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                                 SENATE AMENDED
        PRIOR PRINTER'S NOS. 1551, 2032               PRINTER'S NO. 2112

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1331 Session of 1999


        INTRODUCED BY RAYMOND AND TULLI, APRIL 20, 1999

        AS AMENDED ON THIRD CONSIDERATION, IN SENATE, JUNE 16, 1999

                                     AN ACT

     1  Amending Title 66 (Public Utilities) of the Pennsylvania
     2     Consolidated Statutes, providing for supply choice for
     3     customers of natural gas utilities and for restructuring of
     4     the natural gas utility industry and for utility industry      <--
     5     restructuring.; AND MAKING REPEALS.                            <--

     6     The General Assembly of the Commonwealth of Pennsylvania
     7  hereby enacts as follows:
     8     Section 1.  Sections 1307(f) and (g), 1317 and 1318 of Title   <--
     9  66 of the Pennsylvania Consolidated Statutes are amended to
    10  read:
    11  § 1307.  Sliding scale of rates; adjustments.
    12     * * *
    13     (f)  Recovery of natural gas costs.--
    14         (1)  Natural gas [distributors] distribution companies,
    15     as defined in section 2202 (relating to definitions), with
    16     gross intrastate annual operating revenues in excess of
    17     $40,000,000 may file tariffs reflecting actual and projected
    18     increases or decreases in their natural gas costs and the
    19     tariffs shall have an effective date six months from the date

     1     of filing. The commission shall promulgate regulations
     2     establishing the time and manner of such filing, but, except
     3     for adjustments pursuant to a tariff mechanism authorized in
     4     this title, no such natural gas [utility] distribution
     5     company shall voluntarily file more than one such tariff in a
     6     12-month period: Provided, That [nothing]:
     7             (i)  Nothing contained herein shall prohibit any
     8         party from advising the commission that there has been or
     9         there is anticipated to be a significant difference
    10         between the natural gas costs to the [utility] natural
    11         gas distribution company and the costs reflected in the
    12         then effective tariff or the commission from acting upon
    13         such advice.
    14             (ii)  A natural gas distribution company may also
    15         file a tariff to establish a mechanism by which such
    16         natural gas distribution company may further adjust its
    17         rates for natural gas sales on a regular, but no more
    18         frequent than monthly, basis to reflect actual or
    19         projected changes in natural gas costs reflected in rates
    20         established pursuant to paragraph (2), subject to annual
    21         reconciliation under paragraph (5). In the event that the
    22         natural gas distribution company adjusts rates more
    23         frequently than quarterly, it shall also offer retail gas
    24         customers a fixed rate option which recovers natural gas
    25         costs over a 12-month period, subject to annual
    26         reconciliation under paragraph (5). The commission shall,
    27         within 60 days of the effective date of this
    28         subparagraph, promulgate rules or regulations governing
    29         such adjustments and fixed rate option, but the
    30         commission shall not prohibit such adjustments or fixed
    19990H1331B2112                  - 2 -

     1         rate option.
     2         (2)  The commission shall conduct an investigation and
     3     hold a hearing or hearings, with notice, to [investigate]
     4     review the tariffs and consider the plans filed pursuant to
     5     section 1317 (relating to regulations of natural gas costs).
     6     Where there has been an indication of consumer interest, the
     7     hearing shall be held in the service territory of the natural
     8     gas [distributor] distribution company. Prior to the
     9     effective date of the filing, the commission shall issue an
    10     order establishing the rate to be charged to reflect such
    11     [increases or decreases] changes in natural gas costs. [Rates
    12     established under this subsection do not constitute either a
    13     sliding scale of rates or an automatic adjustment subject to
    14     the prohibitions in subsections (a) and (b).] The commission
    15     shall annually review and approve plans for purposes of
    16     reliability and supply. Such rates, however, are subject to
    17     the [kinds] types of audits, reports and proceedings required
    18     by subsection (d).
    19         (3)  Within 60 days following the end of such 12-month
    20     period as the commission shall designate, each [public
    21     utility] natural gas distribution company subject to this
    22     subsection shall file with the commission a statement which
    23     specifies for such period:
    24             (i)  The total revenues received pursuant to this
    25         section.
    26             (ii)  The total [gas expense] natural gas costs
    27     incurred.
    28             (iii)  The difference between the amounts specified
    29         by subparagraphs (i) and (ii).
    30             (iv)  [Evidence explaining how actual] How actual
    19990H1331B2112                  - 3 -

     1         natural gas costs incurred differ from the natural gas
     2         costs allowed under paragraph (2) and why such
     3         differences occurred.
     4             (v)  How these natural gas costs are consistent with
     5         a least cost procurement policy as required by section
     6         1318 (relating to determination of just and reasonable
     7         [natural] gas cost rates).
     8     Such report shall be a matter of public record and copies
     9     thereof shall be made available by the [gas distributor]
    10     natural gas distribution company to any person upon request.
    11     Copies of the reports shall be filed with the Office of
    12     Consumer Advocate and the Office of Small Business Advocate
    13     at the same time as they are filed with the commission.
    14         (4)  The commission shall hold a public hearing on the
    15     substance of such statement submitted by a [utility] natural
    16     gas distribution company as required in paragraph (3) and on
    17     any related matters.
    18         (5)  The commission, after hearing, shall determine the
    19     portion of the [companies] company's natural gas distribution
    20     actual natural gas costs in the previous 12-month period
    21     which meet the standards set out in section 1318. The
    22     commission shall, by order, direct each [gas utility] natural
    23     gas distribution company subject to this subsection to refund
    24     to its [patrons any] customers gas revenues collected
    25     pursuant to paragraph (2) which exceed the amount of actual
    26     [gas expenses] natural gas costs incurred consistent with the
    27     standards in section 1318 and to recover from its [patrons]
    28     customers any amount by which the actual [gas expenses,]
    29     natural gas costs, which have been incurred consistent with
    30     the standards in section 1318, exceed the revenues collected
    19990H1331B2112                  - 4 -

     1     pursuant to paragraph (2). Absent good reason to the
     2     contrary, the commission shall issue its order within six
     3     months following the filing of the statement described in
     4     paragraph (3). Refunds to [patrons] customers shall be made
     5     with interest, [which shall be the average rate of interest
     6     specified for residential mortgage lending by the Secretary
     7     of Banking in accordance with the act of January 30, 1974
     8     (P.L.13, No.6), referred to as the Loan Interest and
     9     Protection Law,] at the legal rate of interest plus two
    10     percent, during the period or periods for which the
    11     commission orders refunds[:], and recoveries from customers
    12     shall include interest at the legal rate of interest:
    13     Provided, That nothing contained herein shall limit the
    14     applicability of any defenses, principles or doctrines which
    15     would prohibit the commission's  inquiry into any matters
    16     that were decided finally in the commission's order issued
    17     under paragraph (2).
    18         (6)  The commission shall require that customers
    19     transferring from sales to transportation service be subject
    20     to the over or under collection adjustment provided for in
    21     paragraph (5) and shall require further that customers
    22     transferring from transportation service to sales service not
    23     be subject to the over or under collection adjustment for an
    24     appropriate period following either such transfer.
    25     (g)  Definition.--As used in this section, [the term "natural
    26  gas" includes natural gas, liquefied natural gas, synthetic
    27  natural gas and any natural gas substitutes.] the terms "natural
    28  gas costs" and "gas costs" include the direct costs paid by a
    29  natural gas distribution company for the purchase and the
    30  delivery of natural gas to its system in order to supply its
    19990H1331B2112                  - 5 -

     1  customers. Such costs may include costs paid under agreements to
     2  purchase natural gas from sellers; costs paid for transporting
     3  natural gas to its system; costs paid for natural gas storage
     4  service from others, including the costs of injecting and
     5  withdrawing natural gas from storage; all charges, fees, taxes
     6  and rates paid in connection with such purchases, pipeline
     7  gathering, storage and transportation; and costs paid for
     8  employing futures, options and other risk management tools.
     9  "Natural gas" and "gas" include natural gas, liquified natural
    10  gas, synthetic natural gas and any natural gas substitutes.
    11  § 1317.  Regulation of natural gas costs.
    12     (a)  General rule.--In every rate proceeding instituted by a
    13  natural gas distribution utility, pursuant to section 1307(f)
    14  (relating to sliding scale of rates; adjustments), each such
    15  utility shall be required to [provide] supply to the commission
    16  such information, to be established by commission regulation
    17  within 120 days of the passage of this section, that will permit
    18  the commission to make specific findings as to whether the
    19  utility is pursuing a least cost fuel procurement policy,
    20  consistent with the utility's obligation to provide safe,
    21  adequate and reliable service to its customers. Such information
    22  shall include, but need not be limited to, information, data and
    23  statements regarding:
    24         (1)  The utility's participation in rate proceedings
    25     before the Federal Energy Regulatory Commission which affect
    26     the utility's gas costs.
    27         (2)  The utility's efforts to negotiate favorable
    28     contracts with gas suppliers and to renegotiate existing
    29     contracts with gas suppliers or take legal actions necessary
    30     to relieve the utility from existing contract terms which are
    19990H1331B2112                  - 6 -

     1     or may be adverse to the interests of the utility's
     2     ratepayers.
     3         (3)  The utility's efforts to secure lower cost gas
     4     supplies both within and outside of the Commonwealth,
     5     including the use of transportation arrangements with
     6     pipelines and other gas distribution companies.
     7         (4)  The sources and amounts of all gas supplies which
     8     have been withheld or have been caused to be withheld from
     9     the market by the utility and the reasons why such gas is not
    10     to be utilized.
    11     (b)  Integrated gas companies.--In the case of a natural gas
    12  distribution utility which purchases all or part of its gas
    13  supplies from an affiliated interest, as that term is defined in
    14  section 2101 (relating to definition of affiliated interest),
    15  such utility shall, in addition to the materials required in
    16  subsection (a), be required to provide to the commission such
    17  information, to be established by commission regulation within
    18  120 days of the passage of this section, that will permit the
    19  commission to make specific findings as to whether any purchases
    20  of gas from an affiliated interest are consistent with a least
    21  cost fuel procurement policy, consistent with the utility's
    22  obligation to provide safe, adequate and reliable service to its
    23  customers. Such information shall include, but need not be
    24  limited to, statements regarding:
    25         (1)  Efforts made by the utility to obtain gas supplies
    26     from nonaffiliated interests.
    27         (2)  The specific reasons why the utility has purchased
    28     gas supplies from an affiliated interest and demonstration
    29     that such purchases are consistent with a least cost fuel
    30     procurement policy.
    19990H1331B2112                  - 7 -

     1         (3)  The sources and amounts of all gas supplies which
     2     have been withheld from the market by the utility or any
     3     affiliated interest and the reasons why such gas is not being
     4     utilized.
     5     (c)  Reliability plans.--As part of its filing under section
     6  1307(f) or if it is not required to make such a filing on an
     7  annual basis, a natural gas distribution company, as defined in
     8  section 2202 (relating to definitions), shall file a proposed
     9  reliability plan with the commission which shall, at a minimum,
    10  identify the following:
    11         (1)  The projected peak day and seasonal requirements of
    12     the firm customers utilizing the distribution system of the
    13     natural gas distribution company during the 12-month
    14     projected period specified in section 1307(f)(1). Where
    15     operationally required, the design peak day requirements
    16     shall be specified for discrete segments of each natural gas
    17     distribution system.
    18         (2)  The transportation capacity, storage, peaking or on
    19     system production that ensures deliverability of the natural
    20     gas supplies necessary to meet such projected period peak day
    21     and seasonal requirements.
    22     (d)  Supply plans.--As part of its filing under section
    23  1307(f), a natural gas distribution company shall file a
    24  proposed plan with the commission for acquisition or receipt of
    25  natural gas supplies.
    26     [(c)] (e)  Definition.--As used in this section, the [term
    27  "natural gas" includes natural gas, liquified natural gas,
    28  synthetic natural gas and any natural gas substitutes] terms
    29  "natural gas costs," "gas costs," "natural gas" and "gas" shall
    30  have the same definitions as provided in section 1307(g).
    19990H1331B2112                  - 8 -

     1  § 1318.  Determination of just and reasonable [natural] gas cost
     2             rates.
     3     (a)  General rule.--In establishing just and reasonable rates
     4  for those natural gas distribution [utilities] companies, as
     5  defined in section 2202 (relating to definitions), with gross
     6  intrastate operating revenues in excess of $40,000,000 under
     7  section 1307(f) (relating to sliding scale of rates;
     8  adjustments) or 1308(d) (relating to voluntary changes in rates)
     9  or any other rate proceeding, the commission shall consider the
    10  materials provided by the utilities pursuant to section 1317
    11  (relating to regulation of natural gas costs). No rates for a
    12  natural gas distribution utility shall be deemed just and
    13  reasonable unless the commission finds that the utility is
    14  pursuing a least cost fuel procurement policy, consistent with
    15  the utility's obligation to provide safe, adequate and reliable
    16  service to its customers. In making such a determination, the
    17  commission shall be required to make specific findings which
    18  shall include, but need not be limited to, findings that:
    19         (1)  The utility has fully and vigorously represented the
    20     interests of its ratepayers in proceedings before the Federal
    21     Energy Regulatory Commission.
    22         (2)  The utility has taken all prudent steps necessary to
    23     negotiate favorable gas supply contracts and to relieve the
    24     utility from terms in existing contracts with its gas
    25     suppliers which are or may be adverse to the interests of the
    26     utility's ratepayers.
    27         (3)  The utility has taken all prudent steps necessary to
    28     obtain lower cost gas supplies on both short-term and long-
    29     term bases both within and outside the Commonwealth,
    30     including the use of gas transportation arrangements with
    19990H1331B2112                  - 9 -

     1     pipelines and other distribution companies.
     2         (4)  The utility has not withheld from the market or
     3     caused to be withheld from the market any gas supplies which
     4     should have been utilized as part of a least cost fuel
     5     procurement policy.
     6     (b)  Limitation on gas purchased from affiliates.--In any
     7  instance in which a natural gas distribution [utility] company
     8  purchases all or part of its gas supplies from an affiliated
     9  interest, as that term is defined in section 2101 (relating to
    10  definition of affiliated interest), the commission, in addition
    11  to the determinations and findings set forth in subsection (a),
    12  shall be required to make specific findings with regard to the
    13  justness and reasonableness of all such purchases. Such findings
    14  shall include, but not be limited to findings:
    15         (1)  That the utility has fully and vigorously attempted
    16     to obtain less costly gas supplies on both short-term and
    17     long-term bases from nonaffiliated interests.
    18         (2)  That each contract for the purchase of gas from its
    19     affiliated interest is consistent with a least cost fuel
    20     procurement policy.
    21         (3)  That neither the utility nor its affiliated interest
    22     has withheld from the market any gas supplies which should
    23     have been utilized as part of a least cost fuel procurement
    24     policy.
    25     (c)  Shut-in gas; special rule.--In determining whether a gas
    26  utility has purchased the least costly natural gas available,
    27  the commission shall consider as available to the utility any
    28  gas supplies that reasonably could have been brought to market
    29  during the relevant period but which were voluntarily withheld
    30  from the market by the utility or an affiliated interest of the
    19990H1331B2112                 - 10 -

     1  utility.
     2     (d)  Other regulatory approvals.--The fact that a contract or
     3  rate has been approved by a Federal regulatory agency for
     4  interstate ratemaking purposes shall not, in and of itself, be
     5  adequate to satisfy the utility's burden of proof that gas
     6  prices and volumes associated with such contract or rate are
     7  just and reasonable for purposes of this section.
     8     (e)  Reports.--Each natural gas distribution utility with
     9  gross intrastate annual operating revenues in excess of
    10  $40,000,000 shall file with the commission [and], the Office of
    11  Consumer Advocate and the Office of Small Business Advocate, in
    12  accordance with regulations to be prescribed by the commission,
    13  quarterly reports setting forth the actual gas costs incurred by
    14  the utility on a monthly basis. Actual gas costs shall be
    15  reviewed for their accuracy by the Bureau of Audits at least
    16  annually and the results of that review shall be submitted to
    17  the commission.
    18     (f)  Definition.--As used in this section, the [term includes
    19  natural gas, liquified natural gas, synthetic natural gas and
    20  any natural gas substitutes.] terms "natural gas" "natural gas
    21  costs," "gas costs," and "gas" shall have the same definitions
    22  as provided in section 1307(g).
    23     Section 2.  Title 66 is amended by adding a chapter to read:
    24                             CHAPTER 20
    25                   UTILITY INDUSTRY RESTRUCTURING
    26  Sec.
    27  2001.  Applicability.
    28  2002.  Findings and purposes.
    29  2003.  Requirements.
    30  2004.  Requirements related to work force reduction.
    19990H1331B2112                 - 11 -

     1  2005.  Displaced employee program.
     2  2006.  Transfers of ownership.
     3  2007.  Transfers to certain subsidiaries.
     4  2008.  Existing sales agreements.
     5  § 2001.  Applicability.
     6     In addition to any other specific requirements contained in
     7  this title, the provisions of this chapter shall apply to the
     8  restructuring or deregulation of any public utility industry.
     9  § 2002.  Findings and purposes.
    10         (1)  The reliability and safety of the public utility
    11     industries subject to this title have depended on a work
    12     force of skilled and dedicated employees equipped with
    13     technical training and experience.
    14         (2)  The integrity and reliability of their systems also
    15     have depended on each industry's commitment to invest in
    16     regular inspection and maintenance, to assure that they can
    17     withstand the demands of heavy service requirements and
    18     emergency situations.
    19         (3)  It is in the Commonwealth's interest to protect the
    20     interests of public utility employees who have dedicated
    21     themselves to assuring reliable service to the citizens of
    22     this Commonwealth and who otherwise might be economically
    23     displaced in a restructured industry.
    24  § 2003.  Requirements.
    25     The General Assembly further finds that it is necessary to
    26  assure that employees operating in a restructured or deregulated
    27  public utility industry have the requisite skills, knowledge and
    28  competence to provide safe, adequate and reliable service and,
    29  therefore, all public utilities and all other persons providing
    30  services to consumers using the facilities of a public utility
    19990H1331B2112                 - 12 -

