART OF ITS GAS
    27  SUPPLIES FROM AN AFFILIATED INTEREST, AS THAT TERM IS DEFINED IN
    28  SECTION 2101 (RELATING TO DEFINITION OF AFFILIATED INTEREST),
    29  SUCH UTILITY SHALL, IN ADDITION TO THE MATERIALS REQUIRED IN
    30  SUBSECTION (A), BE REQUIRED TO PROVIDE TO THE COMMISSION SUCH
    19990H1331B2032                  - 7 -

     1  INFORMATION, TO BE ESTABLISHED BY COMMISSION REGULATION WITHIN
     2  120 DAYS OF THE PASSAGE OF THIS SECTION, THAT WILL PERMIT THE
     3  COMMISSION TO MAKE SPECIFIC FINDINGS AS TO WHETHER ANY PURCHASES
     4  OF GAS FROM AN AFFILIATED INTEREST ARE CONSISTENT WITH A LEAST
     5  COST FUEL PROCUREMENT POLICY, CONSISTENT WITH THE UTILITY'S
     6  OBLIGATION TO PROVIDE SAFE, ADEQUATE AND RELIABLE SERVICE TO ITS
     7  CUSTOMERS. SUCH INFORMATION SHALL INCLUDE, BUT NEED NOT BE
     8  LIMITED TO, STATEMENTS REGARDING:
     9         (1)  EFFORTS MADE BY THE UTILITY TO OBTAIN GAS SUPPLIES
    10     FROM NONAFFILIATED INTERESTS.
    11         (2)  THE SPECIFIC REASONS WHY THE UTILITY HAS PURCHASED
    12     GAS SUPPLIES FROM AN AFFILIATED INTEREST AND DEMONSTRATION
    13     THAT SUCH PURCHASES ARE CONSISTENT WITH A LEAST COST FUEL
    14     PROCUREMENT POLICY.
    15         (3)  THE SOURCES AND AMOUNTS OF ALL GAS SUPPLIES WHICH
    16     HAVE BEEN WITHHELD FROM THE MARKET BY THE UTILITY OR ANY
    17     AFFILIATED INTEREST AND THE REASONS WHY SUCH GAS IS NOT BEING
    18     UTILIZED.
    19     (C)  RELIABILITY PLANS.--AS PART OF ITS FILING UNDER SECTION
    20  1307(F) OR IF IT IS NOT REQUIRED TO MAKE SUCH A FILING ON AN
    21  ANNUAL BASIS, A NATURAL GAS DISTRIBUTION COMPANY, AS DEFINED IN
    22  SECTION 2202 (RELATING TO DEFINITIONS), SHALL FILE A PROPOSED
    23  RELIABILITY PLAN WITH THE COMMISSION WHICH SHALL, AT A MINIMUM,
    24  IDENTIFY THE FOLLOWING:
    25         (1)  THE PROJECTED PEAK DAY AND SEASONAL REQUIREMENTS OF
    26     THE FIRM CUSTOMERS UTILIZING THE DISTRIBUTION SYSTEM OF THE
    27     NATURAL GAS DISTRIBUTION COMPANY DURING THE 12-MONTH
    28     PROJECTED PERIOD SPECIFIED IN SECTION 1307(F)(1). WHERE
    29     OPERATIONALLY REQUIRED, THE DESIGN PEAK DAY REQUIREMENTS
    30     SHALL BE SPECIFIED FOR DISCRETE SEGMENTS OF EACH NATURAL GAS
    19990H1331B2032                  - 8 -

     1     DISTRIBUTION SYSTEM.
     2         (2)  THE TRANSPORTATION CAPACITY, STORAGE, PEAKING OR ON
     3     SYSTEM PRODUCTION THAT ENSURES DELIVERABILITY OF THE NATURAL
     4     GAS SUPPLIES NECESSARY TO MEET SUCH PROJECTED PERIOD PEAK DAY
     5     AND SEASONAL REQUIREMENTS.
     6     (D)  SUPPLY PLANS.--AS PART OF ITS FILING UNDER SECTION
     7  1307(F), A NATURAL GAS DISTRIBUTION COMPANY SHALL FILE A
     8  PROPOSED PLAN WITH THE COMMISSION FOR ACQUISITION OR RECEIPT OF
     9  NATURAL GAS SUPPLIES.
    10     [(C)] (E)  DEFINITION.--AS USED IN THIS SECTION, THE [TERM
    11  "NATURAL GAS" INCLUDES NATURAL GAS, LIQUIFIED NATURAL GAS,
    12  SYNTHETIC NATURAL GAS AND ANY NATURAL GAS SUBSTITUTES] TERMS
    13  "NATURAL GAS COSTS," "GAS COSTS," "NATURAL GAS" AND "GAS" SHALL
    14  HAVE THE SAME DEFINITIONS AS PROVIDED IN SECTION 1307(G).
    15  § 1318.  DETERMINATION OF JUST AND REASONABLE [NATURAL] GAS COST
    16             RATES.
    17     (A)  GENERAL RULE.--IN ESTABLISHING JUST AND REASONABLE RATES
    18  FOR THOSE NATURAL GAS DISTRIBUTION [UTILITIES] COMPANIES, AS
    19  DEFINED IN SECTION 2202 (RELATING TO DEFINITIONS), WITH GROSS
    20  INTRASTATE OPERATING REVENUES IN EXCESS OF $40,000,000 UNDER
    21  SECTION 1307(F) (RELATING TO SLIDING SCALE OF RATES;
    22  ADJUSTMENTS) OR 1308(D) (RELATING TO VOLUNTARY CHANGES IN RATES)
    23  OR ANY OTHER RATE PROCEEDING, THE COMMISSION SHALL CONSIDER THE
    24  MATERIALS PROVIDED BY THE UTILITIES PURSUANT TO SECTION 1317
    25  (RELATING TO REGULATION OF NATURAL GAS COSTS). NO RATES FOR A
    26  NATURAL GAS DISTRIBUTION UTILITY SHALL BE DEEMED JUST AND
    27  REASONABLE UNLESS THE COMMISSION FINDS THAT THE UTILITY IS
    28  PURSUING A LEAST COST FUEL PROCUREMENT POLICY, CONSISTENT WITH
    29  THE UTILITY'S OBLIGATION TO PROVIDE SAFE, ADEQUATE AND RELIABLE
    30  SERVICE TO ITS CUSTOMERS. IN MAKING SUCH A DETERMINATION, THE
    19990H1331B2032                  - 9 -

     1  COMMISSION SHALL BE REQUIRED TO MAKE SPECIFIC FINDINGS WHICH
     2  SHALL INCLUDE, BUT NEED NOT BE LIMITED TO, FINDINGS THAT:
     3         (1)  THE UTILITY HAS FULLY AND VIGOROUSLY REPRESENTED THE
     4     INTERESTS OF ITS RATEPAYERS IN PROCEEDINGS BEFORE THE FEDERAL
     5     ENERGY REGULATORY COMMISSION.
     6         (2)  THE UTILITY HAS TAKEN ALL PRUDENT STEPS NECESSARY TO
     7     NEGOTIATE FAVORABLE GAS SUPPLY CONTRACTS AND TO RELIEVE THE
     8     UTILITY FROM TERMS IN EXISTING CONTRACTS WITH ITS GAS
     9     SUPPLIERS WHICH ARE OR MAY BE ADVERSE TO THE INTERESTS OF THE
    10     UTILITY'S RATEPAYERS.
    11         (3)  THE UTILITY HAS TAKEN ALL PRUDENT STEPS NECESSARY TO
    12     OBTAIN LOWER COST GAS SUPPLIES ON BOTH SHORT-TERM AND LONG-
    13     TERM BASES BOTH WITHIN AND OUTSIDE THE COMMONWEALTH,
    14     INCLUDING THE USE OF GAS TRANSPORTATION ARRANGEMENTS WITH
    15     PIPELINES AND OTHER DISTRIBUTION COMPANIES.
    16         (4)  THE UTILITY HAS NOT WITHHELD FROM THE MARKET OR
    17     CAUSED TO BE WITHHELD FROM THE MARKET ANY GAS SUPPLIES WHICH
    18     SHOULD HAVE BEEN UTILIZED AS PART OF A LEAST COST FUEL
    19     PROCUREMENT POLICY.
    20     (B)  LIMITATION ON GAS PURCHASED FROM AFFILIATES.--IN ANY
    21  INSTANCE IN WHICH A NATURAL GAS DISTRIBUTION [UTILITY] COMPANY
    22  PURCHASES ALL OR PART OF ITS GAS SUPPLIES FROM AN AFFILIATED
    23  INTEREST, AS THAT TERM IS DEFINED IN SECTION 2101 (RELATING TO
    24  DEFINITION OF AFFILIATED INTEREST), THE COMMISSION, IN ADDITION
    25  TO THE DETERMINATIONS AND FINDINGS SET FORTH IN SUBSECTION (A),
    26  SHALL BE REQUIRED TO MAKE SPECIFIC FINDINGS WITH REGARD TO THE
    27  JUSTNESS AND REASONABLENESS OF ALL SUCH PURCHASES. SUCH FINDINGS
    28  SHALL INCLUDE, BUT NOT BE LIMITED TO FINDINGS:
    29         (1)  THAT THE UTILITY HAS FULLY AND VIGOROUSLY ATTEMPTED
    30     TO OBTAIN LESS COSTLY GAS SUPPLIES ON BOTH SHORT-TERM AND
    19990H1331B2032                 - 10 -

     1     LONG-TERM BASES FROM NONAFFILIATED INTERESTS.
     2         (2)  THAT EACH CONTRACT FOR THE PURCHASE OF GAS FROM ITS
     3     AFFILIATED INTEREST IS CONSISTENT WITH A LEAST COST FUEL
     4     PROCUREMENT POLICY.
     5         (3)  THAT NEITHER THE UTILITY NOR ITS AFFILIATED INTEREST
     6     HAS WITHHELD FROM THE MARKET ANY GAS SUPPLIES WHICH SHOULD
     7     HAVE BEEN UTILIZED AS PART OF A LEAST COST FUEL PROCUREMENT
     8     POLICY.
     9     (C)  SHUT-IN GAS; SPECIAL RULE.--IN DETERMINING WHETHER A GAS
    10  UTILITY HAS PURCHASED THE LEAST COSTLY NATURAL GAS AVAILABLE,
    11  THE COMMISSION SHALL CONSIDER AS AVAILABLE TO THE UTILITY ANY
    12  GAS SUPPLIES THAT REASONABLY COULD HAVE BEEN BROUGHT TO MARKET
    13  DURING THE RELEVANT PERIOD BUT WHICH WERE VOLUNTARILY WITHHELD
    14  FROM THE MARKET BY THE UTILITY OR AN AFFILIATED INTEREST OF THE
    15  UTILITY.
    16     (D)  OTHER REGULATORY APPROVALS.--THE FACT THAT A CONTRACT OR
    17  RATE HAS BEEN APPROVED BY A FEDERAL REGULATORY AGENCY FOR
    18  INTERSTATE RATEMAKING PURPOSES SHALL NOT, IN AND OF ITSELF, BE
    19  ADEQUATE TO SATISFY THE UTILITY'S BURDEN OF PROOF THAT GAS
    20  PRICES AND VOLUMES ASSOCIATED WITH SUCH CONTRACT OR RATE ARE
    21  JUST AND REASONABLE FOR PURPOSES OF THIS SECTION.
    22     (E)  REPORTS.--EACH NATURAL GAS DISTRIBUTION UTILITY WITH
    23  GROSS INTRASTATE ANNUAL OPERATING REVENUES IN EXCESS OF
    24  $40,000,000 SHALL FILE WITH THE COMMISSION [AND], THE OFFICE OF
    25  CONSUMER ADVOCATE AND THE OFFICE OF SMALL BUSINESS ADVOCATE, IN
    26  ACCORDANCE WITH REGULATIONS TO BE PRESCRIBED BY THE COMMISSION,
    27  QUARTERLY REPORTS SETTING FORTH THE ACTUAL GAS COSTS INCURRED BY
    28  THE UTILITY ON A MONTHLY BASIS. ACTUAL GAS COSTS SHALL BE
    29  REVIEWED FOR THEIR ACCURACY BY THE BUREAU OF AUDITS AT LEAST
    30  ANNUALLY AND THE RESULTS OF THAT REVIEW SHALL BE SUBMITTED TO
    19990H1331B2032                 - 11 -

     1  THE COMMISSION.
     2     (F)  DEFINITION.--AS USED IN THIS SECTION, THE [TERM INCLUDES
     3  NATURAL GAS, LIQUIFIED NATURAL GAS, SYNTHETIC NATURAL GAS AND
     4  ANY NATURAL GAS SUBSTITUTES.] TERMS "NATURAL GAS" "NATURAL GAS
     5  COSTS," "GAS COSTS," AND "GAS" SHALL HAVE THE SAME DEFINITIONS
     6  AS PROVIDED IN SECTION 1307(G).
     7     SECTION 2.  TITLE 66 IS AMENDED BY ADDING A CHAPTER TO READ:
     8                             CHAPTER 20
     9                   UTILITY INDUSTRY RESTRUCTURING
    10  SEC.
    11  2001.  APPLICABILITY.
    12  2002.  FINDINGS AND PURPOSES.
    13  2003.  REQUIREMENTS.
    14  2004.  REQUIREMENTS RELATED TO WORK FORCE REDUCTION.
    15  2005.  DISPLACED EMPLOYEE PROGRAM.
    16  2006.  TRANSFERS OF OWNERSHIP.
    17  2007.  TRANSFERS TO CERTAIN SUBSIDIARIES.
    18  2008.  EXISTING SALES AGREEMENTS.
    19  § 2001.  APPLICABILITY.
    20     IN ADDITION TO ANY OTHER SPECIFIC REQUIREMENTS CONTAINED IN
    21  THIS TITLE, THE PROVISIONS OF THIS CHAPTER SHALL APPLY TO THE
    22  RESTRUCTURING OR DEREGULATION OF ANY PUBLIC UTILITY INDUSTRY.
    23  § 2002.  FINDINGS AND PURPOSES.
    24         (1)  THE RELIABILITY AND SAFETY OF THE PUBLIC UTILITY
    25     INDUSTRIES SUBJECT TO THIS TITLE HAVE DEPENDED ON A WORK
    26     FORCE OF SKILLED AND DEDICATED EMPLOYEES EQUIPPED WITH
    27     TECHNICAL TRAINING AND EXPERIENCE.
    28         (2)  THE INTEGRITY AND RELIABILITY OF THEIR SYSTEMS ALSO
    29     HAVE DEPENDED ON EACH INDUSTRY'S COMMITMENT TO INVEST IN
    30     REGULAR INSPECTION AND MAINTENANCE, TO ASSURE THAT THEY CAN
    19990H1331B2032                 - 12 -

     1     WITHSTAND THE DEMANDS OF HEAVY SERVICE REQUIREMENTS AND
     2     EMERGENCY SITUATIONS.
     3         (3)  IT IS IN THE COMMONWEALTH'S INTEREST TO PROTECT THE
     4     INTERESTS OF PUBLIC UTILITY EMPLOYEES WHO HAVE DEDICATED
     5     THEMSELVES TO ASSURING RELIABLE SERVICE TO THE CITIZENS OF
     6     THIS COMMONWEALTH AND WHO OTHERWISE MIGHT BE ECONOMICALLY
     7     DISPLACED IN A RESTRUCTURED INDUSTRY.
     8  § 2003.  REQUIREMENTS.
     9     THE GENERAL ASSEMBLY FURTHER FINDS THAT IT IS NECESSARY TO
    10  ASSURE THAT EMPLOYEES OPERATING IN A RESTRUCTURED OR DEREGULATED
    11  PUBLIC UTILITY INDUSTRY HAVE THE REQUISITE SKILLS, KNOWLEDGE AND
    12  COMPETENCE TO PROVIDE SAFE, ADEQUATE AND RELIABLE SERVICE AND,
    13  THEREFORE, ALL PUBLIC UTILITIES AND ALL OTHER PERSONS PROVIDING
    14  SERVICES TO CONSUMERS USING THE FACILITIES OF A PUBLIC UTILITY
    15  SHALL BE REQUIRED TO DEMONSTRATE THE COMPETENCE OF THEIR
    16  EMPLOYEES TO WORK IN THE PUBLIC UTILITY INDUSTRY. THE KNOWLEDGE,
    17  SKILLS AND COMPETENCE LEVELS TO BE DEMONSTRATED SHALL BE
    18  CONSISTENT WITH THOSE GENERALLY REQUIRED OF OR BY COMPARABLE
    19  PUBLIC UTILITIES IN THIS COMMONWEALTH WITH RESPECT TO THEIR
    20  EMPLOYEES. ADEQUATE DEMONSTRATION OF REQUISITE KNOWLEDGE, SKILLS
    21  AND COMPETENCE SHALL INCLUDE SUCH FACTORS AS COMPLETION BY THE
    22  EMPLOYEE OF AN ACCREDITED OR OTHERWISE RECOGNIZED APPRENTICESHIP
    23  PROGRAM FOR THE PARTICULAR CRAFT, TRADE OR SKILL, OR SPECIFIED
    24  YEARS OF EMPLOYMENT WITH A PUBLIC UTILITY OR SIMILAR BUSINESS
    25  PERFORMING THE PARTICULAR WORK FUNCTION. TO IMPLEMENT THIS
    26  REQUIREMENT, THE COMMISSION, IN DETERMINING THAT A PERSON OR
    27  PUBLIC UTILITY MEETS THE STANDARDS REQUIRED BY THIS CHAPTER,
    28  SHALL REQUIRE THE PERSON OR PUBLIC UTILITY TO DEMONSTRATE THAT
    29  THE PERSON OR PUBLIC UTILITY IS LICENSED TO DO BUSINESS IN THIS
    30  COMMONWEALTH AND THAT THE EMPLOYEES OF THE PERSON OR PUBLIC
    19990H1331B2032                 - 13 -

     1  UTILITY THAT WILL BE INSTALLING, OPERATING AND MAINTAINING
     2  FACILITIES AND SERVICES WITHIN THIS COMMONWEALTH, OR ANY OTHER
     3  ENTITY WHICH THE PERSON OR PUBLIC UTILITY HAS CONTRACTED TO
     4  PERFORM THOSE FUNCTIONS WITHIN THIS COMMONWEALTH, HAVE THE
     5  REQUISITE KNOWLEDGE, SKILLS AND COMPETENCE TO PERFORM THOSE
     6  FUNCTIONS IN A SAFE AND RESPONSIBLE MANNER IN ORDER TO PROVIDE
     7  SAFE, ADEQUATE AND RELIABLE SERVICE IN ACCORDANCE WITH THE
     8  CRITERIA STATED HEREIN.
     9  § 2004.  REQUIREMENTS RELATED TO WORK FORCE REDUCTION.
    10     (A)  WORK FORCE REDUCTION PLAN.--THE GENERAL ASSEMBLY FINDS
    11  BASED ON EXPERIENCE IN INDUSTRIES THAT HAVE UNDERGONE
    12  DEREGULATION, RESTRUCTURING AND TRANSITION, THAT THE
    13  INTRODUCTION OF COMPETITION INTO THIS COMMONWEALTH'S REGULATED
    14  INDUSTRIES MAY RESULT IN WORK FORCE REDUCTIONS BY PUBLIC
    15  UTILITIES WHICH MAY ADVERSELY AFFECT PERSONS WHO HAVE BEEN
    16  EMPLOYED IN THIS COMMONWEALTH'S REGULATED INDUSTRIES IN
    17  FUNCTIONS IMPORTANT TO THE PUBLIC CONVENIENCE AND NECESSITY. THE
    18  GENERAL ASSEMBLY FURTHER FINDS THAT THE IMPACTS ON EMPLOYEES AND
    19  THEIR COMMUNITIES OF ANY NECESSARY REDUCTIONS IN THE INDUSTRY'S
    20  WORK FORCE DIRECTLY CAUSED BY THE RESTRUCTURING OR DEREGULATION
    21  OF AN INDUSTRY SUBJECT TO THIS TITLE SHALL BE MITIGATED TO THE
    22  EXTENT PRACTICABLE THROUGH SUCH MEANS AS OFFERS OF VOLUNTARY
    23  SEVERANCE, RETRAINING, EARLY RETIREMENT, OUTPLACEMENT,
    24  CONTINUATION OF MEDICAL BENEFITS AND RELATED BENEFITS.
    25  THEREFORE, BEFORE ANY SUCH REDUCTION IN THE WORK FORCE, A PUBLIC
    26  UTILITY SHALL PRESENT TO ITS EMPLOYEES OR THEIR REPRESENTATIVES
    27  A WORK FORCE REDUCTION PLAN OUTLINING THE MEANS BY WHICH THE
    28  PUBLIC UTILITY INTENDS TO REASONABLY MITIGATE THE IMPACT OF SUCH
    29  WORK FORCE REDUCTION ON ITS EMPLOYEES.
    30     (B)  EMPLOYEE TERMINATION.--BEGINNING MAY 1, 1999, IF A
    19990H1331B2032                 - 14 -

     1  PUBLIC UTILITY LAYS OFF OR TERMINATES ANY OF ITS EMPLOYEES,
     2  EXCEPT FOR JUST CAUSE, THE PUBLIC UTILITY SHALL PROVIDE THE
     3  COMMISSION WITH SUFFICIENT INFORMATION TO SHOW THAT WITH THE
     4  REDUCTION OF EMPLOYEES THE PUBLIC UTILITY WILL STILL BE ABLE TO
     5  ENSURE THE SAFETY, ADEQUACY AND RELIABILITY OF SERVICE TO ALL
     6  CUSTOMERS AND PROVIDE AT LEAST 60 DAYS' WRITTEN NOTICE OF SUCH
     7  LAYOFF OR TERMINATION TO THE PUBLIC UTILITY'S EMPLOYEES OR THE
     8  EMPLOYEES' AUTHORIZED BARGAINING REPRESENTATIVE.
     9  § 2005.  DISPLACED EMPLOYEE PROGRAM.
    10     THE DEPARTMENT OF LABOR AND INDUSTRY SHALL ESTABLISH AND
    11  IMPLEMENT A PROGRAM TO ASSIST THE EMPLOYEES OF A PUBLIC UTILITY
    12  WHO ARE DISPLACED BY RESTRUCTURING OR DEREGULATION. THE PROGRAM
    13  SHALL BE DESIGNED TO ASSIST EMPLOYEES IN OBTAINING EMPLOYMENT
    14  AND SHALL CONSIST OF UTILIZING THE FEDERAL FUNDS AVAILABLE FOR
    15  THE PURPOSE OF RETRAINING AND OUTPLACEMENT SERVICES FOR SUCH
    16  EMPLOYEES.
    17  § 2006.  TRANSFERS OF OWNERSHIP.
    18     IN THE EVENT OF A SALE, PURCHASE, OR ANY OTHER TRANSFER OF
    19  OWNERSHIP OF A PUBLIC UTILITY, OR OF ONE OR MORE PENNSYLVANIA
    20  DIVISIONS OR BUSINESS UNITS OF A PUBLIC UTILITY, THE EXISTING
    21  PUBLIC UTILITY'S CONTRACTS AND/OR AGREEMENTS WITH THE ACQUIRING
    22  PERSON SHALL REQUIRE THAT THE ACQUIRING PERSON SHALL HIRE A
    23  SUFFICIENT NUMBER OF NONSUPERVISORY EMPLOYEES TO OPERATE AND
    24  MAINTAIN THE FACILITIES AND SERVICES OF THE PUBLIC UTILITY BY
    25  INITIALLY MAKING OFFERS OF EMPLOYMENT TO THE NONSUPERVISORY WORK
    26  FORCE OF THE PUBLIC UTILITY, OR THE DIVISION OR BUSINESS UNIT OF
    27  THE PUBLIC UTILITY BEING TRANSFERRED, AT NO LESS THAN THE WAGE
    28  RATES AND SUBSTANTIALLY EQUIVALENT FRINGE BENEFITS AND TERMS AND
    29  CONDITIONS OF EMPLOYMENT THAT ARE IN EFFECT AT THE TIME OF
    30  TRANSFER OF OWNERSHIP OF SAID DIVISION OR BUSINESS UNIT AND SAID
    19990H1331B2032                 - 15 -

     1  WAGE RATES AND SUBSTANTIALLY EQUIVALENT FRINGE BENEFITS AND
     2  TERMS OF AND CONDITIONS OF EMPLOYMENT SHALL CONTINUE FOR AT
     3  LEAST 30 MONTHS FROM THE TIME OF SAID TRANSFER OF OWNERSHIP
     4  UNLESS THE PUBLIC UTILITY, THE ACQUIRING PERSON AND THE AFFECTED
     5  EMPLOYEES MUTUALLY AGREE TO DIFFERENT TERMS AND CONDITIONS OF
     6  EMPLOYMENT WITHIN THAT 30-MONTH PERIOD. THE PUBLIC UTILITY SHALL
     7  OFFER A TRANSITION PLAN TO THOSE EMPLOYEES WHO ARE NOT OFFERED
     8  JOBS BY THE ACQUIRING PERSON BECAUSE THAT PERSON HAS A NEED FOR
     9  FEWER WORKERS. IF THERE IS LITIGATION CONCERNING THE SALE OR
    10  OTHER TRANSFER OF OWNERSHIP OF THE PUBLIC UTILITY, OR THE
    11  DIVISION OR BUSINESS UNIT OF THE PUBLIC UTILITY, THE 30-MONTH
    12  PERIOD WILL BEGIN ON THE DATE THE ACQUIRING PERSON TAKES CONTROL
    13  OR MANAGEMENT OF THE PUBLIC UTILITY OR THE DIVISION OR BUSINESS
    14  UNIT OF THE PUBLIC UTILITY.
    15  § 2007.  TRANSFERS TO CERTAIN SUBSIDIARIES.
    16     IF A PUBLIC UTILITY TRANSFERS OWNERSHIP OF ONE OR MORE
    17  PENNSYLVANIA DIVISIONS OR BUSINESS UNITS TO A MAJORITY-OWNED
    18  SUBSIDIARY OF THE PUBLIC UTILITY OR TO ANY AFFILIATED INTEREST
    19  OF THE PUBLIC UTILITY AS DEFINED IN SECTION 2101 (RELATING TO
    20  DEFINITION OF AFFILIATED INTEREST), THAT SUBSIDIARY OR
    21  AFFILIATED INTEREST SHALL CONTINUE TO EMPLOY THE PUBLIC
    22  UTILITY'S EMPLOYEES WHO WERE EMPLOYED BY THE PUBLIC UTILITY AT
    23  SUCH DIVISION OR BUSINESS UNIT AT THE TIME OF THE TRANSFER UNDER
    24  THE SAME TERMS AND CONDITIONS OF EMPLOYMENT AS THOSE EMPLOYEES
    25  ENJOYED AT THE TIME OF THE TRANSFER. IF OWNERSHIP OF THE
    26  SUBSIDIARY OR AFFILIATED INTEREST IS SUBSEQUENTLY SOLD OR
    27  TRANSFERRED TO A THIRD PARTY, THESE PROVISIONS SHALL CONTINUE TO
    28  APPLY.
    29  § 2008.  EXISTING SALES AGREEMENTS.
    30     THE PROVISIONS OF SECTIONS 2006 (RELATING TO TRANSFERS OF
    19990H1331B2032                 - 16 -

     1  OWNERSHIP) AND 2007 (RELATING TO TRANSFERS TO CERTAIN
     2  SUBSIDIARIES) SHALL NOT APPLY TO THE TRANSFER OF ANY DIVISION OR
     3  BUSINESS UNIT OF A PUBLIC UTILITY WHICH WAS THE SUBJECT OF AN
     4  EXECUTED SALES AGREEMENT ENTERED INTO BEFORE JANUARY 1, 1999.
     5     SECTION 3.  SUBPART D OF PART I OF TITLE 66 IS AMENDED BY
     6  ADDING A CHAPTER TO READ:
     7                             CHAPTER 22
     8                      NATURAL GAS COMPETITION
     9  SEC.
    10  2201.  SHORT TITLE OF CHAPTER.
    11  2202.  DEFINITIONS.
    12  2203.  STANDARDS FOR RESTRUCTURING OF NATURAL GAS UTILITY
    13         INDUSTRY.
    14  2204.  IMPLEMENTATION.
    15  2205.  DUTIES OF NATURAL GAS DISTRIBUTION COMPANIES.
    16  2206.  CONSUMER PROTECTIONS AND CUSTOMER SERVICE.
    17  2207.  OBLIGATION TO SERVE.
    18  2208.  REQUIREMENTS FOR NATURAL GAS SUPPLIERS.
    19  2209.  MARKET POWER REMEDIATION.
    20  2210.  APPROVAL OF PROPOSED MERGERS, CONSOLIDATIONS,
    21         ACQUISITIONS OR DISPOSITIONS.
    22  2211.  RATE CAPS.
    23  § 2201.  SHORT TITLE OF CHAPTER.
    24     THIS CHAPTER SHALL BE KNOWN AND MAY BE CITED AS THE NATURAL
    25  GAS CHOICE AND COMPETITION ACT.
    26  § 2202.  DEFINITIONS.
    27     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
    28  SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
    29  CONTEXT CLEARLY INDICATES OTHERWISE:
    30     "CONSUMER PROTECTION."  THE STANDARDS, PRACTICES AND SERVICE
    19990H1331B2032                 - 17 -

     1  PROTECTIONS FOR RETAIL GAS CUSTOMERS, INCLUDING THOSE PROVIDED
     2  FOR IN 52 PA. CODE CH. 56 (RELATING TO STANDARDS AND BILLING
     3  PRACTICES FOR RESIDENTIAL UTILITY SERVICE), AS WELL AS
     4  APPLICABLE FEDERAL AND STATE DEBT/CREDIT COLLECTION STATUTES AND
     5  ANY REGULATIONS OR ORDERS OF THE COMMISSION THAT PROVIDE SUCH
     6  PROTECTIONS, AS MAY BE MODIFIED BY THE COMMISSION FROM TIME TO
     7  TIME.
     8     "ENTITY."  A PERSON OR CORPORATION AS DEFINED IN SECTION 102
     9  (RELATING TO DEFINITIONS).
    10     "NATURAL GAS DISTRIBUTION COMPANY."  A PUBLIC UTILITY THAT
    11  PROVIDES NATURAL GAS DISTRIBUTION SERVICES AND WHICH MAY PROVIDE
    12  NATURAL GAS SUPPLY SERVICES AND OTHER SERVICES. FOR PURPOSES OF
    13  THIS CHAPTER, THIS TERM DOES NOT INCLUDE:
    14         (1)  ANY PUBLIC UTILITY SUBJECT TO THE JURISDICTION OF
    15     THE COMMISSION WHICH HAS ANNUAL GAS OPERATING REVENUES OF
    16     LESS THAN $6,000,000 PER YEAR, EXCEPT WHERE THE PUBLIC
    17     UTILITY VOLUNTARILY PETITIONS THE COMMISSION TO BE INCLUDED
    18     WITHIN THIS DEFINITION OR WHERE THE PUBLIC UTILITY SEEKS TO
    19     PROVIDE NATURAL GAS SUPPLY SERVICES TO RETAIL GAS CUSTOMERS
    20     OUTSIDE ITS SERVICE TERRITORY; OR
    21         (2)  ANY NATURAL GAS PUBLIC UTILITY SUBJECT TO THE
    22     JURISDICTION OF THE COMMISSION THAT IS NOT INTERCONNECTED TO
    23     AN INTERSTATE GAS PIPELINE BY MEANS OF A DIRECT CONNECTION OR
    24     AN INDIRECT CONNECTION THROUGH THE DISTRIBUTION SYSTEM OF
    25     ANOTHER NATURAL GAS PUBLIC UTILITY OR THROUGH A NATURAL GAS
    26     GATHERING SYSTEM.
    27     "NATURAL GAS DISTRIBUTION SERVICE."  THE DELIVERY OF NATURAL
    28  GAS TO RETAIL GAS CUSTOMERS UTILIZING THE JURISDICTIONAL
    29  FACILITIES OF THE NATURAL GAS DISTRIBUTION COMPANY.
    30     "NATURAL GAS SUPPLIER."  AN ENTITY OTHER THAN A NATURAL GAS
    19990H1331B2032                 - 18 -

     1  DISTRIBUTION COMPANY, BUT INCLUDING NATURAL GAS DISTRIBUTION
     2  COMPANY MARKETING AFFILIATES, WHICH PROVIDES NATURAL GAS SUPPLY
     3  SERVICES TO RETAIL GAS CUSTOMERS UTILIZING THE JURISDICTIONAL
     4  FACILITIES OF A NATURAL GAS DISTRIBUTION COMPANY. THE TERM
     5  INCLUDES A NATURAL GAS DISTRIBUTION COMPANY THAT PROVIDES
     6  NATURAL GAS SUPPLY SERVICES OUTSIDE ITS CERTIFICATED SERVICE
     7  TERRITORIES. THE TERM INCLUDES A MUNICIPAL CORPORATION, ITS
     8  AFFILIATES OR ANY JOINT VENTURE, TO THE EXTENT THAT IT CHOOSES
     9  TO PROVIDE NATURAL GAS SUPPLY SERVICES TO RETAIL CUSTOMERS
    10  LOCATED OUTSIDE OF ITS CORPORATE OR MUNICIPAL LIMITS, AS
    11  APPLICABLE, OTHER THAN:
    12             (I)  AS PROVIDED PRIOR TO THE EFFECTIVE DATE OF THIS
    13         CHAPTER, PURSUANT TO A CERTIFICATE OF PUBLIC CONVENIENCE
    14         IF REQUIRED UNDER THIS TITLE;
    15             (II)  TOTAL NATURAL GAS SUPPLY SERVICES IN DE MINIMIS
    16         AMOUNTS;
    17             (III)  NATURAL GAS SUPPLY SERVICES REQUESTED BY, OR
    18         PROVIDED WITH THE CONSENT OF, THE PUBLIC UTILITY IN WHOSE
    19         CERTIFICATED TERRITORY THE SERVICES ARE PROVIDED; OR
    20             (IV)  NATURAL GAS SUPPLY SERVICES PROVIDED TO THE
    21         MUNICIPAL CORPORATION ITSELF OR ITS TENANTS ON LAND IT
    22         OWNS OR LEASES, OR IS SUBJECT TO AN AGREEMENT OF SALE OR
    23         PENDING CONDEMNATION, AS OF SEPTEMBER 1, 1999, TO THE
    24         EXTENT PERMITTED BY APPLICABLE LAW INDEPENDENT OF THIS
    25         CHAPTER.
    26  THE TERM EXCLUDES AN ENTITY TO THE EXTENT THAT IT PROVIDES FREE
    27  GAS TO END-USERS UNDER THE TERMS OF AN OIL OR GAS LEASE.
    28  NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE, A NATURAL GAS
    29  SUPPLIER THAT IS NOT A NATURAL GAS DISTRIBUTION COMPANY IS NOT A
    30  PUBLIC UTILITY AS DEFINED IN SECTION 102 (RELATING TO
    19990H1331B2032                 - 19 -