     1  shall be required to demonstrate the competence of their
     2  employees to work in the public utility industry. The knowledge,
     3  skills and competence levels to be demonstrated shall be
     4  consistent with those generally required of or by comparable
     5  public utilities in this Commonwealth with respect to their
     6  employees. Adequate demonstration of requisite knowledge, skills
     7  and competence shall include such factors as completion by the
     8  employee of an accredited or otherwise recognized apprenticeship
     9  program for the particular craft, trade or skill, or specified
    10  years of employment with a public utility or similar business
    11  performing the particular work function. To implement this
    12  requirement, the commission, in determining that a person or
    13  public utility meets the standards required by this chapter,
    14  shall require the person or public utility to demonstrate that
    15  the person or public utility is licensed to do business in this
    16  Commonwealth and that the employees of the person or public
    17  utility that will be installing, operating and maintaining
    18  facilities and services within this Commonwealth, or any other
    19  entity which the person or public utility has contracted to
    20  perform those functions within this Commonwealth, have the
    21  requisite knowledge, skills and competence to perform those
    22  functions in a safe and responsible manner in order to provide
    23  safe, adequate and reliable service in accordance with the
    24  criteria stated herein.
    25  § 2004.  Requirements related to work force reduction.
    26     (a)  Work force reduction plan.--The General Assembly finds
    27  based on experience in industries that have undergone
    28  deregulation, restructuring and transition, that the
    29  introduction of competition into this Commonwealth's regulated
    30  industries may result in work force reductions by public
    19990H1331B2112                 - 13 -

     1  utilities which may adversely affect persons who have been
     2  employed in this Commonwealth's regulated industries in
     3  functions important to the public convenience and necessity. The
     4  General Assembly further finds that the impacts on employees and
     5  their communities of any necessary reductions in the industry's
     6  work force directly caused by the restructuring or deregulation
     7  of an industry subject to this title shall be mitigated to the
     8  extent practicable through such means as offers of voluntary
     9  severance, retraining, early retirement, outplacement,
    10  continuation of medical benefits and related benefits.
    11  Therefore, before any such reduction in the work force, a public
    12  utility shall present to its employees or their representatives
    13  a work force reduction plan outlining the means by which the
    14  public utility intends to reasonably mitigate the impact of such
    15  work force reduction on its employees.
    16     (b)  Employee termination.--Beginning May 1, 1999, if a
    17  public utility lays off or terminates any of its employees,
    18  except for just cause, the public utility shall provide the
    19  commission with sufficient information to show that with the
    20  reduction of employees the public utility will still be able to
    21  ensure the safety, adequacy and reliability of service to all
    22  customers and provide at least 60 days' written notice of such
    23  layoff or termination to the public utility's employees or the
    24  employees' authorized bargaining representative.
    25  § 2005.  Displaced employee program.
    26     The Department of Labor and Industry shall establish and
    27  implement a program to assist the employees of a public utility
    28  who are displaced by restructuring or deregulation. The program
    29  shall be designed to assist employees in obtaining employment
    30  and shall consist of utilizing the Federal funds available for
    19990H1331B2112                 - 14 -

     1  the purpose of retraining and outplacement services for such
     2  employees.
     3  § 2006.  Transfers of ownership.
     4     In the event of a sale, purchase, or any other transfer of
     5  ownership of a public utility, or of one or more Pennsylvania
     6  divisions or business units of a public utility, the existing
     7  public utility's contracts and/or agreements with the acquiring
     8  person shall require that the acquiring person shall hire a
     9  sufficient number of nonsupervisory employees to operate and
    10  maintain the facilities and services of the public utility by
    11  initially making offers of employment to the nonsupervisory work
    12  force of the public utility, or the division or business unit of
    13  the public utility being transferred, at no less than the wage
    14  rates and substantially equivalent fringe benefits and terms and
    15  conditions of employment that are in effect at the time of
    16  transfer of ownership of said division or business unit and said
    17  wage rates and substantially equivalent fringe benefits and
    18  terms of and conditions of employment shall continue for at
    19  least 30 months from the time of said transfer of ownership
    20  unless the public utility, the acquiring person and the affected
    21  employees mutually agree to different terms and conditions of
    22  employment within that 30-month period. The public utility shall
    23  offer a transition plan to those employees who are not offered
    24  jobs by the acquiring person because that person has a need for
    25  fewer workers. If there is litigation concerning the sale or
    26  other transfer of ownership of the public utility, or the
    27  division or business unit of the public utility, the 30-month
    28  period will begin on the date the acquiring person takes control
    29  or management of the public utility or the division or business
    30  unit of the public utility.
    19990H1331B2112                 - 15 -

     1  § 2007.  Transfers to certain subsidiaries.
     2     If a public utility transfers ownership of one or more
     3  Pennsylvania divisions or business units to a majority-owned
     4  subsidiary of the public utility or to any affiliated interest
     5  of the public utility as defined in section 2101 (relating to
     6  definition of affiliated interest), that subsidiary or
     7  affiliated interest shall continue to employ the public
     8  utility's employees who were employed by the public utility at
     9  such division or business unit at the time of the transfer under
    10  the same terms and conditions of employment as those employees
    11  enjoyed at the time of the transfer. If ownership of the
    12  subsidiary or affiliated interest is subsequently sold or
    13  transferred to a third party, these provisions shall continue to
    14  apply.
    15  § 2008.  Existing sales agreements.
    16     The provisions of sections 2006 (relating to transfers of
    17  ownership) and 2007 (relating to transfers to certain
    18  subsidiaries) shall not apply to the transfer of any division or
    19  business unit of a public utility which was the subject of an
    20  executed sales agreement entered into before January 1, 1999.
    21     Section 3.  Subpart D of Part I of Title 66 is amended by
    22  adding a chapter to read:
    23                             CHAPTER 22
    24                      NATURAL GAS COMPETITION
    25  Sec.
    26  2201.  Short title of chapter.
    27  2202.  Definitions.
    28  2203.  Standards for restructuring of natural gas utility
    29         industry.
    30  2204.  Implementation.
    19990H1331B2112                 - 16 -

     1  2205.  Duties of natural gas distribution companies.
     2  2206.  Consumer protections and customer service.
     3  2207.  Obligation to serve.
     4  2208.  Requirements for natural gas suppliers.
     5  2209.  Market power remediation.
     6  2210.  Approval of proposed mergers, consolidations,
     7         acquisitions or dispositions.
     8  2211.  Rate caps.
     9  § 2201.  Short title of chapter.
    10     This chapter shall be known and may be cited as the Natural
    11  Gas Choice and Competition Act.
    12  § 2202.  Definitions.
    13     The following words and phrases when used in this chapter
    14  shall have the meanings given to them in this section unless the
    15  context clearly indicates otherwise:
    16     "Consumer protection."  The standards, practices and service
    17  protections for retail gas customers, including those provided
    18  for in 52 Pa. Code Ch. 56 (relating to standards and billing
    19  practices for residential utility service), as well as
    20  applicable Federal and State debt/credit collection statutes and
    21  any regulations or orders of the commission that provide such
    22  protections, as may be modified by the commission from time to
    23  time.
    24     "Entity."  A person or corporation as defined in section 102
    25  (relating to definitions).
    26     "Natural gas distribution company."  A public utility that
    27  provides natural gas distribution services and which may provide
    28  natural gas supply services and other services. For purposes of
    29  this chapter, this term does not include:
    30         (1)  any public utility subject to the jurisdiction of
    19990H1331B2112                 - 17 -

     1     the commission which has annual gas operating revenues of
     2     less than $6,000,000 per year, except where the public
     3     utility voluntarily petitions the commission to be included
     4     within this definition or where the public utility seeks to
     5     provide natural gas supply services to retail gas customers
     6     outside its service territory; or
     7         (2)  any natural gas public utility subject to the
     8     jurisdiction of the commission that is not interconnected to
     9     an interstate gas pipeline by means of a direct connection or
    10     an indirect connection through the distribution system of
    11     another natural gas public utility or through a natural gas
    12     gathering system.
    13     "Natural gas distribution service."  The delivery of natural
    14  gas to retail gas customers utilizing the jurisdictional
    15  facilities of the natural gas distribution company.
    16     "Natural gas supplier."  An entity other than a natural gas
    17  distribution company, but including natural gas distribution
    18  company marketing affiliates, which provides natural gas supply
    19  services to retail gas customers utilizing the jurisdictional
    20  facilities of a natural gas distribution company. The term
    21  includes a natural gas distribution company that provides
    22  natural gas supply services outside its certificated service
    23  territories. The term includes a municipal corporation, its
    24  affiliates or any joint venture, to the extent that it chooses
    25  to provide natural gas supply services to retail customers
    26  located outside of its corporate or municipal limits, as
    27  applicable, other than:
    28             (i)  as provided prior to the effective date of this
    29         chapter, pursuant to a certificate of public convenience
    30         if required under this title;
    19990H1331B2112                 - 18 -

     1             (ii)  total natural gas supply services in de minimis
     2         amounts;
     3             (iii)  natural gas supply services requested by, or
     4         provided with the consent of, the public utility in whose
     5         certificated territory the services are provided; or
     6             (iv)  natural gas supply services provided to the
     7         municipal corporation itself or its tenants on land it
     8         owns or leases, or is subject to an agreement of sale or
     9         pending condemnation, as of September 1, 1999, to the
    10         extent permitted by applicable law independent of this
    11         chapter.
    12  The term excludes an entity to the extent that it provides free
    13  gas to end-users under the terms of an oil or gas lease.
    14  Notwithstanding any other provision of this title, a natural gas
    15  supplier that is not a natural gas distribution company is not a
    16  public utility as defined in section 102 (relating to
    17  definitions) to the extent that the natural gas supplier is
    18  utilizing the jurisdictional distribution facilities of a
    19  natural gas distribution company or is providing other services
    20  authorized by the commission.
    21     "Natural gas supply services."
    22         (1)  The term includes:
    23             (i)  The sale or arrangement of the sale of natural
    24         gas to retail gas customers; and
    25             (ii)  services that may be unbundled by the
    26         commission under section 2203(3) (relating to standards
    27         for restructuring of natural gas utility industry).
    28         (2)  The term does not include distribution service.
    29     "Reliability."  The term comprises adequacy and security. The
    30  term "adequacy" means the provision of sufficient volumes and
    19990H1331B2112                 - 19 -

     1  deliverability of natural gas so as to supply the requirements
     2  of retail gas customers, taking into account peak and seasonal
     3  demands, as well as isolated market areas and system operation
     4  contingencies. The term "security" means designing, maintaining
     5  and operating a system so that it can safely handle extreme
     6  conditions, as well as emergencies.
     7     "Retail gas customer."  A direct purchaser of natural gas
     8  supply services or natural gas distribution services, other than
     9  a natural gas supplier. The term excludes an occupant of a
    10  building or facility where the owner/operators manage the
    11  internal distribution system serving such building or facility
    12  and supply natural gas and other related services to occupants
    13  of the building or facility; where such owner/operators are
    14  direct purchasers of natural gas supply service; and where the
    15  occupants are not direct purchasers.
    16     "Universal service and energy conservation."  Policies,
    17  practices and services that help residential low-income retail
    18  gas customers and other residential retail gas customers
    19  experiencing temporary emergencies, as defined by the
    20  commission, to maintain natural gas supply and distribution
    21  services. The term includes retail gas customer assistance
    22  programs, termination of service protections and consumer
    23  protection policies and services that help residential low-
    24  income customers and other residential customers experiencing
    25  temporary emergencies to reduce or manage energy consumption in
    26  a cost-effective manner, such as the low-income usage reduction
    27  programs and consumer education.
    28  § 2203.  Standards for restructuring of natural gas utility
    29             industry.
    30     The following interdependent standards shall govern the
    19990H1331B2112                 - 20 -

     1  commission's actions in adopting rules, orders or policies and
     2  in reviewing, assessing and approving each natural gas
     3  distribution company's restructuring filings and overseeing the
     4  transition process and regulation of the restructured natural
     5  gas utility industry:
     6         (1)  The commission shall adopt and enforce standards as
     7     necessary to ensure continuation of the safety and
     8     reliability of the natural gas supply and distribution
     9     service to all retail gas customers. In adopting the
    10     standards, the commission shall consider the absence of any
    11     applicable industry standards and practices or adopt
    12     standards in conformity with industry standards and practices
    13     meeting the standards of this chapter. The application of
    14     such standards shall be in a manner that incorporates the
    15     operating requirements of the different natural gas
    16     distribution companies.
    17         (2)  Consistent with section 2204 (relating to
    18     implementation), the commission shall allow retail gas
    19     customers to choose among natural gas suppliers and natural
    20     gas distribution companies to the extent that they offer such
    21     natural gas supply services. Retail gas customers shall be
    22     able to choose from these suppliers a variety of products,
    23     including, but not limited to, different supply and pricing
    24     options, and services that evolve as the competitive
    25     marketplace matures. Neither any natural gas supplier nor any
    26     natural gas distribution company shall offer interruptible
    27     gas service to any essential human needs retail gas customer
    28     lacking installed and operable alternative fuel capability or
    29     to any residential retail gas customer.
    30         (3)  The commission shall require natural gas
    19990H1331B2112                 - 21 -

     1     distribution companies to unbundle natural gas supply
     2     services such that separate charges for the services can be
     3     set forth in tariffs and on retail gas customers' bills. In
     4     its restructuring filing, the natural gas distribution
     5     company shall establish system reliability standards and
     6     capacity contract mitigation parameters and address the
     7     unbundling of commodity, capacity, storage, balancing and
     8     aggregator services. The commission may address the
     9     unbundling of other services only through a rulemaking. In
    10     conducting the rulemaking, the commission shall consider the
    11     impact of such unbundling on the labor force, the creation of
    12     stranded costs, safety, reliability, consumer protections,
    13     universal service and the potential for unbundling to offer
    14     savings, new products and additional choices or services to
    15     retail gas customers. The commission's decisions shall assure
    16     that standards and procedures for safety and reliability,
    17     consumer protections and universal service are maintained at
    18     levels consistent with this chapter.
    19         (4)  Consistent with the provisions of section 2204, the
    20     commission shall require that a natural gas distribution
    21     company that owns or operates jurisdictional distribution
    22     facilities shall provide distribution service to all retail
    23     gas customers in its service territory and to all natural gas
    24     suppliers, affiliated or nonaffiliated, on nondiscriminatory
    25     rates, terms of access and other conditions.
    26         (5)  The commission shall require that restructuring of
    27     the natural gas utility industry be implemented in a manner
    28     that does not unreasonably discriminate against one customer
    29     class for the benefit of another.
    30         (6)  After notice and hearings, the commission shall
    19990H1331B2112                 - 22 -

     1     establish for each natural gas distribution company an
     2     appropriate nonbypassable, competitively neutral cost-
     3     recovery mechanism which is designed to recover fully the
     4     natural gas distribution company's universal service and
     5     energy conservation costs over the life of these programs.
     6     Except as provided in paragraph (10), policies, activities
     7     and services under this paragraph shall be funded and spent
     8     in each natural gas distribution company's service territory.
     9     Nothing in this chapter shall be construed to prohibit public
    10     funding or voluntary funding by third parties of a natural
    11     gas distribution company's universal service and energy
    12     conservation programs.
    13         (7)  The commission shall, at a minimum, continue the
    14     level and nature of the consumers protections, policies and
    15     services within its jurisdiction that are in existence as of
    16     the effective date of this chapter to assist low-income
    17     retail gas customers to afford natural gas services.
    18         (8)  The commission shall ensure that universal service
    19     and energy conservation policies, activities and services are
    20     appropriately funded and available in each natural gas
    21     distribution service territory. The commission shall
    22     encourage the use of community-based organizations that have
    23     the necessary technical and administrative experience to be
    24     the direct providers of services or programs which reduce
    25     energy consumption or otherwise assist low-income retail gas
    26     customers to afford natural gas service. Programs under this
    27     paragraph shall be subject to the administrative oversight of
    28     the commission, which shall ensure that the programs are
    29     operated in a cost-effective manner.
    30         (9)  Each natural gas distribution company shall set
    19990H1331B2112                 - 23 -

     1     forth in its restructuring filing an initial proposal to meet
     2     its universal service and energy conservation obligations.
     3         (10)  Consistent with paragraph (7), the commission shall
     4     convene a task force to review universal service programs and
     5     their funding. The task force shall issue a report to the
     6     commission by December 31, 1999, and annually thereafter.
     7     Recommendations regarding the use of general State revenue
     8     shall be concurrently forwarded to the General Assembly.
     9         (11)  The commission shall continue to regulate rates for
    10     natural gas distribution services for new and existing retail
    11     gas customers in accordance with Chapter 13 (relating to
    12     rates and rate making) and this chapter.
    13         (12)  The commission shall make its determinations
    14     pursuant to this chapter and shall adopt such orders or
    15     regulations as necessary and appropriate to ensure that
    16     natural gas suppliers meet their supply and reliability
    17     obligations, including, but not limited to, establishing
    18     penalties for failure to deliver natural gas and revoking
    19     licenses. Any affected entity may at any time petition the
    20     commission to amend or rescind any such order or regulation
    21     issued or promulgated under this chapter.
    22         (13)  Each natural gas distribution company shall set
    23     forth in its restructuring filing an initial proposal to meet
    24     its employee transition obligations precipitated by this
    25     chapter.
    26         (14)  The natural gas distribution company may continue
    27     to provide natural gas service to its customers under all
    28     tariff rate schedules and riders incorporated into its
    29     tariff, and policies or programs, existing on the effective
    30     date of this chapter.
    19990H1331B2112                 - 24 -