     1  DEFINITIONS) TO THE EXTENT THAT THE NATURAL GAS SUPPLIER IS
     2  UTILIZING THE JURISDICTIONAL DISTRIBUTION FACILITIES OF A
     3  NATURAL GAS DISTRIBUTION COMPANY OR IS PROVIDING OTHER SERVICES
     4  AUTHORIZED BY THE COMMISSION.
     5     "NATURAL GAS SUPPLY SERVICES."
     6         (1)  THE TERM INCLUDES:
     7             (I)  THE SALE OR ARRANGEMENT OF THE SALE OF NATURAL
     8         GAS TO RETAIL GAS CUSTOMERS; AND
     9             (II)  SERVICES THAT MAY BE UNBUNDLED BY THE
    10         COMMISSION UNDER SECTION 2203(3) (RELATING TO STANDARDS
    11         FOR RESTRUCTURING OF NATURAL GAS UTILITY INDUSTRY).
    12         (2)  THE TERM DOES NOT INCLUDE DISTRIBUTION SERVICE.
    13     "RELIABILITY."  THE TERM COMPRISES ADEQUACY AND SECURITY. THE
    14  TERM "ADEQUACY" MEANS THE PROVISION OF SUFFICIENT VOLUMES AND
    15  DELIVERABILITY OF NATURAL GAS SO AS TO SUPPLY THE REQUIREMENTS
    16  OF RETAIL GAS CUSTOMERS, TAKING INTO ACCOUNT PEAK AND SEASONAL
    17  DEMANDS, AS WELL AS ISOLATED MARKET AREAS AND SYSTEM OPERATION
    18  CONTINGENCIES. THE TERM "SECURITY" MEANS DESIGNING, MAINTAINING
    19  AND OPERATING A SYSTEM SO THAT IT CAN SAFELY HANDLE EXTREME
    20  CONDITIONS, AS WELL AS EMERGENCIES.
    21     "RETAIL GAS CUSTOMER."  A DIRECT PURCHASER OF NATURAL GAS
    22  SUPPLY SERVICES OR NATURAL GAS DISTRIBUTION SERVICES, OTHER THAN
    23  A NATURAL GAS SUPPLIER. THE TERM EXCLUDES AN OCCUPANT OF A
    24  BUILDING OR FACILITY WHERE THE OWNER/OPERATORS MANAGE THE
    25  INTERNAL DISTRIBUTION SYSTEM SERVING SUCH BUILDING OR FACILITY
    26  AND SUPPLY NATURAL GAS AND OTHER RELATED SERVICES TO OCCUPANTS
    27  OF THE BUILDING OR FACILITY; WHERE SUCH OWNER/OPERATORS ARE
    28  DIRECT PURCHASERS OF NATURAL GAS SUPPLY SERVICE; AND WHERE THE
    29  OCCUPANTS ARE NOT DIRECT PURCHASERS.
    30     "UNIVERSAL SERVICE AND ENERGY CONSERVATION."  POLICIES,
    19990H1331B2032                 - 20 -

     1  PRACTICES AND SERVICES THAT HELP RESIDENTIAL LOW-INCOME RETAIL
     2  GAS CUSTOMERS AND OTHER RESIDENTIAL RETAIL GAS CUSTOMERS
     3  EXPERIENCING TEMPORARY EMERGENCIES, AS DEFINED BY THE
     4  COMMISSION, TO MAINTAIN NATURAL GAS SUPPLY AND DISTRIBUTION
     5  SERVICES. THE TERM INCLUDES RETAIL GAS CUSTOMER ASSISTANCE
     6  PROGRAMS, TERMINATION OF SERVICE PROTECTIONS AND CONSUMER
     7  PROTECTION POLICIES AND SERVICES THAT HELP RESIDENTIAL LOW-
     8  INCOME CUSTOMERS AND OTHER RESIDENTIAL CUSTOMERS EXPERIENCING
     9  TEMPORARY EMERGENCIES TO REDUCE OR MANAGE ENERGY CONSUMPTION IN
    10  A COST-EFFECTIVE MANNER, SUCH AS THE LOW-INCOME USAGE REDUCTION
    11  PROGRAMS AND CONSUMER EDUCATION.
    12  § 2203.  STANDARDS FOR RESTRUCTURING OF NATURAL GAS UTILITY
    13             INDUSTRY.
    14     THE FOLLOWING INTERDEPENDENT STANDARDS SHALL GOVERN THE
    15  COMMISSION'S ACTIONS IN ADOPTING RULES, ORDERS OR POLICIES AND
    16  IN REVIEWING, ASSESSING AND APPROVING EACH NATURAL GAS
    17  DISTRIBUTION COMPANY'S RESTRUCTURING FILINGS AND OVERSEEING THE
    18  TRANSITION PROCESS AND REGULATION OF THE RESTRUCTURED NATURAL
    19  GAS UTILITY INDUSTRY:
    20         (1)  THE COMMISSION SHALL ADOPT AND ENFORCE STANDARDS AS
    21     NECESSARY TO ENSURE CONTINUATION OF THE SAFETY AND
    22     RELIABILITY OF THE NATURAL GAS SUPPLY AND DISTRIBUTION
    23     SERVICE TO ALL RETAIL GAS CUSTOMERS. IN ADOPTING THE
    24     STANDARDS, THE COMMISSION SHALL CONSIDER THE ABSENCE OF ANY
    25     APPLICABLE INDUSTRY STANDARDS AND PRACTICES OR ADOPT
    26     STANDARDS IN CONFORMITY WITH INDUSTRY STANDARDS AND PRACTICES
    27     MEETING THE STANDARDS OF THIS CHAPTER. THE APPLICATION OF
    28     SUCH STANDARDS SHALL BE IN A MANNER THAT INCORPORATES THE
    29     OPERATING REQUIREMENTS OF THE DIFFERENT NATURAL GAS
    30     DISTRIBUTION COMPANIES.
    19990H1331B2032                 - 21 -

     1         (2)  CONSISTENT WITH SECTION 2204 (RELATING TO
     2     IMPLEMENTATION), THE COMMISSION SHALL ALLOW RETAIL GAS
     3     CUSTOMERS TO CHOOSE AMONG NATURAL GAS SUPPLIERS AND NATURAL
     4     GAS DISTRIBUTION COMPANIES TO THE EXTENT THAT THEY OFFER SUCH
     5     NATURAL GAS SUPPLY SERVICES. RETAIL GAS CUSTOMERS SHALL BE
     6     ABLE TO CHOOSE FROM THESE SUPPLIERS A VARIETY OF PRODUCTS,
     7     INCLUDING, BUT NOT LIMITED TO, DIFFERENT SUPPLY AND PRICING
     8     OPTIONS, AND SERVICES THAT EVOLVE AS THE COMPETITIVE
     9     MARKETPLACE MATURES. NEITHER ANY NATURAL GAS SUPPLIER NOR ANY
    10     NATURAL GAS DISTRIBUTION COMPANY SHALL OFFER INTERRUPTIBLE
    11     GAS SERVICE TO ANY ESSENTIAL HUMAN NEEDS RETAIL GAS CUSTOMER
    12     LACKING INSTALLED AND OPERABLE ALTERNATIVE FUEL CAPABILITY OR
    13     TO ANY RESIDENTIAL RETAIL GAS CUSTOMER.
    14         (3)  THE COMMISSION SHALL REQUIRE NATURAL GAS
    15     DISTRIBUTION COMPANIES TO UNBUNDLE NATURAL GAS SUPPLY
    16     SERVICES SUCH THAT SEPARATE CHARGES FOR THE SERVICES CAN BE
    17     SET FORTH IN TARIFFS AND ON RETAIL GAS CUSTOMERS' BILLS. IN
    18     ITS RESTRUCTURING FILING, THE NATURAL GAS DISTRIBUTION
    19     COMPANY SHALL ESTABLISH SYSTEM RELIABILITY STANDARDS AND
    20     CAPACITY CONTRACT MITIGATION PARAMETERS AND ADDRESS THE
    21     UNBUNDLING OF COMMODITY, CAPACITY, STORAGE, BALANCING AND
    22     AGGREGATOR SERVICES. THE COMMISSION MAY ADDRESS THE
    23     UNBUNDLING OF OTHER SERVICES ONLY THROUGH A RULEMAKING. IN
    24     CONDUCTING THE RULEMAKING, THE COMMISSION SHALL CONSIDER THE
    25     IMPACT OF SUCH UNBUNDLING ON THE LABOR FORCE, THE CREATION OF
    26     STRANDED COSTS, SAFETY, RELIABILITY, CONSUMER PROTECTIONS,
    27     UNIVERSAL SERVICE AND THE POTENTIAL FOR UNBUNDLING TO OFFER
    28     SAVINGS, NEW PRODUCTS AND ADDITIONAL CHOICES OR SERVICES TO
    29     RETAIL GAS CUSTOMERS. THE COMMISSION'S DECISIONS SHALL ASSURE
    30     THAT STANDARDS AND PROCEDURES FOR SAFETY AND RELIABILITY,
    19990H1331B2032                 - 22 -

     1     CONSUMER PROTECTIONS AND UNIVERSAL SERVICE ARE MAINTAINED AT
     2     LEVELS CONSISTENT WITH THIS CHAPTER.
     3         (4)  CONSISTENT WITH THE PROVISIONS OF SECTION 2204, THE
     4     COMMISSION SHALL REQUIRE THAT A NATURAL GAS DISTRIBUTION
     5     COMPANY THAT OWNS OR OPERATES JURISDICTIONAL DISTRIBUTION
     6     FACILITIES SHALL PROVIDE DISTRIBUTION SERVICE TO ALL RETAIL
     7     GAS CUSTOMERS IN ITS SERVICE TERRITORY AND TO ALL NATURAL GAS
     8     SUPPLIERS, AFFILIATED OR NONAFFILIATED, ON NONDISCRIMINATORY
     9     RATES, TERMS OF ACCESS AND OTHER CONDITIONS.
    10         (5)  THE COMMISSION SHALL REQUIRE THAT RESTRUCTURING OF
    11     THE NATURAL GAS UTILITY INDUSTRY BE IMPLEMENTED IN A MANNER
    12     THAT DOES NOT UNREASONABLY DISCRIMINATE AGAINST ONE CUSTOMER
    13     CLASS FOR THE BENEFIT OF ANOTHER.
    14         (6)  AFTER NOTICE AND HEARINGS, THE COMMISSION SHALL
    15     ESTABLISH FOR EACH NATURAL GAS DISTRIBUTION COMPANY AN
    16     APPROPRIATE NONBYPASSABLE, COMPETITIVELY NEUTRAL COST-
    17     RECOVERY MECHANISM WHICH IS DESIGNED TO RECOVER FULLY THE
    18     NATURAL GAS DISTRIBUTION COMPANY'S UNIVERSAL SERVICE AND
    19     ENERGY CONSERVATION COSTS OVER THE LIFE OF THESE PROGRAMS.
    20     EXCEPT AS PROVIDED IN PARAGRAPH (10), POLICIES, ACTIVITIES
    21     AND SERVICES UNDER THIS PARAGRAPH SHALL BE FUNDED AND SPENT
    22     IN EACH NATURAL GAS DISTRIBUTION COMPANY'S SERVICE TERRITORY.
    23     NOTHING IN THIS CHAPTER SHALL BE CONSTRUED TO PROHIBIT PUBLIC
    24     FUNDING OR VOLUNTARY FUNDING BY THIRD PARTIES OF A NATURAL
    25     GAS DISTRIBUTION COMPANY'S UNIVERSAL SERVICE AND ENERGY
    26     CONSERVATION PROGRAMS.
    27         (7)  THE COMMISSION SHALL, AT A MINIMUM, CONTINUE THE
    28     LEVEL AND NATURE OF THE CONSUMERS PROTECTIONS, POLICIES AND
    29     SERVICES WITHIN ITS JURISDICTION THAT ARE IN EXISTENCE AS OF
    30     THE EFFECTIVE DATE OF THIS CHAPTER TO ASSIST LOW-INCOME
    19990H1331B2032                 - 23 -

     1     RETAIL GAS CUSTOMERS TO AFFORD NATURAL GAS SERVICES.
     2         (8)  THE COMMISSION SHALL ENSURE THAT UNIVERSAL SERVICE
     3     AND ENERGY CONSERVATION POLICIES, ACTIVITIES AND SERVICES ARE
     4     APPROPRIATELY FUNDED AND AVAILABLE IN EACH NATURAL GAS
     5     DISTRIBUTION SERVICE TERRITORY. THE COMMISSION SHALL
     6     ENCOURAGE THE USE OF COMMUNITY-BASED ORGANIZATIONS THAT HAVE
     7     THE NECESSARY TECHNICAL AND ADMINISTRATIVE EXPERIENCE TO BE
     8     THE DIRECT PROVIDERS OF SERVICES OR PROGRAMS WHICH REDUCE
     9     ENERGY CONSUMPTION OR OTHERWISE ASSIST LOW-INCOME RETAIL GAS
    10     CUSTOMERS TO AFFORD NATURAL GAS SERVICE. PROGRAMS UNDER THIS
    11     PARAGRAPH SHALL BE SUBJECT TO THE ADMINISTRATIVE OVERSIGHT OF
    12     THE COMMISSION, WHICH SHALL ENSURE THAT THE PROGRAMS ARE
    13     OPERATED IN A COST-EFFECTIVE MANNER.
    14         (9)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL SET
    15     FORTH IN ITS RESTRUCTURING FILING AN INITIAL PROPOSAL TO MEET
    16     ITS UNIVERSAL SERVICE AND ENERGY CONSERVATION OBLIGATIONS.
    17         (10)  CONSISTENT WITH PARAGRAPH (7), THE COMMISSION SHALL
    18     CONVENE A TASK FORCE TO REVIEW UNIVERSAL SERVICE PROGRAMS AND
    19     THEIR FUNDING. THE TASK FORCE SHALL ISSUE A REPORT TO THE
    20     COMMISSION BY DECEMBER 31, 1999, AND ANNUALLY THEREAFTER.
    21     RECOMMENDATIONS REGARDING THE USE OF GENERAL STATE REVENUE
    22     SHALL BE CONCURRENTLY FORWARDED TO THE GENERAL ASSEMBLY.
    23         (11)  THE COMMISSION SHALL CONTINUE TO REGULATE RATES FOR
    24     NATURAL GAS DISTRIBUTION SERVICES FOR NEW AND EXISTING RETAIL
    25     GAS CUSTOMERS IN ACCORDANCE WITH CHAPTER 13 (RELATING TO
    26     RATES AND RATE MAKING) AND THIS CHAPTER.
    27         (12)  THE COMMISSION SHALL MAKE ITS DETERMINATIONS
    28     PURSUANT TO THIS CHAPTER AND SHALL ADOPT SUCH ORDERS OR
    29     REGULATIONS AS NECESSARY AND APPROPRIATE TO ENSURE THAT
    30     NATURAL GAS SUPPLIERS MEET THEIR SUPPLY AND RELIABILITY
    19990H1331B2032                 - 24 -

     1     OBLIGATIONS, INCLUDING, BUT NOT LIMITED TO, ESTABLISHING
     2     PENALTIES FOR FAILURE TO DELIVER NATURAL GAS AND REVOKING
     3     LICENSES. ANY AFFECTED ENTITY MAY AT ANY TIME PETITION THE
     4     COMMISSION TO AMEND OR RESCIND ANY SUCH ORDER OR REGULATION
     5     ISSUED OR PROMULGATED UNDER THIS CHAPTER.
     6         (13)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL SET
     7     FORTH IN ITS RESTRUCTURING FILING AN INITIAL PROPOSAL TO MEET
     8     ITS EMPLOYEE TRANSITION OBLIGATIONS PRECIPITATED BY THIS
     9     CHAPTER.
    10         (14)  THE NATURAL GAS DISTRIBUTION COMPANY MAY CONTINUE
    11     TO PROVIDE NATURAL GAS SERVICE TO ITS CUSTOMERS UNDER ALL
    12     TARIFF RATE SCHEDULES AND RIDERS INCORPORATED INTO ITS
    13     TARIFF, AND POLICIES OR PROGRAMS, EXISTING ON THE EFFECTIVE
    14     DATE OF THIS CHAPTER.
    15         (15)  BEGINNING MAY 1, 1999, AND CONTINUING FOR A 36-
    16     MONTH PERIOD THEREAFTER, IF A NATURAL GAS DISTRIBUTION
    17     COMPANY LAYS OFF OR TERMINATES ANY OF ITS EMPLOYEES, EXCEPT
    18     FOR JUST CAUSE, THE NATURAL GAS DISTRIBUTION COMPANY SHALL:
    19             (I)  PROVIDE THE COMMISSION WITH SUFFICIENT
    20         INFORMATION TO SHOW THAT WITH THE REDUCTION OF EMPLOYEES
    21         THE COMPANY WILL STILL BE ABLE TO ENSURE THE SAFETY AND
    22         RELIABILITY OF NATURAL GAS DISTRIBUTION SERVICE TO ALL
    23         RETAIL GAS CUSTOMERS, AS PROVIDED FOR BY THE COMMISSION
    24         UNDER PARAGRAPH (1).
    25             (II)  PROVIDE AT LEAST 60 DAYS' WRITTEN NOTICE OF
    26         SUCH LAYOFF OR TERMINATION TO THE COMPANY'S EMPLOYEES'
    27         AUTHORIZED BARGAINING REPRESENTATIVE.
    28  § 2204.  IMPLEMENTATION.
    29     (A)  COMMENCEMENT OF CUSTOMER CHOICE.--BEGINNING ON NOVEMBER
    30  1, 1999, UNLESS THE COMMISSION FOR GOOD CAUSE SHOWN EXTENDS THIS
    19990H1331B2032                 - 25 -