     1         (15)  Beginning May 1, 1999, and continuing for a 36-
     2     month period thereafter, if a natural gas distribution
     3     company lays off or terminates any of its employees, except
     4     for just cause, the natural gas distribution company shall:
     5             (i)  Provide the commission with sufficient
     6         information to show that with the reduction of employees
     7         the company will still be able to ensure the safety and
     8         reliability of natural gas distribution service to all
     9         retail gas customers, as provided for by the commission
    10         under paragraph (1).
    11             (ii)  Provide at least 60 days' written notice of
    12         such layoff or termination to the company's employees'
    13         authorized bargaining representative.
    14  § 2204.  Implementation.
    15     (a)  Commencement of customer choice.--Beginning on November
    16  1, 1999, unless the commission for good cause shown extends this
    17  period by no more than eight months, consistent with this
    18  chapter, all retail gas customers of natural gas distribution
    19  companies shall have the opportunity to purchase natural gas
    20  supply services from a natural gas supplier or their natural gas
    21  distribution company to the extent it offers such services. The
    22  choice of natural gas suppliers shall rest with the retail gas
    23  customer. The commission shall adopt orders, rules, regulations
    24  and policies as shall be necessary and appropriate to implement
    25  fully this chapter within the time frames specified in this
    26  chapter, provided that the commission may, in the context of
    27  each natural gas distribution company's restructuring
    28  proceeding, establish the time frames for implementation of
    29  specific components of each natural gas distribution company's
    30  restructuring plan.
    19990H1331B2112                 - 25 -

     1     (b)  Restructuring filings.--All natural gas distribution
     2  companies in this Commonwealth shall file with the commission,
     3  pursuant to a schedule to be determined by the commission in
     4  consultation with the natural gas distribution companies, a
     5  restructuring filing consistent with this chapter and with any
     6  orders, rules or regulations adopted by the commission.
     7     (c)  Commission review.--
     8         (1)  The commission shall review the restructuring filing
     9     of each natural gas distribution company and shall, after
    10     open evidentiary hearings with proper notice and opportunity
    11     for all parties to cross-examine witnesses and brief issues,
    12     issue an order accepting, modifying or rejecting such filing
    13     at the earliest date possible, but no later than nine months
    14     from the filing date.
    15         (2)  In issuing the restructuring order, the commission
    16     may consider the results of any collaborative process
    17     previously engaged in during or prior to the restructuring
    18     proceeding.
    19         (3)  If the commission modifies or rejects a
    20     restructuring filing, it shall state the specific reasons for
    21     modification or rejection and direct the natural gas
    22     distribution company to address such objections with another
    23     filing within 30 days of the entry date of the commission
    24     order modifying or rejecting the prior filing.
    25         (4)  The commission shall review the alternative filing,
    26     solicit comments and reply comments from interested parties
    27     and issue a final order within 45 days of the revised filing.
    28     (d)  Release, assignment or transfer of capacity.--
    29         (1)  A natural gas distribution company holding contracts
    30     for firm storage or transportation capacity, including gas
    19990H1331B2112                 - 26 -

     1     supply contracts with Pennsylvania producers, on the
     2     effective date of this chapter may, at its option, release,
     3     assign or otherwise transfer such capacity, or Pennsylvania
     4     supply, in whole or part, associated with those contracts on
     5     a nondiscriminatory basis to licensed natural gas suppliers
     6     or large commercial or industrial customers on its system.
     7         (2)  Contracts which by their terms must be renewed
     8     within 150 days after the effective date of this chapter or
     9     contracts for which the last day for notice of renewal or
    10     nonrenewal pursuant to the notice provision of the contract
    11     has occurred or is within 150 days after the effective date
    12     of this chapter and which are renewed pursuant to such notice
    13     requirements shall also be subject to the provisions of this
    14     subsection.
    15         (3)  Such release, assignment or transfer shall be at the
    16     applicable contract rate for such capacity, or Pennsylvania
    17     supply, and shall be subject to applicable contractual
    18     arrangements and tariffs. The amount so released, assigned or
    19     transferred shall be sufficient to serve the level of the
    20     customers' requirements for which the natural gas
    21     distribution company has procured such capacity,  determined
    22     in accordance with the natural gas distribution company's
    23     tariff or procedures approved in its restructuring
    24     proceedings.
    25         (4)  The licensed natural gas supplier shall accept such
    26     release, assignment or transfer of that capacity, or
    27     Pennsylvania supply, and enter into all applicable contracts
    28     or agreements, as a condition of serving retail gas customers
    29     on the natural gas distribution company's system.
    30         (5)  On or after July 1, 2002, the commission shall have
    19990H1331B2112                 - 27 -

     1     the authority to prevent such assignments, releases or
     2     transfers under either of the following circumstances:
     3             (i)  the natural gas distribution company, alone or
     4         together with one or more natural gas suppliers,
     5         voluntarily proposes an alternative to such assignments,
     6         releases or transfers and the commission finds such
     7         alternative to be in the public interest; or
     8             (ii)  upon the petition of the licensed natural gas
     9         supplier who desires to use alternate interstate storage
    10         or transportation capacity to serve its customers on the
    11         natural gas distribution company's system, the commission
    12         makes the following findings and issues a final order as
    13         to which all appeals have been exhausted in which:
    14                 (A)  The commission finds that the alternate
    15             capacity which the natural gas supplier seeks to
    16             utilize meets the operational needs and reliability
    17             standards of the natural gas distribution company.
    18                 (B)  The commission confirms that the natural gas
    19             distribution company's specific transportation and
    20             storage capacity contracts to be displaced are no
    21             longer needed to serve firm customers of the natural
    22             gas distribution company.
    23                 (C)  The commission authorizes the natural gas
    24             distribution company to follow a specific, written
    25             mitigation plan approved by the commission or, if
    26             such a plan is not approved or applicable, to post
    27             the displaced capacity for release in accordance with
    28             the rules and regulations of the Federal Energy
    29             Regulatory Commission and applicable requirements of
    30             interstate pipelines.
    19990H1331B2112                 - 28 -

     1                 (D)  The commission authorizes the natural gas
     2             distribution company to recover the difference
     3             between the amount the natural gas distribution
     4             company is required to pay under the applicable
     5             contract terms for the capacity released, assigned or
     6             transferred pursuant to subparagraph (c) and the
     7             amount the natural gas distribution company receives
     8             from an entity, if any, that acquires such capacity.
     9             Under no circumstances, however, shall such recovery
    10             result in shifting of costs between customer classes
    11             or in any increase in rates to customers who continue
    12             to purchase natural gas supplies from the natural gas
    13             distribution company acting in its supplier of last
    14             resort function.
    15         (6)  Prior to making the filing provided for in paragraph
    16     (5), the natural gas supplier shall meet with the natural gas
    17     distribution company to discuss the natural gas supplier's
    18     proposed alternatives to the existing gas supply or capacity
    19     contracts or to their mandatory assignment.
    20         (7)  Those natural gas distribution companies having gas
    21     supply contracts with Pennsylvania producers may address the
    22     issue of post-July 1, 2002, assignment of such contracts in
    23     their restructuring proceeding or thereafter.
    24     (e)  New and renewed capacity.--
    25         (1)  Subject to the service obligations imposed by this
    26     title, and to the extent such capacity is not needed to meet
    27     the natural gas distribution company's least cost fuel
    28     procurement and other applicable standards pursuant to this
    29     title, prior to entering into new or renewed contracts for
    30     firm storage or transportation capacity not subject to
    19990H1331B2112                 - 29 -

     1     subsection (d)(1), (2), (3) or (4) each natural gas
     2     distribution company shall offer on a nondiscriminatory basis
     3     to each natural gas supplier licensed to do business on its
     4     system, and to large volume industrial or commercial
     5     customers of the natural gas distribution company being
     6     served by such contracts, the opportunity to renew such
     7     contracts, pursuant to the rules and regulations of the
     8     Federal Energy Regulatory Commission, or to enter into other
     9     contracts for capacity.
    10         (2)  The capacity shall meet the reliability criteria of
    11     the natural gas distribution company and, in the case of
    12     large volume industrial and commercial customers being served
    13     by such contracts, shall meet their current requirements.
    14         (3)  Each natural gas distribution company shall utilize
    15     the collaborative process established pursuant to subsection
    16     (f) to address its capacity requirements.
    17         (4)  Absent the natural gas supplier or large volume
    18     industrial or commercial customer taking or providing such
    19     capacity, the natural gas distribution company shall file
    20     with and obtain approval from the commission for such
    21     contracts necessary to ensure sufficient capacity to meet
    22     current and projected customer requirements considering the
    23     commitments of natural gas suppliers.
    24         (5)  Prior to being displaced by a natural gas supplier's
    25     alternate interstate storage or transportation capacity,
    26     contracts renewed or entered into by the natural gas
    27     distribution company pursuant to this subsection shall be
    28     subject to the process set forth in subsection (d).
    29     (f)  Working group and collaborative process.--In its
    30  restructuring proceeding, a natural gas distribution company
    19990H1331B2112                 - 30 -

     1  shall set forth a process to establish a working group of
     2  licensed natural gas suppliers having customers on the natural
     3  gas distribution company's system and representatives of the
     4  residential, commercial and industrial customer classes to:
     5         (1)  Meet on a scheduled basis.
     6         (2)  Seek resolution of operational and capacity issues
     7     related to customer choice.
     8  The final determination of operational and reliability issues
     9  resides with the natural gas distribution company. In addition,
    10  the natural gas distribution company shall include in its
    11  restructuring filing a collaborative process to address broader
    12  issues relating to unbundling, customer choice and deregulation.
    13     (g)  Investigation and report to General Assembly.--Five
    14  years after the effective date of this chapter, the commission
    15  shall initiate an investigation or other appropriate proceeding,
    16  in which all interested parties are invited to participate, to
    17  determine whether effective competition for natural gas supply
    18  services exists on the natural gas distribution companies'
    19  systems in this Commonwealth. The commission shall report its
    20  findings to the General Assembly. Should the commission conclude
    21  that effective competition does not exist, the commission shall
    22  reconvene the stakeholders in the natural gas industry in this
    23  Commonwealth to explore avenues, including legislative, for
    24  encouraging increased competition in this Commonwealth.
    25     (h)  Displaced employee program.--The Department of Labor and
    26  Industry shall establish and implement a program to assist the
    27  natural gas distribution company employees who are displaced by
    28  the transition to retail competition precipitated by this
    29  chapter. The program shall be designed to assist employees in
    30  obtaining employment and shall consist of utilizing the Federal
    19990H1331B2112                 - 31 -

     1  funds available for the purpose of retraining and outplacement
     2  services for such employees.
     3  § 2205.  Duties of natural gas distribution companies.
     4     (a)  Integrity of distribution system.--
     5         (1)  Each natural gas distribution company shall maintain
     6     the integrity of its distribution system at least in
     7     conformity with the standards established by the Federal
     8     Department of Transportation and such other standards
     9     practiced by the industry in a manner sufficient to provide
    10     safe and reliable service to all retail gas customers
    11     connected to its system consistent with this title and the
    12     commission's orders or regulations.
    13         (2)  In performing such duties, the natural gas
    14     distribution company shall implement procedures to require
    15     all natural gas suppliers to supply natural gas to the
    16     natural gas distribution company at locations, volumes,
    17     qualities and pressures that are adequate to meet the natural
    18     gas supplier's supply and reliability obligations to its
    19     retail gas customers and the natural gas distribution
    20     company's supply and reliability obligations to its retail
    21     gas customers. The procedures shall include, but not be
    22     limited to:
    23             (i)  A communication protocol with natural gas
    24         suppliers.
    25             (ii)  An ability to issue system maintenance orders
    26         to control the flow of gas into the distribution system.
    27             (iii)  The right to issue and enforce penalties
    28         pursuant to commission direction, provided, however, that
    29         the commission may approve additional procedures of like
    30         nature by order or regulation to preserve reliability.
    19990H1331B2112                 - 32 -

     1     (b)  Installation and improvement of facilities.--
     2         (1)  The natural gas distribution company shall not have
     3     an obligation to install nonstandard facilities, either as to
     4     type or location, for the purpose of receiving natural gas
     5     from the natural gas supplier unless the natural gas supplier
     6     or its retail gas customer pays the full cost of these
     7     facilities.
     8         (2)  Nothing in this chapter shall prevent the natural
     9     gas distribution company from maintaining and upgrading its
    10     system to meet retail gas customer requirements consistent
    11     with the requirement of section 1501 (relating to character
    12     of service and facilities) or compliance with other statutory
    13     and regulatory requirements.
    14         (3)  Disputes concerning facilities shall be subject to
    15     the jurisdiction of the commission and may be initiated by
    16     the filing of a complaint under section 701 (relating to
    17     complaints) by the commission or any interested party.
    18     (c)  Customer billing.--
    19         (1)  Subject to the right of a retail gas customer to
    20     choose to receive separate bills from its natural gas
    21     supplier for natural gas supply service, the natural gas
    22     distribution company shall be responsible for billing each of
    23     its retail gas customers for natural gas distribution
    24     service, consistent with the orders or regulations of the
    25     commission, regardless of the identity of the provider of
    26     natural gas supply services.
    27         (2)  (i)  Bills to retail gas customers shall contain
    28         sufficient unbundled charge information to enable the
    29         customer to determine the basis for those charges and
    30         shall comply with section 1509 (relating to billing
    19990H1331B2112                 - 33 -

     1         procedures). At a minimum, such charges shall include
     2         those services which are unbundled as a result of a
     3         restructuring filing or rulemaking.
     4             (ii)  Bills to retail residential customers rendered
     5         by a natural gas distribution company for natural gas
     6         distribution services shall include information required
     7         by commission regulations governing standards and billing
     8         practices for residential utility service.
     9             (iii)  Bills rendered by a natural gas distribution
    10         company on behalf of a natural gas supplier shall
    11         include, in a form and manner determined by the natural
    12         gas distribution company, in consultation with the
    13         natural gas supplier, the following information with
    14         respect to natural gas supplier services: the name of the
    15         natural gas supplier; the rates, charges or prices of
    16         natural gas supply services billed, including adjustments
    17         to prior period billings, if applicable, and taxes, if
    18         applicable; and the natural gas supplier's toll-free
    19         telephone number and hours of operation for customer
    20         inquiries.
    21         (3)  Incremental costs relating to billing services
    22     designed, implemented and rendered by the natural gas
    23     distribution company, at its election, on behalf of a natural
    24     gas supplier or other entity may be recovered through fees
    25     charged by the natural gas distribution company to the
    26     natural gas supplier or other entity. Either party may
    27     request that the commission consider the appropriate level of
    28     the fee. In doing so, the commission shall consider fees
    29     charged by other natural gas distribution companies for
    30     similar services. The commission shall either permit the fee
    19990H1331B2112                 - 34 -

     1     to continue as set or shall establish an alternative
     2     mechanism to permit full recovery of unrecovered just and
     3     reasonable costs from the supplier or the supplier's
     4     customers. Nothing in this section shall permit the recovery
     5     of such costs from natural gas supply service customers of
     6     the natural gas distribution company.
     7         (4)  If services are provided by an entity other than the
     8     natural gas distribution company, the entity that provided
     9     those services shall furnish to the natural gas distribution
    10     company billing data sufficient to enable the natural gas
    11     distribution company to timely bill retail gas customers. The
    12     entity shall provide data for billing purposes in a format
    13     and in a time frame as required by the natural gas
    14     distribution company. The natural gas distribution company
    15     shall consider the data and information  confidential and
    16     shall treat it as such.
    17         (5)  No natural gas distribution company shall be
    18     required to forward payment to entities providing services to
    19     customers and on whose behalf the natural gas distribution
    20     company is billing those customers before the natural gas
    21     distribution company has received payment for those services
    22     from customers. The commission shall issue guidelines
    23     addressing the application of partial payments.
    24         (6)  Natural gas distribution companies and natural gas
    25     suppliers shall take reasonable steps to allow retail gas
    26     customers to contribute via their bill to hardship energy
    27     funds which benefit low-income residential retail gas
    28     consumers.
    29     (d)  Enhanced metering.--Subject to commission approval, the
    30  natural gas distribution company may require the installation,
    19990H1331B2112                 - 35 -