     1  PERIOD BY NO MORE THAN EIGHT MONTHS, CONSISTENT WITH THIS
     2  CHAPTER, ALL RETAIL GAS CUSTOMERS OF NATURAL GAS DISTRIBUTION
     3  COMPANIES SHALL HAVE THE OPPORTUNITY TO PURCHASE NATURAL GAS
     4  SUPPLY SERVICES FROM A NATURAL GAS SUPPLIER OR THEIR NATURAL GAS
     5  DISTRIBUTION COMPANY TO THE EXTENT IT OFFERS SUCH SERVICES. THE
     6  CHOICE OF NATURAL GAS SUPPLIERS SHALL REST WITH THE RETAIL GAS
     7  CUSTOMER. THE COMMISSION SHALL ADOPT ORDERS, RULES, REGULATIONS
     8  AND POLICIES AS SHALL BE NECESSARY AND APPROPRIATE TO IMPLEMENT
     9  FULLY THIS CHAPTER WITHIN THE TIME FRAMES SPECIFIED IN THIS
    10  CHAPTER, PROVIDED THAT THE COMMISSION MAY, IN THE CONTEXT OF
    11  EACH NATURAL GAS DISTRIBUTION COMPANY'S RESTRUCTURING
    12  PROCEEDING, ESTABLISH THE TIME FRAMES FOR IMPLEMENTATION OF
    13  SPECIFIC COMPONENTS OF EACH NATURAL GAS DISTRIBUTION COMPANY'S
    14  RESTRUCTURING PLAN.
    15     (B)  RESTRUCTURING FILINGS.--ALL NATURAL GAS DISTRIBUTION
    16  COMPANIES IN THIS COMMONWEALTH SHALL FILE WITH THE COMMISSION,
    17  PURSUANT TO A SCHEDULE TO BE DETERMINED BY THE COMMISSION IN
    18  CONSULTATION WITH THE NATURAL GAS DISTRIBUTION COMPANIES, A
    19  RESTRUCTURING FILING CONSISTENT WITH THIS CHAPTER AND WITH ANY
    20  ORDERS, RULES OR REGULATIONS ADOPTED BY THE COMMISSION.
    21     (C)  COMMISSION REVIEW.--
    22         (1)  THE COMMISSION SHALL REVIEW THE RESTRUCTURING FILING
    23     OF EACH NATURAL GAS DISTRIBUTION COMPANY AND SHALL, AFTER
    24     OPEN EVIDENTIARY HEARINGS WITH PROPER NOTICE AND OPPORTUNITY
    25     FOR ALL PARTIES TO CROSS-EXAMINE WITNESSES AND BRIEF ISSUES,
    26     ISSUE AN ORDER ACCEPTING, MODIFYING OR REJECTING SUCH FILING
    27     AT THE EARLIEST DATE POSSIBLE, BUT NO LATER THAN NINE MONTHS
    28     FROM THE FILING DATE.
    29         (2)  IN ISSUING THE RESTRUCTURING ORDER, THE COMMISSION
    30     MAY CONSIDER THE RESULTS OF ANY COLLABORATIVE PROCESS
    19990H1331B2032                 - 26 -

     1     PREVIOUSLY ENGAGED IN DURING OR PRIOR TO THE RESTRUCTURING
     2     PROCEEDING.
     3         (3)  IF THE COMMISSION MODIFIES OR REJECTS A
     4     RESTRUCTURING FILING, IT SHALL STATE THE SPECIFIC REASONS FOR
     5     MODIFICATION OR REJECTION AND DIRECT THE NATURAL GAS
     6     DISTRIBUTION COMPANY TO ADDRESS SUCH OBJECTIONS WITH ANOTHER
     7     FILING WITHIN 30 DAYS OF THE ENTRY DATE OF THE COMMISSION
     8     ORDER MODIFYING OR REJECTING THE PRIOR FILING.
     9         (4)  THE COMMISSION SHALL REVIEW THE ALTERNATIVE FILING,
    10     SOLICIT COMMENTS AND REPLY COMMENTS FROM INTERESTED PARTIES
    11     AND ISSUE A FINAL ORDER WITHIN 45 DAYS OF THE REVISED FILING.
    12     (D)  RELEASE, ASSIGNMENT OR TRANSFER OF CAPACITY.--
    13         (1)  A NATURAL GAS DISTRIBUTION COMPANY HOLDING CONTRACTS
    14     FOR FIRM STORAGE OR TRANSPORTATION CAPACITY, INCLUDING GAS
    15     SUPPLY CONTRACTS WITH PENNSYLVANIA PRODUCERS, ON THE
    16     EFFECTIVE DATE OF THIS CHAPTER MAY, AT ITS OPTION, RELEASE,
    17     ASSIGN OR OTHERWISE TRANSFER SUCH CAPACITY, OR PENNSYLVANIA
    18     SUPPLY, IN WHOLE OR PART, ASSOCIATED WITH THOSE CONTRACTS ON
    19     A NONDISCRIMINATORY BASIS TO LICENSED NATURAL GAS SUPPLIERS
    20     OR LARGE COMMERCIAL OR INDUSTRIAL CUSTOMERS ON ITS SYSTEM.
    21         (2)  CONTRACTS WHICH BY THEIR TERMS MUST BE RENEWED
    22     WITHIN 150 DAYS AFTER THE EFFECTIVE DATE OF THIS CHAPTER OR
    23     CONTRACTS FOR WHICH THE LAST DAY FOR NOTICE OF RENEWAL OR
    24     NONRENEWAL PURSUANT TO THE NOTICE PROVISION OF THE CONTRACT
    25     HAS OCCURRED OR IS WITHIN 150 DAYS AFTER THE EFFECTIVE DATE
    26     OF THIS CHAPTER AND WHICH ARE RENEWED PURSUANT TO SUCH NOTICE
    27     REQUIREMENTS SHALL ALSO BE SUBJECT TO THE PROVISIONS OF THIS
    28     SUBSECTION.
    29         (3)  SUCH RELEASE, ASSIGNMENT OR TRANSFER SHALL BE AT THE
    30     APPLICABLE CONTRACT RATE FOR SUCH CAPACITY, OR PENNSYLVANIA
    19990H1331B2032                 - 27 -

     1     SUPPLY, AND SHALL BE SUBJECT TO APPLICABLE CONTRACTUAL
     2     ARRANGEMENTS AND TARIFFS. THE AMOUNT SO RELEASED, ASSIGNED OR
     3     TRANSFERRED SHALL BE SUFFICIENT TO SERVE THE LEVEL OF THE
     4     CUSTOMERS' REQUIREMENTS FOR WHICH THE NATURAL GAS
     5     DISTRIBUTION COMPANY HAS PROCURED SUCH CAPACITY,  DETERMINED
     6     IN ACCORDANCE WITH THE NATURAL GAS DISTRIBUTION COMPANY'S
     7     TARIFF OR PROCEDURES APPROVED IN ITS RESTRUCTURING
     8     PROCEEDINGS.
     9         (4)  THE LICENSED NATURAL GAS SUPPLIER SHALL ACCEPT SUCH
    10     RELEASE, ASSIGNMENT OR TRANSFER OF THAT CAPACITY, OR
    11     PENNSYLVANIA SUPPLY, AND ENTER INTO ALL APPLICABLE CONTRACTS
    12     OR AGREEMENTS, AS A CONDITION OF SERVING RETAIL GAS CUSTOMERS
    13     ON THE NATURAL GAS DISTRIBUTION COMPANY'S SYSTEM.
    14         (5)  ON OR AFTER JULY 1, 2002, THE COMMISSION SHALL HAVE
    15     THE AUTHORITY TO PREVENT SUCH ASSIGNMENTS, RELEASES OR
    16     TRANSFERS UNDER EITHER OF THE FOLLOWING CIRCUMSTANCES:
    17             (I)  THE NATURAL GAS DISTRIBUTION COMPANY, ALONE OR
    18         TOGETHER WITH ONE OR MORE NATURAL GAS SUPPLIERS,
    19         VOLUNTARILY PROPOSES AN ALTERNATIVE TO SUCH ASSIGNMENTS,
    20         RELEASES OR TRANSFERS AND THE COMMISSION FINDS SUCH
    21         ALTERNATIVE TO BE IN THE PUBLIC INTEREST; OR
    22             (II)  UPON THE PETITION OF THE LICENSED NATURAL GAS
    23         SUPPLIER WHO DESIRES TO USE ALTERNATE INTERSTATE STORAGE
    24         OR TRANSPORTATION CAPACITY TO SERVE ITS CUSTOMERS ON THE
    25         NATURAL GAS DISTRIBUTION COMPANY'S SYSTEM, THE COMMISSION
    26         MAKES THE FOLLOWING FINDINGS AND ISSUES A FINAL ORDER AS
    27         TO WHICH ALL APPEALS HAVE BEEN EXHAUSTED IN WHICH:
    28                 (A)  THE COMMISSION FINDS THAT THE ALTERNATE
    29             CAPACITY WHICH THE NATURAL GAS SUPPLIER SEEKS TO
    30             UTILIZE MEETS THE OPERATIONAL NEEDS AND RELIABILITY
    19990H1331B2032                 - 28 -

     1             STANDARDS OF THE NATURAL GAS DISTRIBUTION COMPANY.
     2                 (B)  THE COMMISSION CONFIRMS THAT THE NATURAL GAS
     3             DISTRIBUTION COMPANY'S SPECIFIC TRANSPORTATION AND
     4             STORAGE CAPACITY CONTRACTS TO BE DISPLACED ARE NO
     5             LONGER NEEDED TO SERVE FIRM CUSTOMERS OF THE NATURAL
     6             GAS DISTRIBUTION COMPANY.
     7                 (C)  THE COMMISSION AUTHORIZES THE NATURAL GAS
     8             DISTRIBUTION COMPANY TO FOLLOW A SPECIFIC, WRITTEN
     9             MITIGATION PLAN APPROVED BY THE COMMISSION OR, IF
    10             SUCH A PLAN IS NOT APPROVED OR APPLICABLE, TO POST
    11             THE DISPLACED CAPACITY FOR RELEASE IN ACCORDANCE WITH
    12             THE RULES AND REGULATIONS OF THE FEDERAL ENERGY
    13             REGULATORY COMMISSION AND APPLICABLE REQUIREMENTS OF
    14             INTERSTATE PIPELINES.
    15                 (D)  THE COMMISSION AUTHORIZES THE NATURAL GAS
    16             DISTRIBUTION COMPANY TO RECOVER THE DIFFERENCE
    17             BETWEEN THE AMOUNT THE NATURAL GAS DISTRIBUTION
    18             COMPANY IS REQUIRED TO PAY UNDER THE APPLICABLE
    19             CONTRACT TERMS FOR THE CAPACITY RELEASED, ASSIGNED OR
    20             TRANSFERRED PURSUANT TO SUBPARAGRAPH (C) AND THE
    21             AMOUNT THE NATURAL GAS DISTRIBUTION COMPANY RECEIVES
    22             FROM AN ENTITY, IF ANY, THAT ACQUIRES SUCH CAPACITY.
    23             UNDER NO CIRCUMSTANCES, HOWEVER, SHALL SUCH RECOVERY
    24             RESULT IN SHIFTING OF COSTS BETWEEN CUSTOMER CLASSES
    25             OR IN ANY INCREASE IN RATES TO CUSTOMERS WHO CONTINUE
    26             TO PURCHASE NATURAL GAS SUPPLIES FROM THE NATURAL GAS
    27             DISTRIBUTION COMPANY ACTING IN ITS SUPPLIER OF LAST
    28             RESORT FUNCTION.
    29         (6)  PRIOR TO MAKING THE FILING PROVIDED FOR IN PARAGRAPH
    30     (5), THE NATURAL GAS SUPPLIER SHALL MEET WITH THE NATURAL GAS
    19990H1331B2032                 - 29 -

     1     DISTRIBUTION COMPANY TO DISCUSS THE NATURAL GAS SUPPLIER'S
     2     PROPOSED ALTERNATIVES TO THE EXISTING GAS SUPPLY OR CAPACITY
     3     CONTRACTS OR TO THEIR MANDATORY ASSIGNMENT.
     4         (7)  THOSE NATURAL GAS DISTRIBUTION COMPANIES HAVING GAS
     5     SUPPLY CONTRACTS WITH PENNSYLVANIA PRODUCERS MAY ADDRESS THE
     6     ISSUE OF POST-JULY 1, 2002, ASSIGNMENT OF SUCH CONTRACTS IN
     7     THEIR RESTRUCTURING PROCEEDING OR THEREAFTER.
     8     (E)  NEW AND RENEWED CAPACITY.--
     9         (1)  SUBJECT TO THE SERVICE OBLIGATIONS IMPOSED BY THIS
    10     TITLE, AND TO THE EXTENT SUCH CAPACITY IS NOT NEEDED TO MEET
    11     THE NATURAL GAS DISTRIBUTION COMPANY'S LEAST COST FUEL
    12     PROCUREMENT AND OTHER APPLICABLE STANDARDS PURSUANT TO THIS
    13     TITLE, PRIOR TO ENTERING INTO NEW OR RENEWED CONTRACTS FOR
    14     FIRM STORAGE OR TRANSPORTATION CAPACITY NOT SUBJECT TO
    15     SUBSECTION (D)(1), (2), (3) OR (4) EACH NATURAL GAS
    16     DISTRIBUTION COMPANY SHALL OFFER ON A NONDISCRIMINATORY BASIS
    17     TO EACH NATURAL GAS SUPPLIER LICENSED TO DO BUSINESS ON ITS
    18     SYSTEM, AND TO LARGE VOLUME INDUSTRIAL OR COMMERCIAL
    19     CUSTOMERS OF THE NATURAL GAS DISTRIBUTION COMPANY BEING
    20     SERVED BY SUCH CONTRACTS, THE OPPORTUNITY TO RENEW SUCH
    21     CONTRACTS, PURSUANT TO THE RULES AND REGULATIONS OF THE
    22     FEDERAL ENERGY REGULATORY COMMISSION, OR TO ENTER INTO OTHER
    23     CONTRACTS FOR CAPACITY.
    24         (2)  THE CAPACITY SHALL MEET THE RELIABILITY CRITERIA OF
    25     THE NATURAL GAS DISTRIBUTION COMPANY AND, IN THE CASE OF
    26     LARGE VOLUME INDUSTRIAL AND COMMERCIAL CUSTOMERS BEING SERVED
    27     BY SUCH CONTRACTS, SHALL MEET THEIR CURRENT REQUIREMENTS.
    28         (3)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL UTILIZE
    29     THE COLLABORATIVE PROCESS ESTABLISHED PURSUANT TO SUBSECTION
    30     (F) TO ADDRESS ITS CAPACITY REQUIREMENTS.
    19990H1331B2032                 - 30 -

     1         (4)  ABSENT THE NATURAL GAS SUPPLIER OR LARGE VOLUME
     2     INDUSTRIAL OR COMMERCIAL CUSTOMER TAKING OR PROVIDING SUCH
     3     CAPACITY, THE NATURAL GAS DISTRIBUTION COMPANY SHALL FILE
     4     WITH AND OBTAIN APPROVAL FROM THE COMMISSION FOR SUCH
     5     CONTRACTS NECESSARY TO ENSURE SUFFICIENT CAPACITY TO MEET
     6     CURRENT AND PROJECTED CUSTOMER REQUIREMENTS CONSIDERING THE
     7     COMMITMENTS OF NATURAL GAS SUPPLIERS.
     8         (5)  PRIOR TO BEING DISPLACED BY A NATURAL GAS SUPPLIER'S
     9     ALTERNATE INTERSTATE STORAGE OR TRANSPORTATION CAPACITY,
    10     CONTRACTS RENEWED OR ENTERED INTO BY THE NATURAL GAS
    11     DISTRIBUTION COMPANY PURSUANT TO THIS SUBSECTION SHALL BE
    12     SUBJECT TO THE PROCESS SET FORTH IN SUBSECTION (D).
    13     (F)  WORKING GROUP AND COLLABORATIVE PROCESS.--IN ITS
    14  RESTRUCTURING PROCEEDING, A NATURAL GAS DISTRIBUTION COMPANY
    15  SHALL SET FORTH A PROCESS TO ESTABLISH A WORKING GROUP OF
    16  LICENSED NATURAL GAS SUPPLIERS HAVING CUSTOMERS ON THE NATURAL
    17  GAS DISTRIBUTION COMPANY'S SYSTEM AND REPRESENTATIVES OF THE
    18  RESIDENTIAL, COMMERCIAL AND INDUSTRIAL CUSTOMER CLASSES TO:
    19         (1)  MEET ON A SCHEDULED BASIS.
    20         (2)  SEEK RESOLUTION OF OPERATIONAL AND CAPACITY ISSUES
    21     RELATED TO CUSTOMER CHOICE.
    22  THE FINAL DETERMINATION OF OPERATIONAL AND RELIABILITY ISSUES
    23  RESIDES WITH THE NATURAL GAS DISTRIBUTION COMPANY. IN ADDITION,
    24  THE NATURAL GAS DISTRIBUTION COMPANY SHALL INCLUDE IN ITS
    25  RESTRUCTURING FILING A COLLABORATIVE PROCESS TO ADDRESS BROADER
    26  ISSUES RELATING TO UNBUNDLING, CUSTOMER CHOICE AND DEREGULATION.
    27     (G)  INVESTIGATION AND REPORT TO GENERAL ASSEMBLY.--FIVE
    28  YEARS AFTER THE EFFECTIVE DATE OF THIS CHAPTER, THE COMMISSION
    29  SHALL INITIATE AN INVESTIGATION OR OTHER APPROPRIATE PROCEEDING,
    30  IN WHICH ALL INTERESTED PARTIES ARE INVITED TO PARTICIPATE, TO
    19990H1331B2032                 - 31 -