     1  at the retail gas customer's expense, of enhanced metering
     2  capability sufficient to match the natural gas delivered by the
     3  retail gas customer's natural gas supplier or suppliers with
     4  consumption by that retail gas customer. In exercising its
     5  discretion, the commission shall consider the effect on low-
     6  income retail gas customers.
     7  § 2206.  Consumer protections and customer service.
     8     (a)  Quality.--A natural gas distribution company shall be
     9  responsible for customer service functions consistent with the
    10  orders and regulations of the commission, including, but not
    11  limited to, meter reading, installation, testing and maintenance
    12  and emergency response for all customers, and complaint
    13  resolution and collections related to the service provided by
    14  the natural gas distribution company. Customer service and
    15  consumer protections and policies for retail gas customers
    16  shall, at a minimum, be maintained  at the same level of quality
    17  under retail competition as in existence on the effective date
    18  of this chapter.
    19     (b)  Change of suppliers.--The commission shall, by order or
    20  regulation, establish procedures to ensure that a natural gas
    21  distribution company does not change a retail gas customer's
    22  natural gas supplier without direct  oral confirmation from the
    23  customer of record or written evidence of the customer's consent
    24  to a change of supplier.
    25     (c)  Customer information.--The commission shall, by order or
    26  regulation, establish requirements that each natural gas
    27  distribution company and natural gas supplier provide adequate,
    28  accurate customer information to enable retail gas customers to
    29  make informed choices regarding the purchase of all natural gas
    30  services offered by that provider. Information shall be provided
    19990H1331B2112                 - 36 -

     1  to retail gas customers in an understandable format that enables
     2  retail gas customers to compare prices and services on a uniform
     3  basis.
     4     (d)  Consumer education.--Prior to the implementation of any
     5  restructuring plan under section 2204 (relating to
     6  implementation), each natural gas distribution company, in
     7  conjunction with the commission and consistent with the
     8  guidelines established by the commission, shall implement a
     9  consumer education program to inform customers of the changes in
    10  the natural gas utility industry. The program shall provide
    11  retail gas customers with information necessary to help them
    12  make appropriate choices as to their natural gas service. The
    13  education program shall be subject to approval by the
    14  commission. The consumer education program shall include goals,
    15  objectives and an action plan that is designed to be objective,
    16  easily understood, utilizes a uniform measurement as established
    17  by the commission for the cost of gas, be available in languages
    18  that the commission requires to meet the needs of a service
    19  territory and be separate and distinct from marketing.
    20     (e)  Consumer education cost recovery.--The consumer
    21  education program shall be subject to approval by the commission
    22  and shall be funded in each natural gas distribution service
    23  territory by a nonbypassable, competitively neutral cost
    24  recovery mechanism that fully recovers the reasonable cost of
    25  such program. To the extent that the industrial customer class
    26  is not currently assigned such costs on the effective date of
    27  this chapter, it shall not be assigned such costs in the future.
    28     (f)  Tenants' rights.--Nothing in this chapter shall be
    29  construed to restrict the rights of tenants pursuant to
    30  Subchapter B of Chapter 15 (relating to discontinuance of
    19990H1331B2112                 - 37 -

     1  service to leased premises).
     2  § 2207.  Obligation to serve.
     3     (a)  Supplier of last resort.--
     4         (1)  After the effective date of this chapter, the
     5     natural gas distribution company shall serve as the supplier
     6     of last resort for residential, small commercial, small
     7     industrial and essential human needs customers and any other
     8     customer classes determined by the commission in the natural
     9     gas distribution company's restructuring proceeding until
    10     such time as the commission, pursuant to this section,
    11     approves an alternative supplier or suppliers to provide such
    12     services to any or all of the natural gas distribution
    13     company's customers.
    14         (2)  For purposes of this section, a supplier of last
    15     resort is a natural gas distribution company or natural gas
    16     supplier which is designated  by the commission to provide
    17     natural gas supply service with respect to one or more of the
    18     following services:
    19             (i)  natural gas supply services to those customers
    20         who have not chosen an alternative natural gas supplier
    21         or who choose to be served by their supplier of last
    22         resort;
    23             (ii)  natural gas supply services to those customers
    24         who are refused supply service from a natural gas
    25         supplier; or
    26             (iii)  natural gas supply services to those customers
    27         whose natural gas supplier has failed to deliver its
    28         requirements.
    29     No customer shall have more than one supplier of last resort
    30     designated for any of the services set forth in this
    19990H1331B2112                 - 38 -

     1     paragraph.
     2     (b)  Consumer protection.--Service by the supplier of last
     3  resort shall be subject to all consumer protection standards,
     4  including those contained in 52 Pa. Code Ch. 56 (relating to
     5  standards and billing practices for residential utility service)
     6  and to all universal service obligations.
     7     (c)  Natural gas distribution company.--The natural gas
     8  distribution company shall deliver natural gas to the extent
     9  that it is provided by all natural gas suppliers, or suppliers
    10  of last resort, as the case may be, in accordance with the
    11  natural gas distribution company's tariff.
    12     (d)  Standards of service.--Consistent with the standards set
    13  forth in section 1501 (relating to character of service and
    14  facilities) and applicable orders of the commission, a supplier
    15  of last resort under subsection (a)(2)(iii) shall provide
    16  sufficient supplies as to quantity, quality, pressure and
    17  location to meet the operational reliability requirements of the
    18  natural gas distribution company's system, including, but not
    19  limited to, a failure of one or more natural gas suppliers to:
    20         (1)  supply natural gas to their retail gas customers in
    21     conformance with their contractual obligations to such
    22     customers; or
    23         (2)  satisfy applicable reliability standards and
    24     obligations.
    25     (e)  Discontinuation of service.--The natural gas
    26  distribution company shall continue providing services as the
    27  supplier of last resort to all of its customers for all of the
    28  natural gas supply services described in subsection (a)(2),
    29  unless, at its discretion, it requests and receives commission
    30  approval to discontinue providing one or more such supplier of
    19990H1331B2112                 - 39 -

     1  last resort obligation. In approving such a petition, the
     2  commission shall also approve another party as the alternative
     3  supplier of last resort for each customer or customer group for
     4  which the natural gas distribution company no longer provides
     5  such natural gas supply services.
     6     (f)  Regulations.--The commission shall promulgate
     7  regulations setting forth the standards for approving an
     8  alternative supplier of last resort consistent with the
     9  provisions of this title, including a mechanism to ensure that
    10  the rates charged by any alternate supplier of last resort are
    11  just and reasonable.
    12     (g)  Organized labor.--During the five-year period following
    13  the effective date of this chapter, approval of an alternative
    14  supplier of last resort pursuant to subsection (e) shall not be
    15  granted unless the entity designated by the commission to
    16  succeed the natural gas distribution company in the provision
    17  of service to these customers agrees to recognize relevant union
    18  and collective bargaining agreements of the natural gas
    19  distribution company then in place.
    20     (h)  Petition to become supplier of last resort.--After the
    21  five-year period following the effective date of this chapter,
    22  any party may petition the commission to become the supplier of
    23  last resort to some or all customers except for those customers
    24  identified in subsection (a)(2)(i).
    25     (i)  Notice required prior to market exit.--
    26         (1)  A natural gas supplier may not exit the market
    27     without providing notice as determined by the commission in
    28     the restructuring proceeding of the natural gas distribution
    29     company to its customers, the supplier of last resort and the
    30     natural gas distribution company.
    19990H1331B2112                 - 40 -

     1         (2)  If firm gas supply contracts with Pennsylvania
     2     natural gas producers or storage or transportation capacity
     3     contracts used by the natural gas supplier to serve such
     4     retail gas customers were either assigned or released to the
     5     natural gas supplier or constitute capacity which was
     6     acquired by the natural gas supplier as the result of
     7     nonrenewal of a storage or transportation capacity contract
     8     previously held by the natural gas distribution company, the
     9     natural gas supplier shall offer the supplier of last resort
    10     or successor natural gas supplier a right of first refusal to
    11     utilize such Pennsylvania supply contracts or storage or
    12     transportation capacity contracts at its contract cost as
    13     long as needed to serve those customers.
    14         (3)  If the storage or transportation capacity contracts
    15     held by the natural gas supplier were acquired in another
    16     manner, and there was not sufficient notice given to the
    17     supplier of last resort and the natural gas distribution
    18     company, or if there is not alternative storage or
    19     transportation capacity available which is operationally
    20     sufficient to serve the market the natural gas supplier was
    21     serving, then the supplier of last resort shall be provided
    22     with a right to use such storage or transportation capacity
    23     as designated by the natural gas supplier, at the contract
    24     cost, until the supplier of last resort is able to acquire
    25     replacement capacity sufficient to serve its customers using
    26     reasonable and diligent efforts to do so.
    27         (4)  If a dispute arises under this subsection, the
    28     aggrieved party may file a complaint with the commission for
    29     resolution within 45 days.
    30     (j)  Duty involving lost customers.--To the extent that a
    19990H1331B2112                 - 41 -

     1  natural gas supplier loses retail gas customers such that its
     2  capacity requirements to a natural gas distribution company are
     3  reduced below the level established by the commission for such
     4  purpose in the natural gas distribution company's restructuring
     5  proceeding, the natural gas supplier shall have the same
     6  obligations set forth in subsection (i).
     7     (k)  Rate after service discontinued.--In the event the
     8  natural gas supplier discontinues service or defaults before its
     9  contract with the customer expires, the retail gas customer
    10  shall be served by the supplier of last resort at the
    11  commission-approved supplier of last resort rate commencing with
    12  the next billing cycle. However, the retail gas customer shall
    13  continue to be charged the rate the customer negotiated with the
    14  discontinuing or defaulting natural gas supplier for the
    15  remainder of the billing cycle. Any difference between the cost
    16  incurred by the supplier of last resort and the amount payable
    17  by the retail gas customer shall be recovered from the natural
    18  gas supplier or from the bond or other security provided by the
    19  natural gas supplier without recourse to any retail gas customer
    20  not otherwise contractually committed for the difference.
    21  § 2208.  Requirements for natural gas suppliers.
    22     (a)  License requirements.--No entity shall engage in the
    23  business of a natural gas supplier unless it holds a license
    24  issued by the commission. To the extent that a natural gas
    25  distribution company provides natural gas supply service outside
    26  of its chartered or certificated territory, it also must hold a
    27  license. A license shall not be required for customers who make
    28  de minimis incidental sales or resales to themselves, an
    29  affiliate or to other nonresidential retail gas customers.
    30     (b)  License application and issuance.--An application for a
    19990H1331B2112                 - 42 -

     1  natural gas supplier license shall be made to the commission in
     2  writing, be verified by oath or affirmation and be in such form
     3  and contain such information as the commission may, by rule or
     4  order, require. A license shall be issued to any applicant,
     5  authorizing the whole or any part of the service covered by the
     6  application, if it is found that the applicant is fit, willing
     7  and able to perform properly the service proposed and to conform
     8  to the applicable provisions of this title and the orders and
     9  regulations of the commission, including those concerning
    10  standards and billing practices, and that the proposed service,
    11  to the extent authorized by the license, will be consistent with
    12  the public interest. Otherwise, such application shall be
    13  denied.
    14     (c)  Financial fitness.--
    15         (1)  In order to ensure the safety and reliability of the
    16     natural gas supply service in this Commonwealth, no natural
    17     gas supplier license shall be issued or remain in force
    18     unless the applicant or holder, as the case may be, complies
    19     with all of the following:
    20             (i)  Furnishes a bond or other security in a form and
    21         amount to ensure the financial responsibility of the
    22         natural gas supplier. The criteria each natural gas
    23         distribution company shall use to determine the amount
    24         and form of such bond or other security shall be set
    25         forth in the natural gas distribution company's
    26         restructuring filing. In approving the criteria,
    27         commission considerations shall include, but not be
    28         limited to, the financial impact on the natural gas
    29         distribution company or an alternative supplier of last
    30         resort of a default or subsequent bankruptcy of a natural
    19990H1331B2112                 - 43 -

     1         gas supplier. The commission shall periodically review
     2         the criteria upon petition by any party. The amount and
     3         form of the bond or other security may be mutually agreed
     4         to between the natural gas distribution company or the
     5         alternate supplier of last resort and the natural gas
     6         supplier or failing that shall be determined by criteria
     7         approved by the commission.
     8             (ii)  Provides the commission with the address of the
     9         participant's principal office in this Commonwealth or
    10         the address of the participant's registered agent in this
    11         Commonwealth, the latter being the address at which the
    12         participant may be served process.
    13         (2)  Failure of a natural gas supplier to comply with any
    14     provision of this chapter or the rules, regulations, orders
    15     or directives of the Department of Revenue or of the
    16     commission, including, but not limited to, engaging in
    17     anticompetitive behavior, shall be cause for the commission
    18     to revoke the license of the natural gas supplier.
    19     (d)  Transferability of licenses.--No license issued under
    20  this chapter may be transferred without prior commission
    21  approval.
    22     (e)  Form of regulation of natural gas suppliers.--Except
    23  where a natural gas supplier serves as a supplier of last
    24  resort, the commission may forbear from extending its regulation
    25  of natural gas suppliers beyond licensing, bonding, reliability
    26  and consumer services and protections, including all applicable
    27  portions of 52 Pa. Code Ch. 56 (relating to standards and
    28  billing practices for residential utility service). Subject to
    29  the provisions of section 2207 (relating to obligation to
    30  serve), nothing in this section shall preclude a natural gas
    19990H1331B2112                 - 44 -

     1  supplier, upon appropriate and reasonable notice to the retail
     2  gas customer, supplier of last resort, and the natural gas
     3  distribution company, from canceling its contract with any
     4  customer for legal cause, subject to the customer's right to
     5  have continued service from the supplier of last resort.
     6     (f)  Availability of the service of natural gas suppliers.--
     7  Prior to licensing any natural gas supplier, the commission
     8  shall set forth standards to ensure that all customer classes
     9  may choose to purchase natural gas from a natural gas supplier.
    10  The commission shall also ensure that natural gas suppliers
    11  comply with applicable provisions of 52 Pa. Code Ch. 56.
    12     (g)  Open and nondiscriminatory access.--In addition to
    13  meeting the license requirements applicable to applicants under
    14  subsection (b), a municipal corporation shall, before it is
    15  permitted to provide natural gas supply services as a natural
    16  gas supplier, demonstrate, and the commission shall determine,
    17  that by the date of the issuance of the license, it will provide
    18  other natural gas suppliers open and nondiscriminatory access to
    19  its gas distribution system under standards that are comparable
    20  to this title, taking into consideration the particular
    21  circumstances of the municipal corporation's ownership and/or
    22  operation of the gas distribution system.
    23  § 2209.  Market power remediation.
    24     (a)  Interim standards of conduct.--Within 120 days of the
    25  effective date of this chapter, the commission shall provide by
    26  order binding, interim guidelines for standards of conduct
    27  governing the activities of and relationships between natural
    28  gas distribution companies and their affiliated natural gas
    29  suppliers and other natural gas suppliers and monitor and
    30  enforce compliance with those standards.
    19990H1331B2112                 - 45 -

     1     (b)  Permanent standards of conduct.--The commission shall
     2  thereupon promulgate regulations setting forth permanent
     3  standards of conduct governing the activities of and
     4  relationships between natural gas distribution companies and
     5  their affiliated natural gas suppliers and other natural gas
     6  suppliers and monitor and enforce compliance with these
     7  standards. The commission shall neither favor nor disfavor
     8  conduct or operations by and between a natural gas distribution
     9  company and an affiliated natural gas supplier or a
    10  nonaffiliated natural gas supplier.
    11     (c)  Contents of standards.--Standards of conduct shall
    12  provide for:
    13         (1)  No discrimination against or preferential treatment
    14     of any natural gas supplier, including an affiliated natural
    15     gas supplier.
    16         (2)  No disclosure or preferential sharing of any
    17     confidential information to or with any individual natural
    18     gas supplier.
    19         (3)  Adequate rules prohibiting cross-subsidization of an
    20     affiliated natural gas supplier by a natural gas distribution
    21     company.
    22         (4)  Maintenance of separate books and records by the
    23     natural gas distribution company and its affiliated natural
    24     gas supplier.
    25         (5)  Sufficient physical and operational separation, but
    26     not including legal divestiture, to accomplish paragraphs
    27     (1), (2), (3) and (4).
    28         (6)  An informal dispute resolution procedure.
    29         (7)  A system of penalties for noncompliance with the
    30     final set of standards of conduct consistent with existing
    19990H1331B2112                 - 46 -

     1     commission regulations.
     2     (d)  Limitation.--The standards shall not prohibit the
     3  natural gas distribution company and its affiliated natural gas
     4  supplier from using or sharing similar corporate names,
     5  trademarks, trade dress or service marks.
     6     (e)  Initiation of investigations.--Upon complaint or upon
     7  its own motion, for good cause shown, the commission shall
     8  conduct an investigation of the impact on the proper functioning
     9  of a fully competitive retail natural gas market, of mergers,
    10  consolidations, acquisition or disposition of assets or
    11  securities of natural gas suppliers and anticompetitive or
    12  discriminatory conduct affecting the retail distribution of
    13  natural gas.
    14     (f)  Conduct of investigations.--
    15         (1)  The commission may require a natural gas supplier to
    16     provide information, including documents and testimony, in
    17     accordance with the commission's regulations regarding the
    18     discovery of information.
    19         (2)  Material which the commission determines to be
    20     confidential, proprietary or trade secret information
    21     provided under this subsection shall not be disclosed to any
    22     person not directly employed or retained by the commission to
    23     conduct the investigation without the consent of the party
    24     providing the information.
    25         (3)  Notwithstanding the prohibition on disclosure of
    26     information in paragraph (2), the commission shall disclose
    27     information obtained under this subsection to the Office of
    28     Consumer Advocate and the Office of Small Business Advocate
    29     under an appropriate confidentiality agreement. The
    30     commission may disclose the information to appropriate
    19990H1331B2112                 - 47 -

     1     Federal or State law enforcement officials if it determines
     2     that the disclosure of the information is necessary to
     3     prevent or restrain a violation of Federal or State law and
     4     it provides the party that provided the information with
     5     reasonable notice and opportunity to prevent or limit
     6     disclosure.
     7     (g)  Referrals and investigation.--If, as a result of the
     8  investigation conducted under this section, the commission has
     9  reason to believe that anticompetitive or discriminatory
    10  conduct, including the unlawful exercise of market power, is
    11  preventing the retail gas customers from obtaining the benefits
    12  of a properly functioning and effectively competitive retail
    13  natural gas market, the commission, pursuant to its regulations,
    14  shall:
    15         (1)  Refer its findings to the Attorney General, the
    16     United States Department of Justice, the Securities and
    17     Exchange Commission or the Federal Energy Regulatory
    18     Commission.
    19         (2)  Subject to subsection (c)(3), disclose any
    20     information it has obtained in the course of its
    21     investigation to the agency or agencies to which it had made
    22     a referral under paragraph (1).
    23         (3)  Intervene, as provided and permitted by law or
    24     regulation, in any proceedings initiated as a result of a
    25     referral made under paragraph (1).
    26     (h)  Marketing standards.--As part of each natural gas
    27  distribution company's restructuring proceeding, the commission
    28  may, in its discretion, develop and apply different standards of
    29  conduct to the natural gas distribution company's marketing
    30  activities related to natural gas supply services. No such
    19990H1331B2112                 - 48 -

     1  standards shall apply to the natural gas distribution company's
     2  marketing division or operations until the commission issues an
     3  order in the context of that natural gas distribution company's
     4  restructuring proceeding.
     5     (i)  Definition.--Subject to the conditions set forth in
     6  subsection (h), for the purposes of this section, the term
     7  "affiliated natural gas supplier" includes marketing activities
     8  related to natural gas supply services by the marketing division
     9  or the marketing operation of a natural gas distribution
    10  company.
    11  § 2210.  Approval of proposed mergers, consolidations,
    12             acquisitions or dispositions.
    13     (a)  General rule.--In the exercise of authority the
    14  commission otherwise may have to approve mergers or
    15  consolidations involving natural gas distribution companies or
    16  natural gas suppliers or the acquisition or disposition of
    17  assets or securities of natural gas distribution companies or
    18  natural gas suppliers, the commission shall consider:
    19         (1)  Whether the proposed merger, consolidation,
    20     acquisition or disposition is likely to result in
    21     anticompetitive or discriminatory conduct, including the
    22     unlawful exercise of market power, which will prevent retail
    23     gas customers from obtaining the benefits of a properly
    24     functioning and effectively competitive retail natural gas
    25     market.
    26         (2)  The effect of the proposed merger, consolidation,
    27     acquisition or disposition on the employees of the natural
    28     gas distribution company and on any authorized collective
    29     bargaining agent representing those employees.
    30     (b)  Procedure.--Upon request for any approval identified in
    19990H1331B2112                 - 49 -

     1  subsection (a), the commission shall provide notice and an
     2  opportunity for open, public evidentiary hearings. If the
     3  commission finds, after hearing, that a proposed merger,
     4  consolidation, 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 gas
     7  customers from obtaining benefits of a properly functioning and
     8  effectively competitive retail natural gas market, the
     9  commission shall not approve such proposed merger,
    10  consolidation, acquisition or disposition, except upon such
    11  terms and conditions as it finds necessary to preserve the
    12  benefits of a properly functioning and effectively competitive
    13  retail natural gas market.
    14     (c)  Preservation of rights.--Nothing in this section shall
    15  restrict the right of any party to pursue any other remedy
    16  available to it.
    17  § 2211.  Rate caps.
    18     (a)  General rule.--Except as provided under subsections (d),
    19  (e), (f) and (g), for a period from the effective date of this
    20  chapter until January 1, 2001, the total non-gas cost charges of
    21  a natural gas distribution company for service to any retail gas
    22  customer shall not exceed the maximum non-gas cost charges that
    23  are contained in the natural gas distribution company's tariff
    24  as of the effective date of this chapter.
    25     (b)  Recovery of deferred costs.--
    26         (1)  In a restructuring proceeding, the natural gas
    27     distribution company may identify categories of costs
    28     resulting from this chapter.
    29         (2)  The natural gas distribution company may seek
    30     permission in its restructuring proceeding to capitalize and
    19990H1331B2112                 - 50 -

     1     to amortize such costs over an appropriate period to be
     2     determined by the commission. The amortization shall commence
     3     at the time when restructuring orders are issued. The natural
     4     gas distribution company may seek recovery of the unamortized
     5     balance of such costs in a future rate proceeding and the
     6     commission shall allow recovery of such costs provided that
     7     the commission determines that such costs are reasonable and
     8     that the resulting rates are just and reasonable.
     9     (c)  Deferral of costs.--Costs recoverable under sections
    10  2203(6) (relating to standards for restructuring of natural gas
    11  utility industry) and 2206(e) (relating to consumer protections
    12  and customer service), in excess of amounts already reflected in
    13  a natural gas distribution company's rates, which are incurred
    14  between the date of entry of the commission's restructuring
    15  order and the earlier of the date on which the commission
    16  authorizes commencement of recovery or June 30, 2002, may be
    17  deferred for recovery in the future. Such deferrals shall be
    18  without interest.
    19     (d)  Circumstances for exceptions.--A natural gas
    20  distribution company may seek, and the commission may approve,
    21  an exception to the limitations set forth in this section under
    22  any of the following circumstances:
    23         (1)  The natural gas distribution company meets the
    24     requirements for extraordinary relief under section 1308(e)
    25     (relating to voluntary changes in rates).
    26         (2)  The natural gas distribution company demonstrates
    27     that a rate increase is necessary in order to preserve the
    28     reliability of the natural gas distribution system.
    29         (3)  The natural gas distribution company is subject to
    30     significant increases in the rate of Federal taxes or other
    19990H1331B2112                 - 51 -

     1     significant increases in costs resulting from changes in law
     2     or regulations that would not allow the natural gas
     3     distribution company to earn a fair rate of return.
     4     (e)  Interclass and intraclass cost shifts.--For the period
     5  from the effective date of this chapter until January 1, 2001,
     6  interclass or intraclass cost shifts are prohibited. This
     7  prohibition against cost shifting may be accomplished by
     8  maintaining the cost allocation methodology accepted by the
     9  commission for each natural gas distribution company in the
    10  company's most recent base rate proceeding.
    11     (f)  State tax adjustment surcharge.--The natural gas
    12  distribution company shall remain subject to the State tax
    13  adjustment surcharge and shall be permitted to adjust its State
    14  tax adjustment surcharge mechanism to reflect State tax changes
    15  or additions. The natural gas distribution company shall also
    16  remain subject to existing riders or surcharges for the
    17  collection of non-gas transition costs pursuant to Federal
    18  Energy Regulatory Commission decisions.
    19     (g)  Provisions relating to interstate pipelines.--
    20         (1)  Notwithstanding any other provisions of this
    21     chapter, if a natural gas distribution company's current base
    22     rate revenues reflect the margins realized through the
    23     utilization of firm interstate pipeline transportation and
    24     storage capacity to serve the interruptible market when such
    25     capacity is not needed to make firm retail deliveries, then
    26     the natural gas distribution company shall be permitted to
    27     increase base rates and, at the same time, reduce purchased
    28     gas cost rates, as described in this chapter.
    29         (2)  The utility may propose such a change in treatment,
    30     consistent with the following requirements:
    19990H1331B2112                 - 52 -

     1             (i)  Base rates of customers who pay purchased gas
     2         cost rates pursuant to section 1307(f) (relating to
     3         sliding scale of rates; adjustments) shall be increased
     4         by an amount equal to the margin received for service
     5         provided to existing interruptible sales and
     6         transportation service customers using capacity reflected
     7         in rates established under section 1307(f) based upon the
     8         revenue for such services for the most recent 12-month
     9         period immediately preceding the application.
    10             (ii)  Purchased gas cost rates established pursuant
    11         to section 1307(f) shall be decreased by an amount equal
    12         to the amount by which base rates are increased in
    13         subparagraph (i).
    14             (iii)  Purchased gas cost rates established pursuant
    15         to section 1307(f)shall thereafter be reconciled to
    16         reflect the margins realized from interruptible sales and
    17         interruptible transportation customers utilizing capacity
    18         reflected in rates established under section 1307(f).
    19     (h)  Interstate pipeline transportation.--
    20         (1)  Except as specifically set forth in this subsection,
    21     nothing in this section or section 2204(d) (relating to
    22     implementation) shall prevent a natural gas distribution
    23     company from recovering costs paid under the terms of
    24     interstate pipeline transportation and storage capacity
    25     contracts which are not fully recovered through a release,
    26     assignment or transfer of such capacity to another natural
    27     gas supplier if such unrecovered costs arise under the terms
    28     of a natural gas transportation pilot program approved by the
    29     commission for such company on or before February 1, 1999.
    30         (2)  Such unrecovered interstate pipeline transportation
    19990H1331B2112                 - 53 -

     1     and capacity costs incurred under such programs through
     2     October 31, 2004, may be recovered from a class or classes of
     3     customers in accordance with such program provided that the
     4     total volumetric charge for such costs does not exceed one
     5     percent of the volumetric charge for residential natural gas
     6     sales service set forth in the natural gas distribution
     7     company's tariff in effect at the time.
     8         (3)  With respect to such pilot programs, the commission
     9     may determine to extend such programs to include all
    10     customers of that company pursuant to the requirements of
    11     this chapter, and nothing in this section or section 2204(d)
    12     shall prevent unrecovered interstate pipeline and
    13     transportation capacity costs incurred through October 31,
    14     2004, under such programs from being recovered in accordance
    15     with such programs provided that the total volumetric charge
    16     for such costs does not exceed the one percent limit
    17     specified in paragraph (2) for pilot programs.
    18     Section 4.  The provisions of this act are severable. If any
    19  provision of this act or its application to any person or
    20  circumstance is held invalid, the invalidity shall not affect
    21  other provisions or applications of this act which can be given
    22  effect without the invalid provision or application.
    23     Section 5.  This act constitutes the legislation referred to
    24  in section 33(3) of the act of May 12, 1999 (P.L.  , No.4),
    25  entitled "An act amending the act of March 4, 1971 (P.L.6,
    26  No.2), entitled 'An act relating to tax reform and State
    27  taxation by codifying and enumerating certain subjects of
    28  taxation and imposing taxes thereon; providing procedures for
    29  the payment, collection, administration and enforcement thereof;
    30  providing for tax credits in certain cases; conferring powers
    19990H1331B2112                 - 54 -

     1  and imposing duties upon the Department of Revenue, certain
     2  employers, fiduciaries, individuals, persons, corporations and
     3  other entities; prescribing crimes, offenses and penalties,'
     4  revising and adopting sales and use tax provisions on processing
     5  exclusions, credit sales and bad debt sales; revising personal
     6  income tax provisions on small corporations; expanding
     7  eligibility for special poverty provisions; revising estimated
     8  tax declarations; eliminating Lottery Fund transfers; revising
     9  corporate net income tax provisions on nonprofit organizations,
    10  net loss deductions and apportionment of business income;
    11  revising capital stock franchise tax provisions to reduce the
    12  rate of taxation, reduce the minimum tax, and further provide
    13  for capital stock franchise tax exemptions, exclusions and
    14  proceeds; eliminating the utilities gross receipts tax on
    15  natural gas; making omnibus amendments to the public utility
    16  realty tax; providing for a tax credit for coal waste removal
    17  and ultraclean fuels; further providing for malt beverage tax
    18  credits; further providing for the rate of taxation for the
    19  Public Transportation Assistance Fund; further providing for
    20  estimated tax, for payment of harness and thoroughbred racing
    21  taxes and for corporate tax treatment of automobile clubs; and
    22  making a repeal." The Secretary of Revenue shall publish notice
    23  of the enactment of this act in the Pennsylvania Bulletin.
    24     Section 6.  This act shall take effect as follows:
    25         (1)  The addition of 66 Pa.C.S. §§ 2004(b) and 2203(15)
    26     shall take effect May 1, 1999.
    27         (2)  This section shall take effect immediately.
    28         (3)  The remainder of this act shall take effect July 1,
    29     1999, or immediately, whichever occurs later.
    30     SECTION 1.  SECTION 102 OF TITLE 66 OF THE PENNSYLVANIA        <--
    19990H1331B2112                 - 55 -

     1  CONSOLIDATED STATUTES IS AMENDED BY ADDING A DEFINITION TO READ:
     2  § 102.  DEFINITIONS.
     3     SUBJECT TO ADDITIONAL DEFINITIONS CONTAINED IN SUBSEQUENT
     4  PROVISIONS OF THIS PART WHICH ARE APPLICABLE TO SPECIFIC
     5  PROVISIONS OF THIS PART, THE FOLLOWING WORDS AND PHRASES WHEN
     6  USED IN THIS PART SHALL HAVE, UNLESS THE CONTEXT CLEARLY
     7  INDICATES OTHERWISE, THE MEANINGS GIVEN TO THEM IN THIS SECTION:
     8     "CITY NATURAL GAS DISTRIBUTION OPERATION."  A COLLECTION OF
     9  REAL AND PERSONAL ASSETS USED FOR DISTRIBUTING NATURAL GAS TO
    10  RETAIL GAS CUSTOMERS OWNED BY A CITY OR A MUNICIPAL AUTHORITY,
    11  NONPROFIT CORPORATION OR PUBLIC CORPORATION FORMED PURSUANT TO
    12  SECTION 2212(M) (RELATING TO CITY NATURAL GAS DISTRIBUTION
    13  OPERATIONS).
    14     * * *
    15     SECTION 2.  SECTIONS 1307(F) AND (G), 1317 AND 1318 OF TITLE
    16  66 ARE AMENDED TO READ:
    17  § 1307.  SLIDING SCALE OF RATES; ADJUSTMENTS.
    18     * * *
    19     (F)  RECOVERY OF NATURAL GAS COSTS.--
    20         (1)  NATURAL GAS [DISTRIBUTORS] DISTRIBUTION COMPANIES,
    21     AS DEFINED IN SECTION 2202 (RELATING TO DEFINITIONS), WITH
    22     GROSS INTRASTATE ANNUAL OPERATING REVENUES IN EXCESS OF
    23     $40,000,000 MAY FILE TARIFFS REFLECTING ACTUAL AND PROJECTED
    24     INCREASES OR DECREASES IN THEIR NATURAL GAS COSTS AND THE
    25     TARIFFS SHALL HAVE AN EFFECTIVE DATE SIX MONTHS FROM THE DATE
    26     OF FILING. THE COMMISSION SHALL PROMULGATE REGULATIONS
    27     ESTABLISHING THE TIME AND MANNER OF SUCH FILING, BUT, EXCEPT
    28     FOR ADJUSTMENTS PURSUANT TO A TARIFF MECHANISM AUTHORIZED IN
    29     THIS TITLE, NO SUCH NATURAL GAS [UTILITY] DISTRIBUTION
    30     COMPANY SHALL VOLUNTARILY FILE MORE THAN ONE SUCH TARIFF IN A
    19990H1331B2112                 - 56 -

     1     12-MONTH PERIOD: PROVIDED, THAT [NOTHING]:
     2             (I)  NOTHING CONTAINED HEREIN SHALL PROHIBIT ANY
     3         PARTY FROM ADVISING THE COMMISSION THAT THERE HAS BEEN OR
     4         THERE IS ANTICIPATED TO BE A SIGNIFICANT DIFFERENCE
     5         BETWEEN THE NATURAL GAS COSTS TO THE [UTILITY] NATURAL
     6         GAS DISTRIBUTION COMPANY AND THE COSTS REFLECTED IN THE
     7         THEN EFFECTIVE TARIFF OR THE COMMISSION FROM ACTING UPON
     8         SUCH ADVICE.
     9             (II)  A NATURAL GAS DISTRIBUTION COMPANY MAY ALSO
    10         FILE A TARIFF TO ESTABLISH A MECHANISM BY WHICH SUCH
    11         NATURAL GAS DISTRIBUTION COMPANY MAY FURTHER ADJUST ITS
    12         RATES FOR NATURAL GAS SALES ON A REGULAR, BUT NO MORE
    13         FREQUENT THAN MONTHLY, BASIS TO REFLECT ACTUAL OR
    14         PROJECTED CHANGES IN NATURAL GAS COSTS REFLECTED IN RATES
    15         ESTABLISHED PURSUANT TO PARAGRAPH (2), SUBJECT TO ANNUAL
    16         RECONCILIATION UNDER PARAGRAPH (5). IN THE EVENT THAT THE
    17         NATURAL GAS DISTRIBUTION COMPANY ADJUSTS RATES MORE
    18         FREQUENTLY THAN QUARTERLY, IT SHALL ALSO OFFER RETAIL GAS
    19         CUSTOMERS A FIXED RATE OPTION WHICH RECOVERS NATURAL GAS
    20         COSTS OVER A 12-MONTH PERIOD, SUBJECT TO ANNUAL
    21         RECONCILIATION UNDER PARAGRAPH (5). THE COMMISSION SHALL,
    22         WITHIN 60 DAYS OF THE EFFECTIVE DATE OF THIS
    23         SUBPARAGRAPH, PROMULGATE RULES OR REGULATIONS GOVERNING
    24         SUCH ADJUSTMENTS AND FIXED RATE OPTION, BUT THE
    25         COMMISSION SHALL NOT PROHIBIT SUCH ADJUSTMENTS OR FIXED
    26         RATE OPTION.
    27         (2)  THE COMMISSION SHALL CONDUCT AN INVESTIGATION AND
    28     HOLD A HEARING OR HEARINGS, WITH NOTICE, TO [INVESTIGATE]
    29     REVIEW THE TARIFFS AND CONSIDER THE PLANS FILED PURSUANT TO
    30     SECTION 1317 (RELATING TO REGULATIONS OF NATURAL GAS COSTS).
    19990H1331B2112                 - 57 -