     1  DETERMINE WHETHER EFFECTIVE COMPETITION FOR NATURAL GAS SUPPLY
     2  SERVICES EXISTS ON THE NATURAL GAS DISTRIBUTION COMPANIES'
     3  SYSTEMS IN THIS COMMONWEALTH. THE COMMISSION SHALL REPORT ITS
     4  FINDINGS TO THE GENERAL ASSEMBLY. SHOULD THE COMMISSION CONCLUDE
     5  THAT EFFECTIVE COMPETITION DOES NOT EXIST, THE COMMISSION SHALL
     6  RECONVENE THE STAKEHOLDERS IN THE NATURAL GAS INDUSTRY IN THIS
     7  COMMONWEALTH TO EXPLORE AVENUES, INCLUDING LEGISLATIVE, FOR
     8  ENCOURAGING INCREASED COMPETITION IN THIS COMMONWEALTH.
     9     (H)  DISPLACED EMPLOYEE PROGRAM.--THE DEPARTMENT OF LABOR AND
    10  INDUSTRY SHALL ESTABLISH AND IMPLEMENT A PROGRAM TO ASSIST THE
    11  NATURAL GAS DISTRIBUTION COMPANY EMPLOYEES WHO ARE DISPLACED BY
    12  THE TRANSITION TO RETAIL COMPETITION PRECIPITATED BY THIS
    13  CHAPTER. THE PROGRAM SHALL BE DESIGNED TO ASSIST EMPLOYEES IN
    14  OBTAINING EMPLOYMENT AND SHALL CONSIST OF UTILIZING THE FEDERAL
    15  FUNDS AVAILABLE FOR THE PURPOSE OF RETRAINING AND OUTPLACEMENT
    16  SERVICES FOR SUCH EMPLOYEES.
    17  § 2205.  DUTIES OF NATURAL GAS DISTRIBUTION COMPANIES.
    18     (A)  INTEGRITY OF DISTRIBUTION SYSTEM.--
    19         (1)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL MAINTAIN
    20     THE INTEGRITY OF ITS DISTRIBUTION SYSTEM AT LEAST IN
    21     CONFORMITY WITH THE STANDARDS ESTABLISHED BY THE FEDERAL
    22     DEPARTMENT OF TRANSPORTATION AND SUCH OTHER STANDARDS
    23     PRACTICED BY THE INDUSTRY IN A MANNER SUFFICIENT TO PROVIDE
    24     SAFE AND RELIABLE SERVICE TO ALL RETAIL GAS CUSTOMERS
    25     CONNECTED TO ITS SYSTEM CONSISTENT WITH THIS TITLE AND THE
    26     COMMISSION'S ORDERS OR REGULATIONS.
    27         (2)  IN PERFORMING SUCH DUTIES, THE NATURAL GAS
    28     DISTRIBUTION COMPANY SHALL IMPLEMENT PROCEDURES TO REQUIRE
    29     ALL NATURAL GAS SUPPLIERS TO SUPPLY NATURAL GAS TO THE
    30     NATURAL GAS DISTRIBUTION COMPANY AT LOCATIONS, VOLUMES,
    19990H1331B2032                 - 32 -

     1     QUALITIES AND PRESSURES THAT ARE ADEQUATE TO MEET THE NATURAL
     2     GAS SUPPLIER'S SUPPLY AND RELIABILITY OBLIGATIONS TO ITS
     3     RETAIL GAS CUSTOMERS AND THE NATURAL GAS DISTRIBUTION
     4     COMPANY'S SUPPLY AND RELIABILITY OBLIGATIONS TO ITS RETAIL
     5     GAS CUSTOMERS. THE PROCEDURES SHALL INCLUDE, BUT NOT BE
     6     LIMITED TO:
     7             (I)  A COMMUNICATION PROTOCOL WITH NATURAL GAS
     8         SUPPLIERS.
     9             (II)  AN ABILITY TO ISSUE SYSTEM MAINTENANCE ORDERS
    10         TO CONTROL THE FLOW OF GAS INTO THE DISTRIBUTION SYSTEM.
    11             (III)  THE RIGHT TO ISSUE AND ENFORCE PENALTIES
    12         PURSUANT TO COMMISSION DIRECTION, PROVIDED, HOWEVER, THAT
    13         THE COMMISSION MAY APPROVE ADDITIONAL PROCEDURES OF LIKE
    14         NATURE BY ORDER OR REGULATION TO PRESERVE RELIABILITY.
    15     (B)  INSTALLATION AND IMPROVEMENT OF FACILITIES.--
    16         (1)  THE NATURAL GAS DISTRIBUTION COMPANY SHALL NOT HAVE
    17     AN OBLIGATION TO INSTALL NONSTANDARD FACILITIES, EITHER AS TO
    18     TYPE OR LOCATION, FOR THE PURPOSE OF RECEIVING NATURAL GAS
    19     FROM THE NATURAL GAS SUPPLIER UNLESS THE NATURAL GAS SUPPLIER
    20     OR ITS RETAIL GAS CUSTOMER PAYS THE FULL COST OF THESE
    21     FACILITIES.
    22         (2)  NOTHING IN THIS CHAPTER SHALL PREVENT THE NATURAL
    23     GAS DISTRIBUTION COMPANY FROM MAINTAINING AND UPGRADING ITS
    24     SYSTEM TO MEET RETAIL GAS CUSTOMER REQUIREMENTS CONSISTENT
    25     WITH THE REQUIREMENT OF SECTION 1501 (RELATING TO CHARACTER
    26     OF SERVICE AND FACILITIES) OR COMPLIANCE WITH OTHER STATUTORY
    27     AND REGULATORY REQUIREMENTS.
    28         (3)  DISPUTES CONCERNING FACILITIES SHALL BE SUBJECT TO
    29     THE JURISDICTION OF THE COMMISSION AND MAY BE INITIATED BY
    30     THE FILING OF A COMPLAINT UNDER SECTION 701 (RELATING TO
    19990H1331B2032                 - 33 -

     1     COMPLAINTS) BY THE COMMISSION OR ANY INTERESTED PARTY.
     2     (C)  CUSTOMER BILLING.--
     3         (1)  SUBJECT TO THE RIGHT OF A RETAIL GAS CUSTOMER TO
     4     CHOOSE TO RECEIVE SEPARATE BILLS FROM ITS NATURAL GAS
     5     SUPPLIER FOR NATURAL GAS SUPPLY SERVICE, THE NATURAL GAS
     6     DISTRIBUTION COMPANY SHALL BE RESPONSIBLE FOR BILLING EACH OF
     7     ITS RETAIL GAS CUSTOMERS FOR NATURAL GAS DISTRIBUTION
     8     SERVICE, CONSISTENT WITH THE ORDERS OR REGULATIONS OF THE
     9     COMMISSION, REGARDLESS OF THE IDENTITY OF THE PROVIDER OF
    10     NATURAL GAS SUPPLY SERVICES.
    11         (2)  (I)  BILLS TO RETAIL GAS CUSTOMERS SHALL CONTAIN
    12         SUFFICIENT UNBUNDLED CHARGE INFORMATION TO ENABLE THE
    13         CUSTOMER TO DETERMINE THE BASIS FOR THOSE CHARGES AND
    14         SHALL COMPLY WITH SECTION 1509 (RELATING TO BILLING
    15         PROCEDURES). AT A MINIMUM, SUCH CHARGES SHALL INCLUDE
    16         THOSE SERVICES WHICH ARE UNBUNDLED AS A RESULT OF A
    17         RESTRUCTURING FILING OR RULEMAKING.
    18             (II)  BILLS TO RETAIL RESIDENTIAL CUSTOMERS RENDERED
    19         BY A NATURAL GAS DISTRIBUTION COMPANY FOR NATURAL GAS
    20         DISTRIBUTION SERVICES SHALL INCLUDE INFORMATION REQUIRED
    21         BY COMMISSION REGULATIONS GOVERNING STANDARDS AND BILLING
    22         PRACTICES FOR RESIDENTIAL UTILITY SERVICE.
    23             (III)  BILLS RENDERED BY A NATURAL GAS DISTRIBUTION
    24         COMPANY ON BEHALF OF A NATURAL GAS SUPPLIER SHALL
    25         INCLUDE, IN A FORM AND MANNER DETERMINED BY THE NATURAL
    26         GAS DISTRIBUTION COMPANY, IN CONSULTATION WITH THE
    27         NATURAL GAS SUPPLIER, THE FOLLOWING INFORMATION WITH
    28         RESPECT TO NATURAL GAS SUPPLIER SERVICES: THE NAME OF THE
    29         NATURAL GAS SUPPLIER; THE RATES, CHARGES OR PRICES OF
    30         NATURAL GAS SUPPLY SERVICES BILLED, INCLUDING ADJUSTMENTS
    19990H1331B2032                 - 34 -

     1         TO PRIOR PERIOD BILLINGS, IF APPLICABLE, AND TAXES, IF
     2         APPLICABLE; AND THE NATURAL GAS SUPPLIER'S TOLL-FREE
     3         TELEPHONE NUMBER AND HOURS OF OPERATION FOR CUSTOMER
     4         INQUIRIES.
     5         (3)  INCREMENTAL COSTS RELATING TO BILLING SERVICES
     6     DESIGNED, IMPLEMENTED AND RENDERED BY THE NATURAL GAS
     7     DISTRIBUTION COMPANY, AT ITS ELECTION, ON BEHALF OF A NATURAL
     8     GAS SUPPLIER OR OTHER ENTITY MAY BE RECOVERED THROUGH FEES
     9     CHARGED BY THE NATURAL GAS DISTRIBUTION COMPANY TO THE
    10     NATURAL GAS SUPPLIER OR OTHER ENTITY. EITHER PARTY MAY
    11     REQUEST THAT THE COMMISSION CONSIDER THE APPROPRIATE LEVEL OF
    12     THE FEE. IN DOING SO, THE COMMISSION SHALL CONSIDER FEES
    13     CHARGED BY OTHER NATURAL GAS DISTRIBUTION COMPANIES FOR
    14     SIMILAR SERVICES. THE COMMISSION SHALL EITHER PERMIT THE FEE
    15     TO CONTINUE AS SET OR SHALL ESTABLISH AN ALTERNATIVE
    16     MECHANISM TO PERMIT FULL RECOVERY OF UNRECOVERED JUST AND
    17     REASONABLE COSTS FROM THE SUPPLIER OR THE SUPPLIER'S
    18     CUSTOMERS. NOTHING IN THIS SECTION SHALL PERMIT THE RECOVERY
    19     OF SUCH COSTS FROM NATURAL GAS SUPPLY SERVICE CUSTOMERS OF
    20     THE NATURAL GAS DISTRIBUTION COMPANY.
    21         (4)  IF SERVICES ARE PROVIDED BY AN ENTITY OTHER THAN THE
    22     NATURAL GAS DISTRIBUTION COMPANY, THE ENTITY THAT PROVIDED
    23     THOSE SERVICES SHALL FURNISH TO THE NATURAL GAS DISTRIBUTION
    24     COMPANY BILLING DATA SUFFICIENT TO ENABLE THE NATURAL GAS
    25     DISTRIBUTION COMPANY TO TIMELY BILL RETAIL GAS CUSTOMERS. THE
    26     ENTITY SHALL PROVIDE DATA FOR BILLING PURPOSES IN A FORMAT
    27     AND IN A TIME FRAME AS REQUIRED BY THE NATURAL GAS
    28     DISTRIBUTION COMPANY. THE NATURAL GAS DISTRIBUTION COMPANY
    29     SHALL CONSIDER THE DATA AND INFORMATION  CONFIDENTIAL AND
    30     SHALL TREAT IT AS SUCH.
    19990H1331B2032                 - 35 -

     1         (5)  NO NATURAL GAS DISTRIBUTION COMPANY SHALL BE
     2     REQUIRED TO FORWARD PAYMENT TO ENTITIES PROVIDING SERVICES TO
     3     CUSTOMERS AND ON WHOSE BEHALF THE NATURAL GAS DISTRIBUTION
     4     COMPANY IS BILLING THOSE CUSTOMERS BEFORE THE NATURAL GAS
     5     DISTRIBUTION COMPANY HAS RECEIVED PAYMENT FOR THOSE SERVICES
     6     FROM CUSTOMERS. THE COMMISSION SHALL ISSUE GUIDELINES
     7     ADDRESSING THE APPLICATION OF PARTIAL PAYMENTS.
     8         (6)  NATURAL GAS DISTRIBUTION COMPANIES AND NATURAL GAS
     9     SUPPLIERS SHALL TAKE REASONABLE STEPS TO ALLOW RETAIL GAS
    10     CUSTOMERS TO CONTRIBUTE VIA THEIR BILL TO HARDSHIP ENERGY
    11     FUNDS WHICH BENEFIT LOW-INCOME RESIDENTIAL RETAIL GAS
    12     CONSUMERS.
    13     (D)  ENHANCED METERING.--SUBJECT TO COMMISSION APPROVAL, THE
    14  NATURAL GAS DISTRIBUTION COMPANY MAY REQUIRE THE INSTALLATION,
    15  AT THE RETAIL GAS CUSTOMER'S EXPENSE, OF ENHANCED METERING
    16  CAPABILITY SUFFICIENT TO MATCH THE NATURAL GAS DELIVERED BY THE
    17  RETAIL GAS CUSTOMER'S NATURAL GAS SUPPLIER OR SUPPLIERS WITH
    18  CONSUMPTION BY THAT RETAIL GAS CUSTOMER. IN EXERCISING ITS
    19  DISCRETION, THE COMMISSION SHALL CONSIDER THE EFFECT ON LOW-
    20  INCOME RETAIL GAS CUSTOMERS.
    21  § 2206.  CONSUMER PROTECTIONS AND CUSTOMER SERVICE.
    22     (A)  QUALITY.--A NATURAL GAS DISTRIBUTION COMPANY SHALL BE
    23  RESPONSIBLE FOR CUSTOMER SERVICE FUNCTIONS CONSISTENT WITH THE
    24  ORDERS AND REGULATIONS OF THE COMMISSION, INCLUDING, BUT NOT
    25  LIMITED TO, METER READING, INSTALLATION, TESTING AND MAINTENANCE
    26  AND EMERGENCY RESPONSE FOR ALL CUSTOMERS, AND COMPLAINT
    27  RESOLUTION AND COLLECTIONS RELATED TO THE SERVICE PROVIDED BY
    28  THE NATURAL GAS DISTRIBUTION COMPANY. CUSTOMER SERVICE AND
    29  CONSUMER PROTECTIONS AND POLICIES FOR RETAIL GAS CUSTOMERS
    30  SHALL, AT A MINIMUM, BE MAINTAINED  AT THE SAME LEVEL OF QUALITY
    19990H1331B2032                 - 36 -

     1  UNDER RETAIL COMPETITION AS IN EXISTENCE ON THE EFFECTIVE DATE
     2  OF THIS CHAPTER.
     3     (B)  CHANGE OF SUPPLIERS.--THE COMMISSION SHALL, BY ORDER OR
     4  REGULATION, ESTABLISH PROCEDURES TO ENSURE THAT A NATURAL GAS
     5  DISTRIBUTION COMPANY DOES NOT CHANGE A RETAIL GAS CUSTOMER'S
     6  NATURAL GAS SUPPLIER WITHOUT DIRECT  ORAL CONFIRMATION FROM THE
     7  CUSTOMER OF RECORD OR WRITTEN EVIDENCE OF THE CUSTOMER'S CONSENT
     8  TO A CHANGE OF SUPPLIER.
     9     (C)  CUSTOMER INFORMATION.--THE COMMISSION SHALL, BY ORDER OR
    10  REGULATION, ESTABLISH REQUIREMENTS THAT EACH NATURAL GAS
    11  DISTRIBUTION COMPANY AND NATURAL GAS SUPPLIER PROVIDE ADEQUATE,
    12  ACCURATE CUSTOMER INFORMATION TO ENABLE RETAIL GAS CUSTOMERS TO
    13  MAKE INFORMED CHOICES REGARDING THE PURCHASE OF ALL NATURAL GAS
    14  SERVICES OFFERED BY THAT PROVIDER. INFORMATION SHALL BE PROVIDED
    15  TO RETAIL GAS CUSTOMERS IN AN UNDERSTANDABLE FORMAT THAT ENABLES
    16  RETAIL GAS CUSTOMERS TO COMPARE PRICES AND SERVICES ON A UNIFORM
    17  BASIS.
    18     (D)  CONSUMER EDUCATION.--PRIOR TO THE IMPLEMENTATION OF ANY
    19  RESTRUCTURING PLAN UNDER SECTION 2204 (RELATING TO
    20  IMPLEMENTATION), EACH NATURAL GAS DISTRIBUTION COMPANY, IN
    21  CONJUNCTION WITH THE COMMISSION AND CONSISTENT WITH THE
    22  GUIDELINES ESTABLISHED BY THE COMMISSION, SHALL IMPLEMENT A
    23  CONSUMER EDUCATION PROGRAM TO INFORM CUSTOMERS OF THE CHANGES IN
    24  THE NATURAL GAS UTILITY INDUSTRY. THE PROGRAM SHALL PROVIDE
    25  RETAIL GAS CUSTOMERS WITH INFORMATION NECESSARY TO HELP THEM
    26  MAKE APPROPRIATE CHOICES AS TO THEIR NATURAL GAS SERVICE. THE
    27  EDUCATION PROGRAM SHALL BE SUBJECT TO APPROVAL BY THE
    28  COMMISSION. THE CONSUMER EDUCATION PROGRAM SHALL INCLUDE GOALS,
    29  OBJECTIVES AND AN ACTION PLAN THAT IS DESIGNED TO BE OBJECTIVE,
    30  EASILY UNDERSTOOD, UTILIZES A UNIFORM MEASUREMENT AS ESTABLISHED
    19990H1331B2032                 - 37 -