     1     WHERE THERE HAS BEEN AN INDICATION OF CONSUMER INTEREST, THE
     2     HEARING SHALL BE HELD IN THE SERVICE TERRITORY OF THE NATURAL
     3     GAS [DISTRIBUTOR] DISTRIBUTION COMPANY. PRIOR TO THE
     4     EFFECTIVE DATE OF THE FILING, THE COMMISSION SHALL ISSUE AN
     5     ORDER ESTABLISHING THE RATE TO BE CHARGED TO REFLECT SUCH
     6     [INCREASES OR DECREASES] CHANGES IN NATURAL GAS COSTS. [RATES
     7     ESTABLISHED UNDER THIS SUBSECTION DO NOT CONSTITUTE EITHER A
     8     SLIDING SCALE OF RATES OR AN AUTOMATIC ADJUSTMENT SUBJECT TO
     9     THE PROHIBITIONS IN SUBSECTIONS (A) AND (B).] THE COMMISSION
    10     SHALL ANNUALLY REVIEW AND APPROVE PLANS FOR PURPOSES OF
    11     RELIABILITY AND SUPPLY. SUCH RATES, HOWEVER, ARE SUBJECT TO
    12     THE [KINDS] TYPES OF AUDITS, REPORTS AND PROCEEDINGS REQUIRED
    13     BY SUBSECTION (D).
    14         (3)  WITHIN 60 DAYS FOLLOWING THE END OF SUCH 12-MONTH
    15     PERIOD AS THE COMMISSION SHALL DESIGNATE, EACH [PUBLIC
    16     UTILITY] NATURAL GAS DISTRIBUTION COMPANY SUBJECT TO THIS
    17     SUBSECTION SHALL FILE WITH THE COMMISSION A STATEMENT WHICH
    18     SPECIFIES FOR SUCH PERIOD:
    19             (I)  THE TOTAL REVENUES RECEIVED PURSUANT TO THIS
    20         SECTION.
    21             (II)  THE TOTAL [GAS EXPENSE] NATURAL GAS COSTS
    22     INCURRED.
    23             (III)  THE DIFFERENCE BETWEEN THE AMOUNTS SPECIFIED
    24         BY SUBPARAGRAPHS (I) AND (II).
    25             (IV)  [EVIDENCE EXPLAINING HOW ACTUAL] HOW ACTUAL
    26         NATURAL GAS COSTS INCURRED DIFFER FROM THE NATURAL GAS
    27         COSTS ALLOWED UNDER PARAGRAPH (2) AND WHY SUCH
    28         DIFFERENCES OCCURRED.
    29             (V)  HOW THESE NATURAL GAS COSTS ARE CONSISTENT WITH
    30         A LEAST COST PROCUREMENT POLICY AS REQUIRED BY SECTION
    19990H1331B2112                 - 58 -

     1         1318 (RELATING TO DETERMINATION OF JUST AND REASONABLE
     2         [NATURAL] GAS COST RATES).
     3     SUCH REPORT SHALL BE A MATTER OF PUBLIC RECORD AND COPIES
     4     THEREOF SHALL BE MADE AVAILABLE BY THE [GAS DISTRIBUTOR]
     5     NATURAL GAS DISTRIBUTION COMPANY TO ANY PERSON UPON REQUEST.
     6     COPIES OF THE REPORTS SHALL BE FILED WITH THE OFFICE OF
     7     CONSUMER ADVOCATE AND THE OFFICE OF SMALL BUSINESS ADVOCATE
     8     AT THE SAME TIME AS THEY ARE FILED WITH THE COMMISSION.
     9         (4)  THE COMMISSION SHALL HOLD A PUBLIC HEARING ON THE
    10     SUBSTANCE OF SUCH STATEMENT SUBMITTED BY A [UTILITY] NATURAL
    11     GAS DISTRIBUTION COMPANY AS REQUIRED IN PARAGRAPH (3) AND ON
    12     ANY RELATED MATTERS.
    13         (5)  THE COMMISSION, AFTER HEARING, SHALL DETERMINE THE
    14     PORTION OF THE [COMPANIES] COMPANY'S NATURAL GAS DISTRIBUTION
    15     ACTUAL NATURAL GAS COSTS IN THE PREVIOUS 12-MONTH PERIOD
    16     WHICH MEET THE STANDARDS SET OUT IN SECTION 1318. THE
    17     COMMISSION SHALL, BY ORDER, DIRECT EACH [GAS UTILITY] NATURAL
    18     GAS DISTRIBUTION COMPANY SUBJECT TO THIS SUBSECTION TO REFUND
    19     TO ITS [PATRONS ANY] CUSTOMERS GAS REVENUES COLLECTED
    20     PURSUANT TO PARAGRAPH (2) WHICH EXCEED THE AMOUNT OF ACTUAL
    21     [GAS EXPENSES] NATURAL GAS COSTS INCURRED CONSISTENT WITH THE
    22     STANDARDS IN SECTION 1318 AND TO RECOVER FROM ITS [PATRONS]
    23     CUSTOMERS ANY AMOUNT BY WHICH THE ACTUAL [GAS EXPENSES,]
    24     NATURAL GAS COSTS, WHICH HAVE BEEN INCURRED CONSISTENT WITH
    25     THE STANDARDS IN SECTION 1318, EXCEED THE REVENUES COLLECTED
    26     PURSUANT TO PARAGRAPH (2). ABSENT GOOD REASON TO THE
    27     CONTRARY, THE COMMISSION SHALL ISSUE ITS ORDER WITHIN SIX
    28     MONTHS FOLLOWING THE FILING OF THE STATEMENT DESCRIBED IN
    29     PARAGRAPH (3). REFUNDS TO [PATRONS] CUSTOMERS SHALL BE MADE
    30     WITH INTEREST, [WHICH SHALL BE THE AVERAGE RATE OF INTEREST
    19990H1331B2112                 - 59 -

     1     SPECIFIED FOR RESIDENTIAL MORTGAGE LENDING BY THE SECRETARY
     2     OF BANKING IN ACCORDANCE WITH THE ACT OF JANUARY 30, 1974
     3     (P.L.13, NO.6), REFERRED TO AS THE LOAN INTEREST AND
     4     PROTECTION LAW,] AT THE LEGAL RATE OF INTEREST PLUS TWO
     5     PERCENT, DURING THE PERIOD OR PERIODS FOR WHICH THE
     6     COMMISSION ORDERS REFUNDS[:], AND RECOVERIES FROM CUSTOMERS
     7     SHALL INCLUDE INTEREST AT THE LEGAL RATE OF INTEREST:
     8     PROVIDED, THAT NOTHING CONTAINED HEREIN SHALL LIMIT THE
     9     APPLICABILITY OF ANY DEFENSES, PRINCIPLES OR DOCTRINES WHICH
    10     WOULD PROHIBIT THE COMMISSION'S  INQUIRY INTO ANY MATTERS
    11     THAT WERE DECIDED FINALLY IN THE COMMISSION'S   ORDER ISSUED
    12     UNDER PARAGRAPH (2).
    13         (6)  THE COMMISSION SHALL REQUIRE THAT CUSTOMERS
    14     TRANSFERRING FROM SALES TO TRANSPORTATION SERVICE BE SUBJECT
    15     TO THE OVER OR UNDER COLLECTION ADJUSTMENT PROVIDED FOR IN
    16     PARAGRAPH (5) AND SHALL REQUIRE FURTHER THAT CUSTOMERS
    17     TRANSFERRING FROM TRANSPORTATION SERVICE TO SALES SERVICE NOT
    18     BE SUBJECT TO THE OVER OR UNDER COLLECTION ADJUSTMENT FOR AN
    19     APPROPRIATE PERIOD FOLLOWING EITHER SUCH TRANSFER.
    20     (G)  DEFINITION.--AS USED IN THIS SECTION, [THE TERM "NATURAL
    21  GAS" INCLUDES NATURAL GAS, LIQUEFIED NATURAL GAS, SYNTHETIC
    22  NATURAL GAS AND ANY NATURAL GAS SUBSTITUTES.] THE TERMS "NATURAL
    23  GAS COSTS" AND "GAS COSTS" INCLUDE THE DIRECT COSTS PAID BY A
    24  NATURAL GAS DISTRIBUTION COMPANY FOR THE PURCHASE AND THE
    25  DELIVERY OF NATURAL GAS TO ITS SYSTEM IN ORDER TO SUPPLY ITS
    26  CUSTOMERS. SUCH COSTS MAY INCLUDE COSTS PAID UNDER AGREEMENTS TO
    27  PURCHASE NATURAL GAS FROM SELLERS; COSTS PAID FOR TRANSPORTING
    28  NATURAL GAS TO ITS SYSTEM; COSTS PAID FOR NATURAL GAS STORAGE
    29  SERVICE FROM OTHERS, INCLUDING THE COSTS OF INJECTING AND
    30  WITHDRAWING NATURAL GAS FROM STORAGE; ALL CHARGES, FEES, TAXES
    19990H1331B2112                 - 60 -

     1  AND RATES PAID IN CONNECTION WITH SUCH PURCHASES, PIPELINE
     2  GATHERING, STORAGE AND TRANSPORTATION; AND COSTS PAID FOR
     3  EMPLOYING FUTURES, OPTIONS AND OTHER RISK MANAGEMENT TOOLS.
     4  "NATURAL GAS" AND "GAS" INCLUDE NATURAL GAS, LIQUIFIED NATURAL
     5  GAS, SYNTHETIC NATURAL GAS AND ANY NATURAL GAS SUBSTITUTES.
     6  § 1317.  REGULATION OF NATURAL GAS COSTS.
     7     (A)  GENERAL RULE.--IN EVERY RATE PROCEEDING INSTITUTED BY A
     8  NATURAL GAS DISTRIBUTION UTILITY, PURSUANT TO SECTION 1307(F)
     9  (RELATING TO SLIDING SCALE OF RATES; ADJUSTMENTS), EACH SUCH
    10  UTILITY SHALL BE REQUIRED TO [PROVIDE] SUPPLY TO THE COMMISSION
    11  SUCH INFORMATION, TO BE ESTABLISHED BY COMMISSION REGULATION
    12  WITHIN 120 DAYS OF THE PASSAGE OF THIS SECTION, THAT WILL PERMIT
    13  THE COMMISSION TO MAKE SPECIFIC FINDINGS AS TO WHETHER THE
    14  UTILITY IS PURSUING A LEAST COST FUEL PROCUREMENT POLICY,
    15  CONSISTENT WITH THE UTILITY'S OBLIGATION TO PROVIDE SAFE,
    16  ADEQUATE AND RELIABLE SERVICE TO ITS CUSTOMERS. SUCH INFORMATION
    17  SHALL INCLUDE, BUT NEED NOT BE LIMITED TO, INFORMATION, DATA AND
    18  STATEMENTS REGARDING:
    19         (1)  THE UTILITY'S PARTICIPATION IN RATE PROCEEDINGS
    20     BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION WHICH AFFECT
    21     THE UTILITY'S GAS COSTS.
    22         (2)  THE UTILITY'S EFFORTS TO NEGOTIATE FAVORABLE
    23     CONTRACTS WITH GAS SUPPLIERS AND TO RENEGOTIATE EXISTING
    24     CONTRACTS WITH GAS SUPPLIERS OR TAKE LEGAL ACTIONS NECESSARY
    25     TO RELIEVE THE UTILITY FROM EXISTING CONTRACT TERMS WHICH ARE
    26     OR MAY BE ADVERSE TO THE INTERESTS OF THE UTILITY'S
    27     RATEPAYERS.
    28         (3)  THE UTILITY'S EFFORTS TO SECURE LOWER COST GAS
    29     SUPPLIES BOTH WITHIN AND OUTSIDE OF THE COMMONWEALTH,
    30     INCLUDING THE USE OF TRANSPORTATION ARRANGEMENTS WITH
    19990H1331B2112                 - 61 -

     1     PIPELINES AND OTHER GAS DISTRIBUTION COMPANIES.
     2         (4)  THE SOURCES AND AMOUNTS OF ALL GAS SUPPLIES WHICH
     3     HAVE BEEN WITHHELD OR HAVE BEEN CAUSED TO BE WITHHELD FROM
     4     THE MARKET BY THE UTILITY AND THE REASONS WHY SUCH GAS IS NOT
     5     TO BE UTILIZED.
     6     (B)  INTEGRATED GAS COMPANIES.--IN THE CASE OF A NATURAL GAS
     7  DISTRIBUTION UTILITY WHICH PURCHASES ALL OR PART OF ITS GAS
     8  SUPPLIES FROM AN AFFILIATED INTEREST, AS THAT TERM IS DEFINED IN
     9  SECTION 2101 (RELATING TO DEFINITION OF AFFILIATED INTEREST),
    10  SUCH UTILITY SHALL, IN ADDITION TO THE MATERIALS REQUIRED IN
    11  SUBSECTION (A), BE REQUIRED TO PROVIDE TO THE COMMISSION SUCH
    12  INFORMATION, TO BE ESTABLISHED BY COMMISSION REGULATION WITHIN
    13  120 DAYS OF THE PASSAGE OF THIS SECTION, THAT WILL PERMIT THE
    14  COMMISSION TO MAKE SPECIFIC FINDINGS AS TO WHETHER ANY PURCHASES
    15  OF GAS FROM AN AFFILIATED INTEREST ARE CONSISTENT WITH A LEAST
    16  COST FUEL PROCUREMENT POLICY, CONSISTENT WITH THE UTILITY'S
    17  OBLIGATION TO PROVIDE SAFE, ADEQUATE AND RELIABLE SERVICE TO ITS
    18  CUSTOMERS. SUCH INFORMATION SHALL INCLUDE, BUT NEED NOT BE
    19  LIMITED TO, STATEMENTS REGARDING:
    20         (1)  EFFORTS MADE BY THE UTILITY TO OBTAIN GAS SUPPLIES
    21     FROM NONAFFILIATED INTERESTS.
    22         (2)  THE SPECIFIC REASONS WHY THE UTILITY HAS PURCHASED
    23     GAS SUPPLIES FROM AN AFFILIATED INTEREST AND DEMONSTRATION
    24     THAT SUCH PURCHASES ARE CONSISTENT WITH A LEAST COST FUEL
    25     PROCUREMENT POLICY.
    26         (3)  THE SOURCES AND AMOUNTS OF ALL GAS SUPPLIES WHICH
    27     HAVE BEEN WITHHELD FROM THE MARKET BY THE UTILITY OR ANY
    28     AFFILIATED INTEREST AND THE REASONS WHY SUCH GAS IS NOT BEING
    29     UTILIZED.
    30     (C)  RELIABILITY PLANS.--AS PART OF ITS FILING UNDER SECTION
    19990H1331B2112                 - 62 -

     1  1307(F) OR IF IT IS NOT REQUIRED TO MAKE SUCH A FILING ON AN
     2  ANNUAL BASIS, A NATURAL GAS DISTRIBUTION COMPANY, AS DEFINED IN
     3  SECTION 2202 (RELATING TO DEFINITIONS), SHALL FILE A PROPOSED
     4  RELIABILITY PLAN WITH THE COMMISSION WHICH SHALL, AT A MINIMUM,
     5  IDENTIFY THE FOLLOWING:
     6         (1)  THE PROJECTED PEAK DAY AND SEASONAL REQUIREMENTS OF
     7     THE FIRM CUSTOMERS UTILIZING THE DISTRIBUTION SYSTEM OF THE
     8     NATURAL GAS DISTRIBUTION COMPANY DURING THE 12-MONTH
     9     PROJECTED PERIOD SPECIFIED IN SECTION 1307(F)(1). WHERE
    10     OPERATIONALLY REQUIRED, THE DESIGN PEAK DAY REQUIREMENTS
    11     SHALL BE SPECIFIED FOR DISCRETE SEGMENTS OF EACH NATURAL GAS
    12     DISTRIBUTION SYSTEM.
    13         (2)  THE TRANSPORTATION CAPACITY, STORAGE, PEAKING OR ON
    14     SYSTEM PRODUCTION THAT ENSURES DELIVERABILITY OF THE NATURAL
    15     GAS SUPPLIES NECESSARY TO MEET SUCH PROJECTED PERIOD PEAK DAY
    16     AND SEASONAL REQUIREMENTS.
    17     (D)  SUPPLY PLANS.--AS PART OF ITS FILING UNDER SECTION
    18  1307(F), A NATURAL GAS DISTRIBUTION COMPANY SHALL FILE A
    19  PROPOSED PLAN WITH THE COMMISSION FOR ACQUISITION OR RECEIPT OF
    20  NATURAL GAS SUPPLIES.
    21     [(C)] (E)  DEFINITION.--AS USED IN THIS SECTION, THE [TERM
    22  "NATURAL GAS" INCLUDES NATURAL GAS, LIQUIFIED NATURAL GAS,
    23  SYNTHETIC NATURAL GAS AND ANY NATURAL GAS SUBSTITUTES] TERMS
    24  "NATURAL GAS COSTS," "GAS COSTS," "NATURAL GAS" AND "GAS" SHALL
    25  HAVE THE SAME DEFINITIONS AS PROVIDED IN SECTION 1307(G).
    26  § 1318.  DETERMINATION OF JUST AND REASONABLE [NATURAL] GAS COST
    27             RATES.
    28     (A)  GENERAL RULE.--IN ESTABLISHING JUST AND REASONABLE RATES
    29  FOR THOSE NATURAL GAS DISTRIBUTION [UTILITIES] COMPANIES, AS
    30  DEFINED IN SECTION 2202 (RELATING TO DEFINITIONS), WITH GROSS
    19990H1331B2112                 - 63 -

     1  INTRASTATE OPERATING REVENUES IN EXCESS OF $40,000,000 UNDER
     2  SECTION 1307(F) (RELATING TO SLIDING SCALE OF RATES;
     3  ADJUSTMENTS) OR 1308(D) (RELATING TO VOLUNTARY CHANGES IN RATES)
     4  OR ANY OTHER RATE PROCEEDING, THE COMMISSION SHALL CONSIDER THE
     5  MATERIALS PROVIDED BY THE UTILITIES PURSUANT TO SECTION 1317
     6  (RELATING TO REGULATION OF NATURAL GAS COSTS). NO RATES FOR A
     7  NATURAL GAS DISTRIBUTION UTILITY SHALL BE DEEMED JUST AND
     8  REASONABLE UNLESS THE COMMISSION FINDS THAT THE UTILITY IS
     9  PURSUING A LEAST COST FUEL PROCUREMENT POLICY, CONSISTENT WITH
    10  THE UTILITY'S OBLIGATION TO PROVIDE SAFE, ADEQUATE AND RELIABLE
    11  SERVICE TO ITS CUSTOMERS. IN MAKING SUCH A DETERMINATION, THE
    12  COMMISSION SHALL BE REQUIRED TO MAKE SPECIFIC FINDINGS WHICH
    13  SHALL INCLUDE, BUT NEED NOT BE LIMITED TO, FINDINGS THAT:
    14         (1)  THE UTILITY HAS FULLY AND VIGOROUSLY REPRESENTED THE
    15     INTERESTS OF ITS RATEPAYERS IN PROCEEDINGS BEFORE THE FEDERAL
    16     ENERGY REGULATORY COMMISSION.
    17         (2)  THE UTILITY HAS TAKEN ALL PRUDENT STEPS NECESSARY TO
    18     NEGOTIATE FAVORABLE GAS SUPPLY CONTRACTS AND TO RELIEVE THE
    19     UTILITY FROM TERMS IN EXISTING CONTRACTS WITH ITS GAS
    20     SUPPLIERS WHICH ARE OR MAY BE ADVERSE TO THE INTERESTS OF THE
    21     UTILITY'S RATEPAYERS.
    22         (3)  THE UTILITY HAS TAKEN ALL PRUDENT STEPS NECESSARY TO
    23     OBTAIN LOWER COST GAS SUPPLIES ON BOTH SHORT-TERM AND LONG-
    24     TERM BASES BOTH WITHIN AND OUTSIDE THE COMMONWEALTH,
    25     INCLUDING THE USE OF GAS TRANSPORTATION ARRANGEMENTS WITH
    26     PIPELINES AND OTHER DISTRIBUTION COMPANIES.
    27         (4)  THE UTILITY HAS NOT WITHHELD FROM THE MARKET OR
    28     CAUSED TO BE WITHHELD FROM THE MARKET ANY GAS SUPPLIES WHICH
    29     SHOULD HAVE BEEN UTILIZED AS PART OF A LEAST COST FUEL
    30     PROCUREMENT POLICY.
    19990H1331B2112                 - 64 -

     1     (B)  LIMITATION ON GAS PURCHASED FROM AFFILIATES.--IN ANY
     2  INSTANCE IN WHICH A NATURAL GAS DISTRIBUTION [UTILITY] COMPANY
     3  PURCHASES ALL OR PART OF ITS GAS SUPPLIES FROM AN AFFILIATED
     4  INTEREST, AS THAT TERM IS DEFINED IN SECTION 2101 (RELATING TO
     5  DEFINITION OF AFFILIATED INTEREST), THE COMMISSION, IN ADDITION
     6  TO THE DETERMINATIONS AND FINDINGS SET FORTH IN SUBSECTION (A),
     7  SHALL BE REQUIRED TO MAKE SPECIFIC FINDINGS WITH REGARD TO THE
     8  JUSTNESS AND REASONABLENESS OF ALL SUCH PURCHASES. SUCH FINDINGS
     9  SHALL INCLUDE, BUT NOT BE LIMITED TO FINDINGS:
    10         (1)  THAT THE UTILITY HAS FULLY AND VIGOROUSLY ATTEMPTED
    11     TO OBTAIN LESS COSTLY GAS SUPPLIES ON BOTH SHORT-TERM AND
    12     LONG-TERM BASES FROM NONAFFILIATED INTERESTS.
    13         (2)  THAT EACH CONTRACT FOR THE PURCHASE OF GAS FROM ITS
    14     AFFILIATED INTEREST IS CONSISTENT WITH A LEAST COST FUEL
    15     PROCUREMENT POLICY.
    16         (3)  THAT NEITHER THE UTILITY NOR ITS AFFILIATED INTEREST
    17     HAS WITHHELD FROM THE MARKET ANY GAS SUPPLIES WHICH SHOULD
    18     HAVE BEEN UTILIZED AS PART OF A LEAST COST FUEL PROCUREMENT
    19     POLICY.
    20     (C)  SHUT-IN GAS; SPECIAL RULE.--IN DETERMINING WHETHER A GAS
    21  UTILITY HAS PURCHASED THE LEAST COSTLY NATURAL GAS AVAILABLE,
    22  THE COMMISSION SHALL CONSIDER AS AVAILABLE TO THE UTILITY ANY
    23  GAS SUPPLIES THAT REASONABLY COULD HAVE BEEN BROUGHT TO MARKET
    24  DURING THE RELEVANT PERIOD BUT WHICH WERE VOLUNTARILY WITHHELD
    25  FROM THE MARKET BY THE UTILITY OR AN AFFILIATED INTEREST OF THE
    26  UTILITY.
    27     (D)  OTHER REGULATORY APPROVALS.--THE FACT THAT A CONTRACT OR
    28  RATE HAS BEEN APPROVED BY A FEDERAL REGULATORY AGENCY FOR
    29  INTERSTATE RATEMAKING PURPOSES SHALL NOT, IN AND OF ITSELF, BE
    30  ADEQUATE TO SATISFY THE UTILITY'S BURDEN OF PROOF THAT GAS
    19990H1331B2112                 - 65 -

     1  PRICES AND VOLUMES ASSOCIATED WITH SUCH CONTRACT OR RATE ARE
     2  JUST AND REASONABLE FOR PURPOSES OF THIS SECTION.
     3     (E)  REPORTS.--EACH NATURAL GAS DISTRIBUTION UTILITY WITH
     4  GROSS INTRASTATE ANNUAL OPERATING REVENUES IN EXCESS OF
     5  $40,000,000 SHALL FILE WITH THE COMMISSION [AND], THE OFFICE OF
     6  CONSUMER ADVOCATE AND THE OFFICE OF SMALL BUSINESS ADVOCATE, IN
     7  ACCORDANCE WITH REGULATIONS TO BE PRESCRIBED BY THE COMMISSION,
     8  QUARTERLY REPORTS SETTING FORTH THE ACTUAL GAS COSTS INCURRED BY
     9  THE UTILITY ON A MONTHLY BASIS. ACTUAL GAS COSTS SHALL BE
    10  REVIEWED FOR THEIR ACCURACY BY THE BUREAU OF AUDITS AT LEAST
    11  ANNUALLY AND THE RESULTS OF THAT REVIEW SHALL BE SUBMITTED TO
    12  THE COMMISSION.
    13     (F)  DEFINITION.--AS USED IN THIS SECTION, THE [TERM INCLUDES
    14  NATURAL GAS, LIQUIFIED NATURAL GAS, SYNTHETIC NATURAL GAS AND
    15  ANY NATURAL GAS SUBSTITUTES.] TERMS "NATURAL GAS" "NATURAL GAS
    16  COSTS," "GAS COSTS," AND "GAS" SHALL HAVE THE SAME DEFINITIONS
    17  AS PROVIDED IN SECTION 1307(G).
    18     SECTION 3.  SUBPART D OF PART I OF TITLE 66 IS AMENDED BY
    19  ADDING A CHAPTER TO READ:
    20                             CHAPTER 22
    21                      NATURAL GAS COMPETITION
    22  SEC.
    23  2201.  SHORT TITLE OF CHAPTER.
    24  2202.  DEFINITIONS.
    25  2203.  STANDARDS FOR RESTRUCTURING OF NATURAL GAS UTILITY
    26         INDUSTRY.
    27  2204.  IMPLEMENTATION.
    28  2205.  DUTIES OF NATURAL GAS DISTRIBUTION COMPANIES.
    29  2206.  CONSUMER PROTECTIONS AND CUSTOMER SERVICE.
    30  2207.  OBLIGATION TO SERVE.
    19990H1331B2112                 - 66 -

     1  2208.  REQUIREMENTS FOR NATURAL GAS SUPPLIERS.
     2  2209.  MARKET POWER REMEDIATION.
     3  2210.  APPROVAL OF PROPOSED MERGERS, CONSOLIDATIONS,
     4         ACQUISITIONS OR DISPOSITIONS.
     5  2211.  RATE CAPS.
     6  2212.  CITY NATURAL GAS DISTRIBUTION OPERATIONS.
     7  § 2201.  SHORT TITLE OF CHAPTER.
     8     THIS CHAPTER SHALL BE KNOWN AND MAY BE CITED AS THE NATURAL
     9  GAS CHOICE AND COMPETITION ACT.
    10  § 2202.  DEFINITIONS.
    11     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
    12  SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
    13  CONTEXT CLEARLY INDICATES OTHERWISE:
    14     "CONSUMER PROTECTION."  THE STANDARDS, PRACTICES AND SERVICE
    15  PROTECTIONS FOR RETAIL GAS CUSTOMERS, INCLUDING THOSE PROVIDED
    16  FOR IN 52 PA. CODE CH. 56 (RELATING TO STANDARDS AND BILLING
    17  PRACTICES FOR RESIDENTIAL UTILITY SERVICE), AS WELL AS
    18  APPLICABLE FEDERAL AND STATE DEBT/CREDIT COLLECTION STATUTES AND
    19  ANY REGULATIONS OR ORDERS OF THE COMMISSION THAT PROVIDE SUCH
    20  PROTECTIONS, AS MAY BE MODIFIED BY THE COMMISSION FROM TIME TO
    21  TIME.
    22     "ENTITY."  A PERSON OR CORPORATION AS DEFINED IN SECTION 102
    23  (RELATING TO DEFINITIONS) INCLUDING, FOR PURPOSES OF THIS
    24  CHAPTER, A CITY NATURAL GAS DISTRIBUTION OPERATION.
    25     "LOCAL COMMISSION."  THE LOCAL BODY OR AGENCY DESIGNATED
    26  UNDER APPLICABLE LAW AS RESPONSIBLE FOR SETTING THE RATES AND
    27  CHARGES OF A CITY NATURAL GAS DISTRIBUTION OPERATION IMMEDIATELY
    28  PRIOR TO THE DATE THE COMMISSION ASSUMES JURISDICTION OVER THE
    29  CITY NATURAL GAS DISTRIBUTION OPERATION.
    30     "NATURAL GAS DISTRIBUTION COMPANY."  A PUBLIC UTILITY OR CITY
    19990H1331B2112                 - 67 -

     1  NATURAL GAS DISTRIBUTION OPERATION THAT PROVIDES NATURAL GAS
     2  DISTRIBUTION SERVICES AND WHICH MAY PROVIDE NATURAL GAS SUPPLY
     3  SERVICES AND OTHER SERVICES. FOR PURPOSES OF THIS CHAPTER, THIS
     4  TERM DOES NOT INCLUDE:
     5         (1)  ANY PUBLIC UTILITY SUBJECT TO THE JURISDICTION OF
     6     THE COMMISSION WHICH HAS ANNUAL GAS OPERATING REVENUES OF
     7     LESS THAN $6,000,000 PER YEAR, EXCEPT WHERE THE PUBLIC
     8     UTILITY VOLUNTARILY PETITIONS THE COMMISSION TO BE INCLUDED
     9     WITHIN THIS DEFINITION OR WHERE THE PUBLIC UTILITY SEEKS TO
    10     PROVIDE NATURAL GAS SUPPLY SERVICES TO RETAIL GAS CUSTOMERS
    11     OUTSIDE ITS SERVICE TERRITORY; OR
    12         (2)  ANY NATURAL GAS PUBLIC UTILITY SUBJECT TO THE
    13     JURISDICTION OF THE COMMISSION THAT IS NOT INTERCONNECTED TO
    14     AN INTERSTATE GAS PIPELINE BY MEANS OF A DIRECT CONNECTION OR
    15     AN INDIRECT CONNECTION THROUGH THE DISTRIBUTION SYSTEM OF
    16     ANOTHER NATURAL GAS PUBLIC UTILITY OR THROUGH A NATURAL GAS
    17     GATHERING SYSTEM.
    18     "NATURAL GAS DISTRIBUTION SERVICE."  THE DELIVERY OF NATURAL
    19  GAS TO RETAIL GAS CUSTOMERS UTILIZING THE JURISDICTIONAL
    20  FACILITIES OF THE NATURAL GAS DISTRIBUTION COMPANY.
    21     "NATURAL GAS SUPPLIER."  AN ENTITY OTHER THAN A NATURAL GAS
    22  DISTRIBUTION COMPANY, BUT INCLUDING NATURAL GAS DISTRIBUTION
    23  COMPANY MARKETING AFFILIATES, WHICH PROVIDES NATURAL GAS SUPPLY
    24  SERVICES TO RETAIL GAS CUSTOMERS UTILIZING THE JURISDICTIONAL
    25  FACILITIES OF A NATURAL GAS DISTRIBUTION COMPANY. THE TERM
    26  INCLUDES A NATURAL GAS DISTRIBUTION COMPANY THAT PROVIDES
    27  NATURAL GAS SUPPLY SERVICES OUTSIDE ITS CERTIFICATED SERVICE
    28  TERRITORIES. THE TERM INCLUDES A MUNICIPAL CORPORATION, ITS
    29  AFFILIATES OR ANY JOINT VENTURE, TO THE EXTENT THAT IT CHOOSES
    30  TO PROVIDE NATURAL GAS SUPPLY SERVICES TO RETAIL CUSTOMERS
    19990H1331B2112                 - 68 -

     1  LOCATED OUTSIDE OF ITS CORPORATE OR MUNICIPAL LIMITS, AS
     2  APPLICABLE, OTHER THAN:
     3             (I)  AS PROVIDED PRIOR TO THE EFFECTIVE DATE OF THIS
     4         CHAPTER, PURSUANT TO A CERTIFICATE OF PUBLIC CONVENIENCE
     5         IF REQUIRED UNDER THIS TITLE;
     6             (II)  TOTAL NATURAL GAS SUPPLY SERVICES IN DE MINIMIS
     7         AMOUNTS;
     8             (III)  NATURAL GAS SUPPLY SERVICES REQUESTED BY, OR
     9         PROVIDED WITH THE CONSENT OF, THE PUBLIC UTILITY IN WHOSE
    10         CERTIFICATED TERRITORY THE SERVICES ARE PROVIDED; OR
    11             (IV)  NATURAL GAS SUPPLY SERVICES PROVIDED TO THE
    12         MUNICIPAL CORPORATION ITSELF OR ITS TENANTS ON LAND IT
    13         OWNS OR LEASES, OR IS SUBJECT TO AN AGREEMENT OF SALE OR
    14         PENDING CONDEMNATION, AS OF SEPTEMBER 1, 1999, TO THE
    15         EXTENT PERMITTED BY APPLICABLE LAW INDEPENDENT OF THIS
    16         CHAPTER.
    17  THE TERM EXCLUDES AN ENTITY TO THE EXTENT THAT IT PROVIDES FREE
    18  GAS TO END-USERS UNDER THE TERMS OF AN OIL OR GAS LEASE.
    19  NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE, A NATURAL GAS
    20  SUPPLIER THAT IS NOT A NATURAL GAS DISTRIBUTION COMPANY IS NOT A
    21  PUBLIC UTILITY AS DEFINED IN SECTION 102 (RELATING TO
    22  DEFINITIONS) TO THE EXTENT THAT THE NATURAL GAS SUPPLIER IS
    23  UTILIZING THE JURISDICTIONAL DISTRIBUTION FACILITIES OF A
    24  NATURAL GAS DISTRIBUTION COMPANY OR IS PROVIDING OTHER SERVICES
    25  AUTHORIZED BY THE COMMISSION.
    26     "NATURAL GAS SUPPLY SERVICES."
    27         (1)  THE TERM INCLUDES:
    28             (I)  THE SALE OR ARRANGEMENT OF THE SALE OF NATURAL
    29         GAS TO RETAIL GAS CUSTOMERS; AND
    30             (II)  SERVICES THAT MAY BE UNBUNDLED BY THE
    19990H1331B2112                 - 69 -