     1  BY THE COMMISSION FOR THE COST OF GAS, BE AVAILABLE IN LANGUAGES
     2  THAT THE COMMISSION REQUIRES TO MEET THE NEEDS OF A SERVICE
     3  TERRITORY AND BE SEPARATE AND DISTINCT FROM MARKETING.
     4     (E)  CONSUMER EDUCATION COST RECOVERY.--THE CONSUMER
     5  EDUCATION PROGRAM SHALL BE SUBJECT TO APPROVAL BY THE COMMISSION
     6  AND SHALL BE FUNDED IN EACH NATURAL GAS DISTRIBUTION SERVICE
     7  TERRITORY BY A NONBYPASSABLE, COMPETITIVELY NEUTRAL COST
     8  RECOVERY MECHANISM THAT FULLY RECOVERS THE REASONABLE COST OF
     9  SUCH PROGRAM. TO THE EXTENT THAT THE INDUSTRIAL CUSTOMER CLASS
    10  IS NOT CURRENTLY ASSIGNED SUCH COSTS ON THE EFFECTIVE DATE OF
    11  THIS CHAPTER, IT SHALL NOT BE ASSIGNED SUCH COSTS IN THE FUTURE.
    12     (F)  TENANTS' RIGHTS.--NOTHING IN THIS CHAPTER SHALL BE
    13  CONSTRUED TO RESTRICT THE RIGHTS OF TENANTS PURSUANT TO
    14  SUBCHAPTER B OF CHAPTER 15 (RELATING TO DISCONTINUANCE OF
    15  SERVICE TO LEASED PREMISES).
    16  § 2207.  OBLIGATION TO SERVE.
    17     (A)  SUPPLIER OF LAST RESORT.--
    18         (1)  AFTER THE EFFECTIVE DATE OF THIS CHAPTER, THE
    19     NATURAL GAS DISTRIBUTION COMPANY SHALL SERVE AS THE SUPPLIER
    20     OF LAST RESORT FOR RESIDENTIAL, SMALL COMMERCIAL, SMALL
    21     INDUSTRIAL AND ESSENTIAL HUMAN NEEDS CUSTOMERS AND ANY OTHER
    22     CUSTOMER CLASSES DETERMINED BY THE COMMISSION IN THE NATURAL
    23     GAS DISTRIBUTION COMPANY'S RESTRUCTURING PROCEEDING UNTIL
    24     SUCH TIME AS THE COMMISSION, PURSUANT TO THIS SECTION,
    25     APPROVES AN ALTERNATIVE SUPPLIER OR SUPPLIERS TO PROVIDE SUCH
    26     SERVICES TO ANY OR ALL OF THE NATURAL GAS DISTRIBUTION
    27     COMPANY'S CUSTOMERS.
    28         (2)  FOR PURPOSES OF THIS SECTION, A SUPPLIER OF LAST
    29     RESORT IS A NATURAL GAS DISTRIBUTION COMPANY OR NATURAL GAS
    30     SUPPLIER WHICH IS DESIGNATED  BY THE COMMISSION TO PROVIDE
    19990H1331B2032                 - 38 -

     1     NATURAL GAS SUPPLY SERVICE WITH RESPECT TO ONE OR MORE OF THE
     2     FOLLOWING SERVICES:
     3             (I)  NATURAL GAS SUPPLY SERVICES TO THOSE CUSTOMERS
     4         WHO HAVE NOT CHOSEN AN ALTERNATIVE NATURAL GAS SUPPLIER
     5         OR WHO CHOOSE TO BE SERVED BY THEIR SUPPLIER OF LAST
     6         RESORT;
     7             (II)  NATURAL GAS SUPPLY SERVICES TO THOSE CUSTOMERS
     8         WHO ARE REFUSED SUPPLY SERVICE FROM A NATURAL GAS
     9         SUPPLIER; OR
    10             (III)  NATURAL GAS SUPPLY SERVICES TO THOSE CUSTOMERS
    11         WHOSE NATURAL GAS SUPPLIER HAS FAILED TO DELIVER ITS
    12         REQUIREMENTS.
    13     NO CUSTOMER SHALL HAVE MORE THAN ONE SUPPLIER OF LAST RESORT
    14     DESIGNATED FOR ANY OF THE SERVICES SET FORTH IN THIS
    15     PARAGRAPH.
    16     (B)  CONSUMER PROTECTION.--SERVICE BY THE SUPPLIER OF LAST
    17  RESORT SHALL BE SUBJECT TO ALL CONSUMER PROTECTION STANDARDS,
    18  INCLUDING THOSE CONTAINED IN 52 PA. CODE CH. 56 (RELATING TO
    19  STANDARDS AND BILLING PRACTICES FOR RESIDENTIAL UTILITY SERVICE)
    20  AND TO ALL UNIVERSAL SERVICE OBLIGATIONS.
    21     (C)  NATURAL GAS DISTRIBUTION COMPANY.--THE NATURAL GAS
    22  DISTRIBUTION COMPANY SHALL DELIVER NATURAL GAS TO THE EXTENT
    23  THAT IT IS PROVIDED BY ALL NATURAL GAS SUPPLIERS, OR SUPPLIERS
    24  OF LAST RESORT, AS THE CASE MAY BE, IN ACCORDANCE WITH THE
    25  NATURAL GAS DISTRIBUTION COMPANY'S TARIFF.
    26     (D)  STANDARDS OF SERVICE.--CONSISTENT WITH THE STANDARDS SET
    27  FORTH IN SECTION 1501 (RELATING TO CHARACTER OF SERVICE AND
    28  FACILITIES) AND APPLICABLE ORDERS OF THE COMMISSION, A SUPPLIER
    29  OF LAST RESORT UNDER SUBSECTION (A)(2)(III) SHALL PROVIDE
    30  SUFFICIENT SUPPLIES AS TO QUANTITY, QUALITY, PRESSURE AND
    19990H1331B2032                 - 39 -

     1  LOCATION TO MEET THE OPERATIONAL RELIABILITY REQUIREMENTS OF THE
     2  NATURAL GAS DISTRIBUTION COMPANY'S SYSTEM, INCLUDING, BUT NOT
     3  LIMITED TO, A FAILURE OF ONE OR MORE NATURAL GAS SUPPLIERS TO:
     4         (1)  SUPPLY NATURAL GAS TO THEIR RETAIL GAS CUSTOMERS IN
     5     CONFORMANCE WITH THEIR CONTRACTUAL OBLIGATIONS TO SUCH
     6     CUSTOMERS; OR
     7         (2)  SATISFY APPLICABLE RELIABILITY STANDARDS AND
     8     OBLIGATIONS.
     9     (E)  DISCONTINUATION OF SERVICE.--THE NATURAL GAS
    10  DISTRIBUTION COMPANY SHALL CONTINUE PROVIDING SERVICES AS THE
    11  SUPPLIER OF LAST RESORT TO ALL OF ITS CUSTOMERS FOR ALL OF THE
    12  NATURAL GAS SUPPLY SERVICES DESCRIBED IN SUBSECTION (A)(2),
    13  UNLESS, AT ITS DISCRETION, IT REQUESTS AND RECEIVES COMMISSION
    14  APPROVAL TO DISCONTINUE PROVIDING ONE OR MORE SUCH SUPPLIER OF
    15  LAST RESORT OBLIGATION. IN APPROVING SUCH A PETITION, THE
    16  COMMISSION SHALL ALSO APPROVE ANOTHER PARTY AS THE ALTERNATIVE
    17  SUPPLIER OF LAST RESORT FOR EACH CUSTOMER OR CUSTOMER GROUP FOR
    18  WHICH THE NATURAL GAS DISTRIBUTION COMPANY NO LONGER PROVIDES
    19  SUCH NATURAL GAS SUPPLY SERVICES.
    20     (F)  REGULATIONS.--THE COMMISSION SHALL PROMULGATE
    21  REGULATIONS SETTING FORTH THE STANDARDS FOR APPROVING AN
    22  ALTERNATIVE SUPPLIER OF LAST RESORT CONSISTENT WITH THE
    23  PROVISIONS OF THIS TITLE, INCLUDING A MECHANISM TO ENSURE THAT
    24  THE RATES CHARGED BY ANY ALTERNATE SUPPLIER OF LAST RESORT ARE
    25  JUST AND REASONABLE.
    26     (G)  ORGANIZED LABOR.--DURING THE FIVE-YEAR PERIOD FOLLOWING
    27  THE EFFECTIVE DATE OF THIS CHAPTER, APPROVAL OF AN ALTERNATIVE
    28  SUPPLIER OF LAST RESORT PURSUANT TO SUBSECTION (E) SHALL NOT BE
    29  GRANTED UNLESS THE ENTITY DESIGNATED BY THE COMMISSION TO
    30  SUCCEED THE NATURAL GAS DISTRIBUTION COMPANY IN THE PROVISION
    19990H1331B2032                 - 40 -

     1  OF SERVICE TO THESE CUSTOMERS AGREES TO RECOGNIZE RELEVANT UNION
     2  AND COLLECTIVE BARGAINING AGREEMENTS OF THE NATURAL GAS
     3  DISTRIBUTION COMPANY THEN IN PLACE.
     4     (H)  PETITION TO BECOME SUPPLIER OF LAST RESORT.--AFTER THE
     5  FIVE-YEAR PERIOD FOLLOWING THE EFFECTIVE DATE OF THIS CHAPTER,
     6  ANY PARTY MAY PETITION THE COMMISSION TO BECOME THE SUPPLIER OF
     7  LAST RESORT TO SOME OR ALL CUSTOMERS EXCEPT FOR THOSE CUSTOMERS
     8  IDENTIFIED IN SUBSECTION (A)(2)(I).
     9     (I)  NOTICE REQUIRED PRIOR TO MARKET EXIT.--
    10         (1)  A NATURAL GAS SUPPLIER MAY NOT EXIT THE MARKET
    11     WITHOUT PROVIDING NOTICE AS DETERMINED BY THE COMMISSION IN
    12     THE RESTRUCTURING PROCEEDING OF THE NATURAL GAS DISTRIBUTION
    13     COMPANY TO ITS CUSTOMERS, THE SUPPLIER OF LAST RESORT AND THE
    14     NATURAL GAS DISTRIBUTION COMPANY.
    15         (2)  IF FIRM GAS SUPPLY CONTRACTS WITH PENNSYLVANIA
    16     NATURAL GAS PRODUCERS OR STORAGE OR TRANSPORTATION CAPACITY
    17     CONTRACTS USED BY THE NATURAL GAS SUPPLIER TO SERVE SUCH
    18     RETAIL GAS CUSTOMERS WERE EITHER ASSIGNED OR RELEASED TO THE
    19     NATURAL GAS SUPPLIER OR CONSTITUTE CAPACITY WHICH WAS
    20     ACQUIRED BY THE NATURAL GAS SUPPLIER AS THE RESULT OF
    21     NONRENEWAL OF A STORAGE OR TRANSPORTATION CAPACITY CONTRACT
    22     PREVIOUSLY HELD BY THE NATURAL GAS DISTRIBUTION COMPANY, THE
    23     NATURAL GAS SUPPLIER SHALL OFFER THE SUPPLIER OF LAST RESORT
    24     OR SUCCESSOR NATURAL GAS SUPPLIER A RIGHT OF FIRST REFUSAL TO
    25     UTILIZE SUCH PENNSYLVANIA SUPPLY CONTRACTS OR STORAGE OR
    26     TRANSPORTATION CAPACITY CONTRACTS AT ITS CONTRACT COST AS
    27     LONG AS NEEDED TO SERVE THOSE CUSTOMERS.
    28         (3)  IF THE STORAGE OR TRANSPORTATION CAPACITY CONTRACTS
    29     HELD BY THE NATURAL GAS SUPPLIER WERE ACQUIRED IN ANOTHER
    30     MANNER, AND THERE WAS NOT SUFFICIENT NOTICE GIVEN TO THE
    19990H1331B2032                 - 41 -

     1     SUPPLIER OF LAST RESORT AND THE NATURAL GAS DISTRIBUTION
     2     COMPANY, OR IF THERE IS NOT ALTERNATIVE STORAGE OR
     3     TRANSPORTATION CAPACITY AVAILABLE WHICH IS OPERATIONALLY
     4     SUFFICIENT TO SERVE THE MARKET THE NATURAL GAS SUPPLIER WAS
     5     SERVING, THEN THE SUPPLIER OF LAST RESORT SHALL BE PROVIDED
     6     WITH A RIGHT TO USE SUCH STORAGE OR TRANSPORTATION CAPACITY
     7     AS DESIGNATED BY THE NATURAL GAS SUPPLIER, AT THE CONTRACT
     8     COST, UNTIL THE SUPPLIER OF LAST RESORT IS ABLE TO ACQUIRE
     9     REPLACEMENT CAPACITY SUFFICIENT TO SERVE ITS CUSTOMERS USING
    10     REASONABLE AND DILIGENT EFFORTS TO DO SO.
    11         (4)  IF A DISPUTE ARISES UNDER THIS SUBSECTION, THE
    12     AGGRIEVED PARTY MAY FILE A COMPLAINT WITH THE COMMISSION FOR
    13     RESOLUTION WITHIN 45 DAYS.
    14     (J)  DUTY INVOLVING LOST CUSTOMERS.--TO THE EXTENT THAT A
    15  NATURAL GAS SUPPLIER LOSES RETAIL GAS CUSTOMERS SUCH THAT ITS
    16  CAPACITY REQUIREMENTS TO A NATURAL GAS DISTRIBUTION COMPANY ARE
    17  REDUCED BELOW THE LEVEL ESTABLISHED BY THE COMMISSION FOR SUCH
    18  PURPOSE IN THE NATURAL GAS DISTRIBUTION COMPANY'S RESTRUCTURING
    19  PROCEEDING, THE NATURAL GAS SUPPLIER SHALL HAVE THE SAME
    20  OBLIGATIONS SET FORTH IN SUBSECTION (I).
    21     (K)  RATE AFTER SERVICE DISCONTINUED.--IN THE EVENT THE
    22  NATURAL GAS SUPPLIER DISCONTINUES SERVICE OR DEFAULTS BEFORE ITS
    23  CONTRACT WITH THE CUSTOMER EXPIRES, THE RETAIL GAS CUSTOMER
    24  SHALL BE SERVED BY THE SUPPLIER OF LAST RESORT AT THE
    25  COMMISSION-APPROVED SUPPLIER OF LAST RESORT RATE COMMENCING WITH
    26  THE NEXT BILLING CYCLE. HOWEVER, THE RETAIL GAS CUSTOMER SHALL
    27  CONTINUE TO BE CHARGED THE RATE THE CUSTOMER NEGOTIATED WITH THE
    28  DISCONTINUING OR DEFAULTING NATURAL GAS SUPPLIER FOR THE
    29  REMAINDER OF THE BILLING CYCLE. ANY DIFFERENCE BETWEEN THE COST
    30  INCURRED BY THE SUPPLIER OF LAST RESORT AND THE AMOUNT PAYABLE
    19990H1331B2032                 - 42 -

     1  BY THE RETAIL GAS CUSTOMER SHALL BE RECOVERED FROM THE NATURAL
     2  GAS SUPPLIER OR FROM THE BOND OR OTHER SECURITY PROVIDED BY THE
     3  NATURAL GAS SUPPLIER WITHOUT RECOURSE TO ANY RETAIL GAS CUSTOMER
     4  NOT OTHERWISE CONTRACTUALLY COMMITTED FOR THE DIFFERENCE.
     5  § 2208.  REQUIREMENTS FOR NATURAL GAS SUPPLIERS.
     6     (A)  LICENSE REQUIREMENTS.--NO ENTITY SHALL ENGAGE IN THE
     7  BUSINESS OF A NATURAL GAS SUPPLIER UNLESS IT HOLDS A LICENSE
     8  ISSUED BY THE COMMISSION. TO THE EXTENT THAT A NATURAL GAS
     9  DISTRIBUTION COMPANY PROVIDES NATURAL GAS SUPPLY SERVICE OUTSIDE
    10  OF ITS CHARTERED OR CERTIFICATED TERRITORY, IT ALSO MUST HOLD A
    11  LICENSE. A LICENSE SHALL NOT BE REQUIRED FOR CUSTOMERS WHO MAKE
    12  DE MINIMIS INCIDENTAL SALES OR RESALES TO THEMSELVES, AN
    13  AFFILIATE OR TO OTHER NONRESIDENTIAL RETAIL GAS CUSTOMERS.
    14     (B)  LICENSE APPLICATION AND ISSUANCE.--AN APPLICATION FOR A
    15  NATURAL GAS SUPPLIER LICENSE SHALL BE MADE TO THE COMMISSION IN
    16  WRITING, BE VERIFIED BY OATH OR AFFIRMATION AND BE IN SUCH FORM
    17  AND CONTAIN SUCH INFORMATION AS THE COMMISSION MAY, BY RULE OR
    18  ORDER, REQUIRE. A LICENSE SHALL BE ISSUED TO ANY APPLICANT,
    19  AUTHORIZING THE WHOLE OR ANY PART OF THE SERVICE COVERED BY THE
    20  APPLICATION, IF IT IS FOUND THAT THE APPLICANT IS FIT, WILLING
    21  AND ABLE TO PERFORM PROPERLY THE SERVICE PROPOSED AND TO CONFORM
    22  TO THE APPLICABLE PROVISIONS OF THIS TITLE AND THE ORDERS AND
    23  REGULATIONS OF THE COMMISSION, INCLUDING THOSE CONCERNING
    24  STANDARDS AND BILLING PRACTICES, AND THAT THE PROPOSED SERVICE,
    25  TO THE EXTENT AUTHORIZED BY THE LICENSE, WILL BE CONSISTENT WITH
    26  THE PUBLIC INTEREST. OTHERWISE, SUCH APPLICATION SHALL BE
    27  DENIED.
    28     (C)  FINANCIAL FITNESS.--
    29         (1)  IN ORDER TO ENSURE THE SAFETY AND RELIABILITY OF THE
    30     NATURAL GAS SUPPLY SERVICE IN THIS COMMONWEALTH, NO NATURAL
    19990H1331B2032                 - 43 -

     1     GAS SUPPLIER LICENSE SHALL BE ISSUED OR REMAIN IN FORCE
     2     UNLESS THE APPLICANT OR HOLDER, AS THE CASE MAY BE, COMPLIES
     3     WITH ALL OF THE FOLLOWING:
     4             (I)  FURNISHES A BOND OR OTHER SECURITY IN A FORM AND
     5         AMOUNT TO ENSURE THE FINANCIAL RESPONSIBILITY OF THE
     6         NATURAL GAS SUPPLIER. THE CRITERIA EACH NATURAL GAS
     7         DISTRIBUTION COMPANY SHALL USE TO DETERMINE THE AMOUNT
     8         AND FORM OF SUCH BOND OR OTHER SECURITY SHALL BE SET
     9         FORTH IN THE NATURAL GAS DISTRIBUTION COMPANY'S
    10         RESTRUCTURING FILING. IN APPROVING THE CRITERIA,
    11         COMMISSION CONSIDERATIONS SHALL INCLUDE, BUT NOT BE
    12         LIMITED TO, THE FINANCIAL IMPACT ON THE NATURAL GAS
    13         DISTRIBUTION COMPANY OR AN ALTERNATIVE SUPPLIER OF LAST
    14         RESORT OF A DEFAULT OR SUBSEQUENT BANKRUPTCY OF A NATURAL
    15         GAS SUPPLIER. THE COMMISSION SHALL PERIODICALLY REVIEW
    16         THE CRITERIA UPON PETITION BY ANY PARTY. THE AMOUNT AND
    17         FORM OF THE BOND OR OTHER SECURITY MAY BE MUTUALLY AGREED
    18         TO BETWEEN THE NATURAL GAS DISTRIBUTION COMPANY OR THE
    19         ALTERNATE SUPPLIER OF LAST RESORT AND THE NATURAL GAS
    20         SUPPLIER OR FAILING THAT SHALL BE DETERMINED BY CRITERIA
    21         APPROVED BY THE COMMISSION.
    22             (II)  PROVIDES THE COMMISSION WITH THE ADDRESS OF THE
    23         PARTICIPANT'S PRINCIPAL OFFICE IN THIS COMMONWEALTH OR
    24         THE ADDRESS OF THE PARTICIPANT'S REGISTERED AGENT IN THIS
    25         COMMONWEALTH, THE LATTER BEING THE ADDRESS AT WHICH THE
    26         PARTICIPANT MAY BE SERVED PROCESS.
    27         (2)  FAILURE OF A NATURAL GAS SUPPLIER TO COMPLY WITH ANY
    28     PROVISION OF THIS CHAPTER OR THE RULES, REGULATIONS, ORDERS
    29     OR DIRECTIVES OF THE DEPARTMENT OF REVENUE OR OF THE
    30     COMMISSION, INCLUDING, BUT NOT LIMITED TO, ENGAGING IN
    19990H1331B2032                 - 44 -

     1     ANTICOMPETITIVE BEHAVIOR, SHALL BE CAUSE FOR THE COMMISSION
     2     TO REVOKE THE LICENSE OF THE NATURAL GAS SUPPLIER.
     3     (D)  TRANSFERABILITY OF LICENSES.--NO LICENSE ISSUED UNDER
     4  THIS CHAPTER MAY BE TRANSFERRED WITHOUT PRIOR COMMISSION
     5  APPROVAL.
     6     (E)  FORM OF REGULATION OF NATURAL GAS SUPPLIERS.--EXCEPT
     7  WHERE A NATURAL GAS SUPPLIER SERVES AS A SUPPLIER OF LAST
     8  RESORT, THE COMMISSION MAY FORBEAR FROM EXTENDING ITS REGULATION
     9  OF NATURAL GAS SUPPLIERS BEYOND LICENSING, BONDING, RELIABILITY
    10  AND CONSUMER SERVICES AND PROTECTIONS, INCLUDING ALL APPLICABLE
    11  PORTIONS OF 52 PA. CODE CH. 56 (RELATING TO STANDARDS AND
    12  BILLING PRACTICES FOR RESIDENTIAL UTILITY SERVICE). SUBJECT TO
    13  THE PROVISIONS OF SECTION 2207 (RELATING TO OBLIGATION TO
    14  SERVE), NOTHING IN THIS SECTION SHALL PRECLUDE A NATURAL GAS
    15  SUPPLIER, UPON APPROPRIATE AND REASONABLE NOTICE TO THE RETAIL
    16  GAS CUSTOMER, SUPPLIER OF LAST RESORT, AND THE NATURAL GAS
    17  DISTRIBUTION COMPANY, FROM CANCELING ITS CONTRACT WITH ANY
    18  CUSTOMER FOR LEGAL CAUSE, SUBJECT TO THE CUSTOMER'S RIGHT TO
    19  HAVE CONTINUED SERVICE FROM THE SUPPLIER OF LAST RESORT.
    20     (F)  AVAILABILITY OF THE SERVICE OF NATURAL GAS SUPPLIERS.--
    21  PRIOR TO LICENSING ANY NATURAL GAS SUPPLIER, THE COMMISSION
    22  SHALL SET FORTH STANDARDS TO ENSURE THAT ALL CUSTOMER CLASSES
    23  MAY CHOOSE TO PURCHASE NATURAL GAS FROM A NATURAL GAS SUPPLIER.
    24  THE COMMISSION SHALL ALSO ENSURE THAT NATURAL GAS SUPPLIERS
    25  COMPLY WITH APPLICABLE PROVISIONS OF 52 PA. CODE CH. 56.
    26     (G)  OPEN AND NONDISCRIMINATORY ACCESS.--IN ADDITION TO
    27  MEETING THE LICENSE REQUIREMENTS APPLICABLE TO APPLICANTS UNDER
    28  SUBSECTION (B), A MUNICIPAL CORPORATION SHALL, BEFORE IT IS
    29  PERMITTED TO PROVIDE NATURAL GAS SUPPLY SERVICES AS A NATURAL
    30  GAS SUPPLIER, DEMONSTRATE, AND THE COMMISSION SHALL DETERMINE,
    19990H1331B2032                 - 45 -

     1  THAT BY THE DATE OF THE ISSUANCE OF THE LICENSE, IT WILL PROVIDE
     2  OTHER NATURAL GAS SUPPLIERS OPEN AND NONDISCRIMINATORY ACCESS TO
     3  ITS GAS DISTRIBUTION SYSTEM UNDER STANDARDS THAT ARE COMPARABLE
     4  TO THIS TITLE, TAKING INTO CONSIDERATION THE PARTICULAR
     5  CIRCUMSTANCES OF THE MUNICIPAL CORPORATION'S OWNERSHIP AND/OR
     6  OPERATION OF THE GAS DISTRIBUTION SYSTEM.
     7  § 2209.  MARKET POWER REMEDIATION.
     8     (A)  INTERIM STANDARDS OF CONDUCT.--WITHIN 120 DAYS OF THE
     9  EFFECTIVE DATE OF THIS CHAPTER, THE COMMISSION SHALL PROVIDE BY
    10  ORDER BINDING, INTERIM GUIDELINES FOR STANDARDS OF CONDUCT
    11  GOVERNING THE ACTIVITIES OF AND RELATIONSHIPS BETWEEN NATURAL
    12  GAS DISTRIBUTION COMPANIES AND THEIR AFFILIATED NATURAL GAS
    13  SUPPLIERS AND OTHER NATURAL GAS SUPPLIERS AND MONITOR AND
    14  ENFORCE COMPLIANCE WITH THOSE STANDARDS.
    15     (B)  PERMANENT STANDARDS OF CONDUCT.--THE COMMISSION SHALL
    16  THEREUPON PROMULGATE REGULATIONS SETTING FORTH PERMANENT
    17  STANDARDS OF CONDUCT GOVERNING THE ACTIVITIES OF AND
    18  RELATIONSHIPS BETWEEN NATURAL GAS DISTRIBUTION COMPANIES AND
    19  THEIR AFFILIATED NATURAL GAS SUPPLIERS AND OTHER NATURAL GAS
    20  SUPPLIERS AND MONITOR AND ENFORCE COMPLIANCE WITH THESE
    21  STANDARDS. THE COMMISSION SHALL NEITHER FAVOR NOR DISFAVOR
    22  CONDUCT OR OPERATIONS BY AND BETWEEN A NATURAL GAS DISTRIBUTION
    23  COMPANY AND AN AFFILIATED NATURAL GAS SUPPLIER OR A
    24  NONAFFILIATED NATURAL GAS SUPPLIER.
    25     (C)  CONTENTS OF STANDARDS.--STANDARDS OF CONDUCT SHALL
    26  PROVIDE FOR:
    27         (1)  NO DISCRIMINATION AGAINST OR PREFERENTIAL TREATMENT
    28     OF ANY NATURAL GAS SUPPLIER, INCLUDING AN AFFILIATED NATURAL
    29     GAS SUPPLIER.
    30         (2)  NO DISCLOSURE OR PREFERENTIAL SHARING OF ANY
    19990H1331B2032                 - 46 -

     1     CONFIDENTIAL INFORMATION TO OR WITH ANY INDIVIDUAL NATURAL
     2     GAS SUPPLIER.
     3         (3)  ADEQUATE RULES PROHIBITING CROSS-SUBSIDIZATION OF AN
     4     AFFILIATED NATURAL GAS SUPPLIER BY A NATURAL GAS DISTRIBUTION
     5     COMPANY.
     6         (4)  MAINTENANCE OF SEPARATE BOOKS AND RECORDS BY THE
     7     NATURAL GAS DISTRIBUTION COMPANY AND ITS AFFILIATED NATURAL
     8     GAS SUPPLIER.
     9         (5)  SUFFICIENT PHYSICAL AND OPERATIONAL SEPARATION, BUT
    10     NOT INCLUDING LEGAL DIVESTITURE, TO ACCOMPLISH PARAGRAPHS
    11     (1), (2), (3) AND (4).
    12         (6)  AN INFORMAL DISPUTE RESOLUTION PROCEDURE.
    13         (7)  A SYSTEM OF PENALTIES FOR NONCOMPLIANCE WITH THE
    14     FINAL SET OF STANDARDS OF CONDUCT CONSISTENT WITH EXISTING
    15     COMMISSION REGULATIONS.
    16     (D)  LIMITATION.--THE STANDARDS SHALL NOT PROHIBIT THE
    17  NATURAL GAS DISTRIBUTION COMPANY AND ITS AFFILIATED NATURAL GAS
    18  SUPPLIER FROM USING OR SHARING SIMILAR CORPORATE NAMES,
    19  TRADEMARKS, TRADE DRESS OR SERVICE MARKS.
    20     (E)  INITIATION OF INVESTIGATIONS.--UPON COMPLAINT OR UPON
    21  ITS OWN MOTION, FOR GOOD CAUSE SHOWN, THE COMMISSION SHALL
    22  CONDUCT AN INVESTIGATION OF THE IMPACT ON THE PROPER FUNCTIONING
    23  OF A FULLY COMPETITIVE RETAIL NATURAL GAS MARKET, OF MERGERS,
    24  CONSOLIDATIONS, ACQUISITION OR DISPOSITION OF ASSETS OR
    25  SECURITIES OF NATURAL GAS SUPPLIERS AND ANTICOMPETITIVE OR
    26  DISCRIMINATORY CONDUCT AFFECTING THE RETAIL DISTRIBUTION OF
    27  NATURAL GAS.
    28     (F)  CONDUCT OF INVESTIGATIONS.--
    29         (1)  THE COMMISSION MAY REQUIRE A NATURAL GAS SUPPLIER TO
    30     PROVIDE INFORMATION, INCLUDING DOCUMENTS AND TESTIMONY, IN
    19990H1331B2032                 - 47 -

     1     ACCORDANCE WITH THE COMMISSION'S REGULATIONS REGARDING THE
     2     DISCOVERY OF INFORMATION.
     3         (2)  MATERIAL WHICH THE COMMISSION DETERMINES TO BE
     4     CONFIDENTIAL, PROPRIETARY OR TRADE SECRET INFORMATION
     5     PROVIDED UNDER THIS SUBSECTION SHALL NOT BE DISCLOSED TO ANY
     6     PERSON NOT DIRECTLY EMPLOYED OR RETAINED BY THE COMMISSION TO
     7     CONDUCT THE INVESTIGATION WITHOUT THE CONSENT OF THE PARTY
     8     PROVIDING THE INFORMATION.
     9         (3)  NOTWITHSTANDING THE PROHIBITION ON DISCLOSURE OF
    10     INFORMATION IN PARAGRAPH (2), THE COMMISSION SHALL DISCLOSE
    11     INFORMATION OBTAINED UNDER THIS SUBSECTION TO THE OFFICE OF
    12     CONSUMER ADVOCATE AND THE OFFICE OF SMALL BUSINESS ADVOCATE
    13     UNDER AN APPROPRIATE CONFIDENTIALITY AGREEMENT. THE
    14     COMMISSION MAY DISCLOSE THE INFORMATION TO APPROPRIATE
    15     FEDERAL OR STATE LAW ENFORCEMENT OFFICIALS IF IT DETERMINES
    16     THAT THE DISCLOSURE OF THE INFORMATION IS NECESSARY TO
    17     PREVENT OR RESTRAIN A VIOLATION OF FEDERAL OR STATE LAW AND
    18     IT PROVIDES THE PARTY THAT PROVIDED THE INFORMATION WITH
    19     REASONABLE NOTICE AND OPPORTUNITY TO PREVENT OR LIMIT
    20     DISCLOSURE.
    21     (G)  REFERRALS AND INVESTIGATION.--IF, AS A RESULT OF THE
    22  INVESTIGATION CONDUCTED UNDER THIS SECTION, THE COMMISSION HAS
    23  REASON TO BELIEVE THAT ANTICOMPETITIVE OR DISCRIMINATORY
    24  CONDUCT, INCLUDING THE UNLAWFUL EXERCISE OF MARKET POWER, IS
    25  PREVENTING THE RETAIL GAS CUSTOMERS FROM OBTAINING THE BENEFITS
    26  OF A PROPERLY FUNCTIONING AND EFFECTIVELY COMPETITIVE RETAIL
    27  NATURAL GAS MARKET, THE COMMISSION, PURSUANT TO ITS REGULATIONS,
    28  SHALL:
    29         (1)  REFER ITS FINDINGS TO THE ATTORNEY GENERAL, THE
    30     UNITED STATES DEPARTMENT OF JUSTICE, THE SECURITIES AND
    19990H1331B2032                 - 48 -

     1     EXCHANGE COMMISSION OR THE FEDERAL ENERGY REGULATORY
     2     COMMISSION.
     3         (2)  SUBJECT TO SUBSECTION (C)(3), DISCLOSE ANY
     4     INFORMATION IT HAS OBTAINED IN THE COURSE OF ITS
     5     INVESTIGATION TO THE AGENCY OR AGENCIES TO WHICH IT HAD MADE
     6     A REFERRAL UNDER PARAGRAPH (1).
     7         (3)  INTERVENE, AS PROVIDED AND PERMITTED BY LAW OR
     8     REGULATION, IN ANY PROCEEDINGS INITIATED AS A RESULT OF A
     9     REFERRAL MADE UNDER PARAGRAPH (1).
    10     (H)  MARKETING STANDARDS.--AS PART OF EACH NATURAL GAS
    11  DISTRIBUTION COMPANY'S RESTRUCTURING PROCEEDING, THE COMMISSION
    12  MAY, IN ITS DISCRETION, DEVELOP AND APPLY DIFFERENT STANDARDS OF
    13  CONDUCT TO THE NATURAL GAS DISTRIBUTION COMPANY'S MARKETING
    14  ACTIVITIES RELATED TO NATURAL GAS SUPPLY SERVICES. NO SUCH
    15  STANDARDS SHALL APPLY TO THE NATURAL GAS DISTRIBUTION COMPANY'S
    16  MARKETING DIVISION OR OPERATIONS UNTIL THE COMMISSION ISSUES AN
    17  ORDER IN THE CONTEXT OF THAT NATURAL GAS DISTRIBUTION COMPANY'S
    18  RESTRUCTURING PROCEEDING.
    19     (I)  DEFINITION.--SUBJECT TO THE CONDITIONS SET FORTH IN
    20  SUBSECTION (H), FOR THE PURPOSES OF THIS SECTION, THE TERM
    21  "AFFILIATED NATURAL GAS SUPPLIER" INCLUDES MARKETING ACTIVITIES
    22  RELATED TO NATURAL GAS SUPPLY SERVICES BY THE MARKETING DIVISION
    23  OR THE MARKETING OPERATION OF A NATURAL GAS DISTRIBUTION
    24  COMPANY.
    25  § 2210.  APPROVAL OF PROPOSED MERGERS, CONSOLIDATIONS,
    26             ACQUISITIONS OR DISPOSITIONS.
    27     (A)  GENERAL RULE.--IN THE EXERCISE OF AUTHORITY THE
    28  COMMISSION OTHERWISE MAY HAVE TO APPROVE MERGERS OR
    29  CONSOLIDATIONS INVOLVING NATURAL GAS DISTRIBUTION COMPANIES OR
    30  NATURAL GAS SUPPLIERS OR THE ACQUISITION OR DISPOSITION OF
    19990H1331B2032                 - 49 -

     1  ASSETS OR SECURITIES OF NATURAL GAS DISTRIBUTION COMPANIES OR
     2  NATURAL GAS SUPPLIERS, THE COMMISSION SHALL CONSIDER:
     3         (1)  WHETHER THE PROPOSED MERGER, CONSOLIDATION,
     4     ACQUISITION OR DISPOSITION IS LIKELY TO RESULT IN
     5     ANTICOMPETITIVE OR DISCRIMINATORY CONDUCT, INCLUDING THE
     6     UNLAWFUL EXERCISE OF MARKET POWER, WHICH WILL PREVENT RETAIL
     7     GAS CUSTOMERS FROM OBTAINING THE BENEFITS OF A PROPERLY
     8     FUNCTIONING AND EFFECTIVELY COMPETITIVE RETAIL NATURAL GAS
     9     MARKET.
    10         (2)  THE EFFECT OF THE PROPOSED MERGER, CONSOLIDATION,
    11     ACQUISITION OR DISPOSITION ON THE EMPLOYEES OF THE NATURAL
    12     GAS DISTRIBUTION COMPANY AND ON ANY AUTHORIZED COLLECTIVE
    13     BARGAINING AGENT REPRESENTING THOSE EMPLOYEES.
    14     (B)  PROCEDURE.--UPON REQUEST FOR ANY APPROVAL IDENTIFIED IN
    15  SUBSECTION (A), THE COMMISSION SHALL PROVIDE NOTICE AND AN
    16  OPPORTUNITY FOR OPEN, PUBLIC EVIDENTIARY HEARINGS. IF THE
    17  COMMISSION FINDS, AFTER HEARING, THAT A PROPOSED MERGER,
    18  CONSOLIDATION, ACQUISITION OR DISPOSITION IS LIKELY TO RESULT IN
    19  ANTICOMPETITIVE OR DISCRIMINATORY CONDUCT, INCLUDING THE
    20  UNLAWFUL EXERCISE OF MARKET POWER, WHICH WILL PREVENT RETAIL GAS
    21  CUSTOMERS FROM OBTAINING BENEFITS OF A PROPERLY FUNCTIONING AND
    22  EFFECTIVELY COMPETITIVE RETAIL NATURAL GAS MARKET, THE
    23  COMMISSION SHALL NOT APPROVE SUCH PROPOSED MERGER,
    24  CONSOLIDATION, ACQUISITION OR DISPOSITION, EXCEPT UPON SUCH
    25  TERMS AND CONDITIONS AS IT FINDS NECESSARY TO PRESERVE THE
    26  BENEFITS OF A PROPERLY FUNCTIONING AND EFFECTIVELY COMPETITIVE
    27  RETAIL NATURAL GAS MARKET.
    28     (C)  PRESERVATION OF RIGHTS.--NOTHING IN THIS SECTION SHALL
    29  RESTRICT THE RIGHT OF ANY PARTY TO PURSUE ANY OTHER REMEDY
    30  AVAILABLE TO IT.
    19990H1331B2032                 - 50 -

     1  § 2211.  RATE CAPS.
     2     (A)  GENERAL RULE.--EXCEPT AS PROVIDED UNDER SUBSECTIONS (D),
     3  (E), (F) AND (G), FOR A PERIOD FROM THE EFFECTIVE DATE OF THIS
     4  CHAPTER UNTIL JANUARY 1, 2001, THE TOTAL NON-GAS COST CHARGES OF
     5  A NATURAL GAS DISTRIBUTION COMPANY FOR SERVICE TO ANY RETAIL GAS
     6  CUSTOMER SHALL NOT EXCEED THE MAXIMUM NON-GAS COST CHARGES THAT
     7  ARE CONTAINED IN THE NATURAL GAS DISTRIBUTION COMPANY'S TARIFF
     8  AS OF THE EFFECTIVE DATE OF THIS CHAPTER.
     9     (B)  RECOVERY OF DEFERRED COSTS.--
    10         (1)  IN A RESTRUCTURING PROCEEDING, THE NATURAL GAS
    11     DISTRIBUTION COMPANY MAY IDENTIFY CATEGORIES OF COSTS
    12     RESULTING FROM THIS CHAPTER.
    13         (2)  THE NATURAL GAS DISTRIBUTION COMPANY MAY SEEK
    14     PERMISSION IN ITS RESTRUCTURING PROCEEDING TO CAPITALIZE AND
    15     TO AMORTIZE SUCH COSTS OVER AN APPROPRIATE PERIOD TO BE
    16     DETERMINED BY THE COMMISSION. THE AMORTIZATION SHALL COMMENCE
    17     AT THE TIME WHEN RESTRUCTURING ORDERS ARE ISSUED. THE NATURAL
    18     GAS DISTRIBUTION COMPANY MAY SEEK RECOVERY OF THE UNAMORTIZED
    19     BALANCE OF SUCH COSTS IN A FUTURE RATE PROCEEDING AND THE
    20     COMMISSION SHALL ALLOW RECOVERY OF SUCH COSTS PROVIDED THAT
    21     THE COMMISSION DETERMINES THAT SUCH COSTS ARE REASONABLE AND
    22     THAT THE RESULTING RATES ARE JUST AND REASONABLE.
    23     (C)  DEFERRAL OF COSTS.--COSTS RECOVERABLE UNDER SECTIONS
    24  2203(6) (RELATING TO STANDARDS FOR RESTRUCTURING OF NATURAL GAS
    25  UTILITY INDUSTRY) AND 2206(E) (RELATING TO CONSUMER PROTECTIONS
    26  AND CUSTOMER SERVICE), IN EXCESS OF AMOUNTS ALREADY REFLECTED IN
    27  A NATURAL GAS DISTRIBUTION COMPANY'S RATES, WHICH ARE INCURRED
    28  BETWEEN THE DATE OF ENTRY OF THE COMMISSION'S RESTRUCTURING
    29  ORDER AND THE EARLIER OF THE DATE ON WHICH THE COMMISSION
    30  AUTHORIZES COMMENCEMENT OF RECOVERY OR JUNE 30, 2002, MAY BE
    19990H1331B2032                 - 51 -

     1  DEFERRED FOR RECOVERY IN THE FUTURE. SUCH DEFERRALS SHALL BE
     2  WITHOUT INTEREST.
     3     (D)  CIRCUMSTANCES FOR EXCEPTIONS.--A NATURAL GAS
     4  DISTRIBUTION COMPANY MAY SEEK, AND THE COMMISSION MAY APPROVE,
     5  AN EXCEPTION TO THE LIMITATIONS SET FORTH IN THIS SECTION UNDER
     6  ANY OF THE FOLLOWING CIRCUMSTANCES:
     7         (1)  THE NATURAL GAS DISTRIBUTION COMPANY MEETS THE
     8     REQUIREMENTS FOR EXTRAORDINARY RELIEF UNDER SECTION 1308(E)
     9     (RELATING TO VOLUNTARY CHANGES IN RATES).
    10         (2)  THE NATURAL GAS DISTRIBUTION COMPANY DEMONSTRATES
    11     THAT A RATE INCREASE IS NECESSARY IN ORDER TO PRESERVE THE
    12     RELIABILITY OF THE NATURAL GAS DISTRIBUTION SYSTEM.
    13         (3)  THE NATURAL GAS DISTRIBUTION COMPANY IS SUBJECT TO
    14     SIGNIFICANT INCREASES IN THE RATE OF FEDERAL TAXES OR OTHER
    15     SIGNIFICANT INCREASES IN COSTS RESULTING FROM CHANGES IN LAW
    16     OR REGULATIONS THAT WOULD NOT ALLOW THE NATURAL GAS
    17     DISTRIBUTION COMPANY TO EARN A FAIR RATE OF RETURN.
    18     (E)  INTERCLASS AND INTRACLASS COST SHIFTS.--FOR THE PERIOD
    19  FROM THE EFFECTIVE DATE OF THIS CHAPTER UNTIL JANUARY 1, 2001,
    20  INTERCLASS OR INTRACLASS COST SHIFTS ARE PROHIBITED. THIS
    21  PROHIBITION AGAINST COST SHIFTING MAY BE ACCOMPLISHED BY
    22  MAINTAINING THE COST ALLOCATION METHODOLOGY ACCEPTED BY THE
    23  COMMISSION FOR EACH NATURAL GAS DISTRIBUTION COMPANY IN THE
    24  COMPANY'S MOST RECENT BASE RATE PROCEEDING.
    25     (F)  STATE TAX ADJUSTMENT SURCHARGE.--THE NATURAL GAS
    26  DISTRIBUTION COMPANY SHALL REMAIN SUBJECT TO THE STATE TAX
    27  ADJUSTMENT SURCHARGE AND SHALL BE PERMITTED TO ADJUST ITS STATE
    28  TAX ADJUSTMENT SURCHARGE MECHANISM TO REFLECT STATE TAX CHANGES
    29  OR ADDITIONS. THE NATURAL GAS DISTRIBUTION COMPANY SHALL ALSO
    30  REMAIN SUBJECT TO EXISTING RIDERS OR SURCHARGES FOR THE
    19990H1331B2032                 - 52 -

     1  COLLECTION OF NON-GAS TRANSITION COSTS PURSUANT TO FEDERAL
     2  ENERGY REGULATORY COMMISSION DECISIONS.
     3     (G)  PROVISIONS RELATING TO INTERSTATE PIPELINES.--
     4         (1)  NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS
     5     CHAPTER, IF A NATURAL GAS DISTRIBUTION COMPANY'S CURRENT BASE
     6     RATE REVENUES REFLECT THE MARGINS REALIZED THROUGH THE
     7     UTILIZATION OF FIRM INTERSTATE PIPELINE TRANSPORTATION AND
     8     STORAGE CAPACITY TO SERVE THE INTERRUPTIBLE MARKET WHEN SUCH
     9     CAPACITY IS NOT NEEDED TO MAKE FIRM RETAIL DELIVERIES, THEN
    10     THE NATURAL GAS DISTRIBUTION COMPANY SHALL BE PERMITTED TO
    11     INCREASE BASE RATES AND, AT THE SAME TIME, REDUCE PURCHASED
    12     GAS COST RATES, AS DESCRIBED IN THIS CHAPTER.
    13         (2)  THE UTILITY MAY PROPOSE SUCH A CHANGE IN TREATMENT,
    14     CONSISTENT WITH THE FOLLOWING REQUIREMENTS:
    15             (I)  BASE RATES OF CUSTOMERS WHO PAY PURCHASED GAS
    16         COST RATES PURSUANT TO SECTION 1307(F) (RELATING TO
    17         SLIDING SCALE OF RATES; ADJUSTMENTS) SHALL BE INCREASED
    18         BY AN AMOUNT EQUAL TO THE MARGIN RECEIVED FOR SERVICE
    19         PROVIDED TO EXISTING INTERRUPTIBLE SALES AND
    20         TRANSPORTATION SERVICE CUSTOMERS USING CAPACITY REFLECTED
    21         IN RATES ESTABLISHED UNDER SECTION 1307(F) BASED UPON THE
    22         REVENUE FOR SUCH SERVICES FOR THE MOST RECENT 12-MONTH
    23         PERIOD IMMEDIATELY PRECEDING THE APPLICATION.
    24             (II)  PURCHASED GAS COST RATES ESTABLISHED PURSUANT
    25         TO SECTION 1307(F) SHALL BE DECREASED BY AN AMOUNT EQUAL
    26         TO THE AMOUNT BY WHICH BASE RATES ARE INCREASED IN
    27         SUBPARAGRAPH (I).
    28             (III)  PURCHASED GAS COST RATES ESTABLISHED PURSUANT
    29         TO SECTION 1307(F)SHALL THEREAFTER BE RECONCILED TO
    30         REFLECT THE MARGINS REALIZED FROM INTERRUPTIBLE SALES AND
    19990H1331B2032                 - 53 -

     1         INTERRUPTIBLE TRANSPORTATION CUSTOMERS UTILIZING CAPACITY
     2         REFLECTED IN RATES ESTABLISHED UNDER SECTION 1307(F).
     3     (H)  INTERSTATE PIPELINE TRANSPORTATION.--
     4         (1)  EXCEPT AS SPECIFICALLY SET FORTH IN THIS SUBSECTION,
     5     NOTHING IN THIS SECTION OR SECTION 2204(D) (RELATING TO
     6     IMPLEMENTATION) SHALL PREVENT A NATURAL GAS DISTRIBUTION
     7     COMPANY FROM RECOVERING COSTS PAID UNDER THE TERMS OF
     8     INTERSTATE PIPELINE TRANSPORTATION AND STORAGE CAPACITY
     9     CONTRACTS WHICH ARE NOT FULLY RECOVERED THROUGH A RELEASE,
    10     ASSIGNMENT OR TRANSFER OF SUCH CAPACITY TO ANOTHER NATURAL
    11     GAS SUPPLIER IF SUCH UNRECOVERED COSTS ARISE UNDER THE TERMS
    12     OF A NATURAL GAS TRANSPORTATION PILOT PROGRAM APPROVED BY THE
    13     COMMISSION FOR SUCH COMPANY ON OR BEFORE FEBRUARY 1, 1999.
    14         (2)  SUCH UNRECOVERED INTERSTATE PIPELINE TRANSPORTATION
    15     AND CAPACITY COSTS INCURRED UNDER SUCH PROGRAMS THROUGH
    16     OCTOBER 31, 2004, MAY BE RECOVERED FROM A CLASS OR CLASSES OF
    17     CUSTOMERS IN ACCORDANCE WITH SUCH PROGRAM PROVIDED THAT THE
    18     TOTAL VOLUMETRIC CHARGE FOR SUCH COSTS DOES NOT EXCEED ONE
    19     PERCENT OF THE VOLUMETRIC CHARGE FOR RESIDENTIAL NATURAL GAS
    20     SALES SERVICE SET FORTH IN THE NATURAL GAS DISTRIBUTION
    21     COMPANY'S TARIFF IN EFFECT AT THE TIME.
    22         (3)  WITH RESPECT TO SUCH PILOT PROGRAMS, THE COMMISSION
    23     MAY DETERMINE TO EXTEND SUCH PROGRAMS TO INCLUDE ALL
    24     CUSTOMERS OF THAT COMPANY PURSUANT TO THE REQUIREMENTS OF
    25     THIS CHAPTER, AND NOTHING IN THIS SECTION OR SECTION 2204(D)
    26     SHALL PREVENT UNRECOVERED INTERSTATE PIPELINE AND
    27     TRANSPORTATION CAPACITY COSTS INCURRED THROUGH OCTOBER 31,
    28     2004, UNDER SUCH PROGRAMS FROM BEING RECOVERED IN ACCORDANCE
    29     WITH SUCH PROGRAMS PROVIDED THAT THE TOTAL VOLUMETRIC CHARGE
    30     FOR SUCH COSTS DOES NOT EXCEED THE ONE PERCENT LIMIT
    19990H1331B2032                 - 54 -

     1     SPECIFIED IN PARAGRAPH (2) FOR PILOT PROGRAMS.
     2     SECTION 4.  THE PROVISIONS OF THIS ACT ARE SEVERABLE. IF ANY
     3  PROVISION OF THIS ACT OR ITS APPLICATION TO ANY PERSON OR
     4  CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY SHALL NOT AFFECT
     5  OTHER PROVISIONS OR APPLICATIONS OF THIS ACT WHICH CAN BE GIVEN
     6  EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION.
     7     SECTION 5.  THIS ACT CONSTITUTES THE LEGISLATION REFERRED TO
     8  IN SECTION 33(3) OF THE ACT OF MAY 12, 1999 (P.L.  , NO.4),
     9  ENTITLED "AN ACT AMENDING THE ACT OF MARCH 4, 1971 (P.L.6,
    10  NO.2), ENTITLED 'AN ACT RELATING TO TAX REFORM AND STATE
    11  TAXATION BY CODIFYING AND ENUMERATING CERTAIN SUBJECTS OF
    12  TAXATION AND IMPOSING TAXES THEREON; PROVIDING PROCEDURES FOR
    13  THE PAYMENT, COLLECTION, ADMINISTRATION AND ENFORCEMENT THEREOF;
    14  PROVIDING FOR TAX CREDITS IN CERTAIN CASES; CONFERRING POWERS
    15  AND IMPOSING DUTIES UPON THE DEPARTMENT OF REVENUE, CERTAIN
    16  EMPLOYERS, FIDUCIARIES, INDIVIDUALS, PERSONS, CORPORATIONS AND
    17  OTHER ENTITIES; PRESCRIBING CRIMES, OFFENSES AND PENALTIES,'
    18  REVISING AND ADOPTING SALES AND USE TAX PROVISIONS ON PROCESSING
    19  EXCLUSIONS, CREDIT SALES AND BAD DEBT SALES; REVISING PERSONAL
    20  INCOME TAX PROVISIONS ON SMALL CORPORATIONS; EXPANDING
    21  ELIGIBILITY FOR SPECIAL POVERTY PROVISIONS; REVISING ESTIMATED
    22  TAX DECLARATIONS; ELIMINATING LOTTERY FUND TRANSFERS; REVISING
    23  CORPORATE NET INCOME TAX PROVISIONS ON NONPROFIT ORGANIZATIONS,
    24  NET LOSS DEDUCTIONS AND APPORTIONMENT OF BUSINESS INCOME;
    25  REVISING CAPITAL STOCK FRANCHISE TAX PROVISIONS TO REDUCE THE
    26  RATE OF TAXATION, REDUCE THE MINIMUM TAX, AND FURTHER PROVIDE
    27  FOR CAPITAL STOCK FRANCHISE TAX EXEMPTIONS, EXCLUSIONS AND
    28  PROCEEDS; ELIMINATING THE UTILITIES GROSS RECEIPTS TAX ON
    29  NATURAL GAS; MAKING OMNIBUS AMENDMENTS TO THE PUBLIC UTILITY
    30  REALTY TAX; PROVIDING FOR A TAX CREDIT FOR COAL WASTE REMOVAL
    19990H1331B2032                 - 55 -

     1  AND ULTRACLEAN FUELS; FURTHER PROVIDING FOR MALT BEVERAGE TAX
     2  CREDITS; FURTHER PROVIDING FOR THE RATE OF TAXATION FOR THE
     3  PUBLIC TRANSPORTATION ASSISTANCE FUND; FURTHER PROVIDING FOR
     4  ESTIMATED TAX, FOR PAYMENT OF HARNESS AND THOROUGHBRED RACING
     5  TAXES AND FOR CORPORATE TAX TREATMENT OF AUTOMOBILE CLUBS; AND
     6  MAKING A REPEAL." THE SECRETARY OF REVENUE SHALL PUBLISH NOTICE
     7  OF THE ENACTMENT OF THIS ACT IN THE PENNSYLVANIA BULLETIN.
     8     SECTION 6.  THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
     9         (1)  THE ADDITION OF 66 PA.C.S. §§ 2004(B) AND 2203(15)
    10     SHALL TAKE EFFECT MAY 1, 1999.
    11         (2)  THIS SECTION SHALL TAKE EFFECT IMMEDIATELY.
    12         (3)  THE REMAINDER OF THIS ACT SHALL TAKE EFFECT JULY 1,
    13     1999, OR IMMEDIATELY, WHICHEVER OCCURS LATER.












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