     1         COMMISSION UNDER SECTION 2203(3) (RELATING TO STANDARDS
     2         FOR RESTRUCTURING OF NATURAL GAS UTILITY INDUSTRY).
     3         (2)  THE TERM DOES NOT INCLUDE DISTRIBUTION SERVICE.
     4     "RELIABILITY."  THE TERM COMPRISES ADEQUACY AND SECURITY. THE
     5  TERM "ADEQUACY" MEANS THE PROVISION OF SUFFICIENT VOLUMES AND
     6  DELIVERABILITY OF NATURAL GAS SO AS TO SUPPLY THE REQUIREMENTS
     7  OF RETAIL GAS CUSTOMERS, TAKING INTO ACCOUNT PEAK AND SEASONAL
     8  DEMANDS, AS WELL AS ISOLATED MARKET AREAS AND SYSTEM OPERATION
     9  CONTINGENCIES. THE TERM "SECURITY" MEANS DESIGNING, MAINTAINING
    10  AND OPERATING A SYSTEM SO THAT IT CAN SAFELY HANDLE EXTREME
    11  CONDITIONS, AS WELL AS EMERGENCIES.
    12     "RETAIL GAS CUSTOMER."  A DIRECT PURCHASER OF NATURAL GAS
    13  SUPPLY SERVICES OR NATURAL GAS DISTRIBUTION SERVICES, OTHER THAN
    14  A NATURAL GAS SUPPLIER. THE TERM EXCLUDES AN OCCUPANT OF A
    15  BUILDING OR FACILITY WHERE THE OWNER/OPERATORS MANAGE THE
    16  INTERNAL DISTRIBUTION SYSTEM SERVING SUCH BUILDING OR FACILITY
    17  AND SUPPLY NATURAL GAS AND OTHER RELATED SERVICES TO OCCUPANTS
    18  OF THE BUILDING OR FACILITY; WHERE SUCH OWNER/OPERATORS ARE
    19  DIRECT PURCHASERS OF NATURAL GAS SUPPLY SERVICE; AND WHERE THE
    20  OCCUPANTS ARE NOT DIRECT PURCHASERS.
    21     "UNIVERSAL SERVICE AND ENERGY CONSERVATION."  POLICIES,
    22  PRACTICES AND SERVICES THAT HELP RESIDENTIAL LOW-INCOME RETAIL
    23  GAS CUSTOMERS AND OTHER RESIDENTIAL RETAIL GAS CUSTOMERS
    24  EXPERIENCING TEMPORARY EMERGENCIES, AS DEFINED BY THE
    25  COMMISSION, TO MAINTAIN NATURAL GAS SUPPLY AND DISTRIBUTION
    26  SERVICES. THE TERM INCLUDES RETAIL GAS CUSTOMER ASSISTANCE
    27  PROGRAMS, TERMINATION OF SERVICE PROTECTIONS AND CONSUMER
    28  PROTECTION POLICIES AND SERVICES THAT HELP RESIDENTIAL LOW-
    29  INCOME CUSTOMERS AND OTHER RESIDENTIAL CUSTOMERS EXPERIENCING
    30  TEMPORARY EMERGENCIES TO REDUCE OR MANAGE ENERGY CONSUMPTION IN
    19990H1331B2112                 - 70 -

     1  A COST-EFFECTIVE MANNER, SUCH AS THE LOW-INCOME USAGE REDUCTION
     2  PROGRAMS AND CONSUMER EDUCATION.
     3  § 2203.  STANDARDS FOR RESTRUCTURING OF NATURAL GAS UTILITY
     4             INDUSTRY.
     5     THE FOLLOWING INTERDEPENDENT STANDARDS SHALL GOVERN THE
     6  COMMISSION'S ACTIONS IN ADOPTING RULES, ORDERS OR POLICIES AND
     7  IN REVIEWING, ASSESSING AND APPROVING EACH NATURAL GAS
     8  DISTRIBUTION COMPANY'S RESTRUCTURING FILINGS AND OVERSEEING THE
     9  TRANSITION PROCESS AND REGULATION OF THE RESTRUCTURED NATURAL
    10  GAS UTILITY INDUSTRY:
    11         (1)  THE COMMISSION SHALL ADOPT AND ENFORCE STANDARDS AS
    12     NECESSARY TO ENSURE CONTINUATION OF THE SAFETY AND
    13     RELIABILITY OF THE NATURAL GAS SUPPLY AND DISTRIBUTION
    14     SERVICE TO ALL RETAIL GAS CUSTOMERS. IN ADOPTING THE
    15     STANDARDS, THE COMMISSION SHALL CONSIDER THE ABSENCE OF ANY
    16     APPLICABLE INDUSTRY STANDARDS AND PRACTICES OR ADOPT
    17     STANDARDS IN CONFORMITY WITH INDUSTRY STANDARDS AND PRACTICES
    18     MEETING THE STANDARDS OF THIS CHAPTER. THE APPLICATION OF
    19     SUCH STANDARDS SHALL BE IN A MANNER THAT INCORPORATES THE
    20     OPERATING REQUIREMENTS OF THE DIFFERENT NATURAL GAS
    21     DISTRIBUTION COMPANIES.
    22         (2)  CONSISTENT WITH SECTION 2204 (RELATING TO
    23     IMPLEMENTATION), THE COMMISSION SHALL ALLOW RETAIL GAS
    24     CUSTOMERS TO CHOOSE AMONG NATURAL GAS SUPPLIERS AND NATURAL
    25     GAS DISTRIBUTION COMPANIES TO THE EXTENT THAT THEY OFFER SUCH
    26     NATURAL GAS SUPPLY SERVICES. RETAIL GAS CUSTOMERS SHALL BE
    27     ABLE TO CHOOSE FROM THESE SUPPLIERS A VARIETY OF PRODUCTS,
    28     INCLUDING, BUT NOT LIMITED TO, DIFFERENT SUPPLY AND PRICING
    29     OPTIONS, AND SERVICES THAT EVOLVE AS THE COMPETITIVE
    30     MARKETPLACE MATURES. NEITHER ANY NATURAL GAS SUPPLIER NOR ANY
    19990H1331B2112                 - 71 -

     1     NATURAL GAS DISTRIBUTION COMPANY SHALL OFFER INTERRUPTIBLE
     2     GAS SERVICE TO ANY ESSENTIAL HUMAN NEEDS RETAIL GAS CUSTOMER
     3     LACKING INSTALLED AND OPERABLE ALTERNATIVE FUEL CAPABILITY OR
     4     TO ANY RESIDENTIAL RETAIL GAS CUSTOMER.
     5         (3)  THE COMMISSION SHALL REQUIRE NATURAL GAS
     6     DISTRIBUTION COMPANIES TO UNBUNDLE NATURAL GAS SUPPLY
     7     SERVICES SUCH THAT SEPARATE CHARGES FOR THE SERVICES CAN BE
     8     SET FORTH IN TARIFFS AND ON RETAIL GAS CUSTOMERS' BILLS. IN
     9     ITS RESTRUCTURING FILING, THE NATURAL GAS DISTRIBUTION
    10     COMPANY SHALL ESTABLISH SYSTEM RELIABILITY STANDARDS AND
    11     CAPACITY CONTRACT MITIGATION PARAMETERS AND ADDRESS THE
    12     UNBUNDLING OF COMMODITY, CAPACITY, STORAGE, BALANCING AND
    13     AGGREGATOR SERVICES. THE COMMISSION MAY ADDRESS THE
    14     UNBUNDLING OF OTHER SERVICES ONLY THROUGH A RULEMAKING. IN
    15     CONDUCTING THE RULEMAKING, THE COMMISSION SHALL CONSIDER THE
    16     IMPACT OF SUCH UNBUNDLING ON THE LABOR FORCE, THE CREATION OF
    17     STRANDED COSTS, SAFETY, RELIABILITY, CONSUMER PROTECTIONS,
    18     UNIVERSAL SERVICE AND THE POTENTIAL FOR UNBUNDLING TO OFFER
    19     SAVINGS, NEW PRODUCTS AND ADDITIONAL CHOICES OR SERVICES TO
    20     RETAIL GAS CUSTOMERS. THE COMMISSION'S DECISIONS SHALL ASSURE
    21     THAT STANDARDS AND PROCEDURES FOR SAFETY AND RELIABILITY,
    22     CONSUMER PROTECTIONS AND UNIVERSAL SERVICE ARE MAINTAINED AT
    23     LEVELS CONSISTENT WITH THIS CHAPTER.
    24         (4)  CONSISTENT WITH THE PROVISIONS OF SECTION 2204, THE
    25     COMMISSION SHALL REQUIRE THAT A NATURAL GAS DISTRIBUTION
    26     COMPANY THAT OWNS OR OPERATES JURISDICTIONAL DISTRIBUTION
    27     FACILITIES SHALL PROVIDE DISTRIBUTION SERVICE TO ALL RETAIL
    28     GAS CUSTOMERS IN ITS SERVICE TERRITORY AND TO ALL NATURAL GAS
    29     SUPPLIERS, AFFILIATED OR NONAFFILIATED, ON NONDISCRIMINATORY
    30     RATES, TERMS OF ACCESS AND OTHER CONDITIONS.
    19990H1331B2112                 - 72 -

     1         (5)  THE COMMISSION SHALL REQUIRE THAT RESTRUCTURING OF
     2     THE NATURAL GAS UTILITY INDUSTRY BE IMPLEMENTED IN A MANNER
     3     THAT DOES NOT UNREASONABLY DISCRIMINATE AGAINST ONE CUSTOMER
     4     CLASS FOR THE BENEFIT OF ANOTHER.
     5         (6)  AFTER NOTICE AND HEARINGS, THE COMMISSION SHALL
     6     ESTABLISH FOR EACH NATURAL GAS DISTRIBUTION COMPANY AN
     7     APPROPRIATE NONBYPASSABLE, COMPETITIVELY NEUTRAL COST-
     8     RECOVERY MECHANISM WHICH IS DESIGNED TO RECOVER FULLY THE
     9     NATURAL GAS DISTRIBUTION COMPANY'S UNIVERSAL SERVICE AND
    10     ENERGY CONSERVATION COSTS OVER THE LIFE OF THESE PROGRAMS.
    11     EXCEPT AS PROVIDED IN PARAGRAPH (10), POLICIES, ACTIVITIES
    12     AND SERVICES UNDER THIS PARAGRAPH SHALL BE FUNDED AND SPENT
    13     IN EACH NATURAL GAS DISTRIBUTION COMPANY'S SERVICE TERRITORY.
    14     NOTHING IN THIS CHAPTER SHALL BE CONSTRUED TO PROHIBIT PUBLIC
    15     FUNDING OR VOLUNTARY FUNDING BY THIRD PARTIES OF A NATURAL
    16     GAS DISTRIBUTION COMPANY'S UNIVERSAL SERVICE AND ENERGY
    17     CONSERVATION PROGRAMS.
    18         (7)  THE COMMISSION SHALL, AT A MINIMUM, CONTINUE THE
    19     LEVEL AND NATURE OF THE CONSUMERS PROTECTIONS, POLICIES AND
    20     SERVICES WITHIN ITS JURISDICTION THAT ARE IN EXISTENCE AS OF
    21     THE EFFECTIVE DATE OF THIS CHAPTER TO ASSIST LOW-INCOME
    22     RETAIL GAS CUSTOMERS TO AFFORD NATURAL GAS SERVICES.
    23         (8)  THE COMMISSION SHALL ENSURE THAT UNIVERSAL SERVICE
    24     AND ENERGY CONSERVATION POLICIES, ACTIVITIES AND SERVICES ARE
    25     APPROPRIATELY FUNDED AND AVAILABLE IN EACH NATURAL GAS
    26     DISTRIBUTION SERVICE TERRITORY. THE COMMISSION SHALL
    27     ENCOURAGE THE USE OF COMMUNITY-BASED ORGANIZATIONS THAT HAVE
    28     THE NECESSARY TECHNICAL AND ADMINISTRATIVE EXPERIENCE TO BE
    29     THE DIRECT PROVIDERS OF SERVICES OR PROGRAMS WHICH REDUCE
    30     ENERGY CONSUMPTION OR OTHERWISE ASSIST LOW-INCOME RETAIL GAS
    19990H1331B2112                 - 73 -

     1     CUSTOMERS TO AFFORD NATURAL GAS SERVICE. PROGRAMS UNDER THIS
     2     PARAGRAPH SHALL BE SUBJECT TO THE ADMINISTRATIVE OVERSIGHT OF
     3     THE COMMISSION, WHICH SHALL ENSURE THAT THE PROGRAMS ARE
     4     OPERATED IN A COST-EFFECTIVE MANNER.
     5         (9)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL SET
     6     FORTH IN ITS RESTRUCTURING FILING AN INITIAL PROPOSAL TO MEET
     7     ITS UNIVERSAL SERVICE AND ENERGY CONSERVATION OBLIGATIONS.
     8         (10)  CONSISTENT WITH PARAGRAPH (7), THE COMMISSION SHALL
     9     CONVENE A TASK FORCE TO REVIEW UNIVERSAL SERVICE PROGRAMS AND
    10     THEIR FUNDING. THE TASK FORCE SHALL ISSUE A REPORT TO THE
    11     COMMISSION BY DECEMBER 31, 1999, AND ANNUALLY THEREAFTER.
    12     RECOMMENDATIONS REGARDING THE USE OF GENERAL STATE REVENUE
    13     SHALL BE CONCURRENTLY FORWARDED TO THE GENERAL ASSEMBLY.
    14         (11)  THE COMMISSION SHALL CONTINUE TO REGULATE RATES FOR
    15     NATURAL GAS DISTRIBUTION SERVICES FOR NEW AND EXISTING RETAIL
    16     GAS CUSTOMERS IN ACCORDANCE WITH CHAPTER 13 (RELATING TO
    17     RATES AND RATE MAKING) AND THIS CHAPTER.
    18         (12)  THE COMMISSION SHALL MAKE ITS DETERMINATIONS
    19     PURSUANT TO THIS CHAPTER AND SHALL ADOPT SUCH ORDERS OR
    20     REGULATIONS AS NECESSARY AND APPROPRIATE TO ENSURE THAT
    21     NATURAL GAS SUPPLIERS MEET THEIR SUPPLY AND RELIABILITY
    22     OBLIGATIONS, INCLUDING, BUT NOT LIMITED TO, ESTABLISHING
    23     PENALTIES FOR FAILURE TO DELIVER NATURAL GAS AND REVOKING
    24     LICENSES. ANY AFFECTED ENTITY MAY AT ANY TIME PETITION THE
    25     COMMISSION TO AMEND OR RESCIND ANY SUCH ORDER OR REGULATION
    26     ISSUED OR PROMULGATED UNDER THIS CHAPTER.
    27         (13)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL SET
    28     FORTH IN ITS RESTRUCTURING FILING AN INITIAL PROPOSAL TO MEET
    29     ITS EMPLOYEE TRANSITION OBLIGATIONS PRECIPITATED BY THIS
    30     CHAPTER.
    19990H1331B2112                 - 74 -

     1         (14)  THE NATURAL GAS DISTRIBUTION COMPANY MAY CONTINUE
     2     TO PROVIDE NATURAL GAS SERVICE TO ITS CUSTOMERS UNDER ALL
     3     TARIFF RATE SCHEDULES AND RIDERS INCORPORATED INTO ITS
     4     TARIFF, AND POLICIES OR PROGRAMS, EXISTING ON THE EFFECTIVE
     5     DATE OF THIS CHAPTER.
     6         (15)  BEGINNING MAY 1, 1999, AND CONTINUING FOR A 36-
     7     MONTH PERIOD THEREAFTER, IF A NATURAL GAS DISTRIBUTION
     8     COMPANY LAYS OFF OR TERMINATES ANY OF ITS EMPLOYEES, EXCEPT
     9     FOR JUST CAUSE, THE NATURAL GAS DISTRIBUTION COMPANY SHALL:
    10             (I)  PROVIDE THE COMMISSION WITH SUFFICIENT
    11         INFORMATION TO SHOW THAT WITH THE REDUCTION OF EMPLOYEES
    12         THE COMPANY WILL STILL BE ABLE TO ENSURE THE SAFETY AND
    13         RELIABILITY OF NATURAL GAS DISTRIBUTION SERVICE TO ALL
    14         RETAIL GAS CUSTOMERS, AS PROVIDED FOR BY THE COMMISSION
    15         UNDER PARAGRAPH (1).
    16             (II)  PROVIDE AT LEAST 60 DAYS' WRITTEN NOTICE OF
    17         SUCH LAYOFF OR TERMINATION TO THE COMPANY'S EMPLOYEES'
    18         AUTHORIZED BARGAINING REPRESENTATIVE.
    19  § 2204.  IMPLEMENTATION.
    20     (A)  COMMENCEMENT OF CUSTOMER CHOICE.--BEGINNING ON NOVEMBER
    21  1, 1999, UNLESS THE COMMISSION FOR GOOD CAUSE SHOWN EXTENDS THIS
    22  PERIOD BY NO MORE THAN EIGHT MONTHS, CONSISTENT WITH THIS
    23  CHAPTER, ALL RETAIL GAS CUSTOMERS OF NATURAL GAS DISTRIBUTION
    24  COMPANIES OTHER THAN CITY NATURAL GAS DISTRIBUTION OPERATIONS
    25  SHALL HAVE THE OPPORTUNITY TO PURCHASE NATURAL GAS SUPPLY
    26  SERVICES FROM A NATURAL GAS SUPPLIER OR THEIR NATURAL GAS
    27  DISTRIBUTION COMPANY TO THE EXTENT IT OFFERS SUCH SERVICES. THE
    28  CHOICE OF NATURAL GAS SUPPLIERS SHALL REST WITH THE RETAIL GAS
    29  CUSTOMER. THE COMMISSION SHALL ADOPT ORDERS, RULES, REGULATIONS
    30  AND POLICIES AS SHALL BE NECESSARY AND APPROPRIATE TO IMPLEMENT
    19990H1331B2112                 - 75 -

     1  FULLY THIS CHAPTER WITHIN THE TIME FRAMES SPECIFIED IN THIS
     2  CHAPTER, PROVIDED THAT THE COMMISSION MAY, IN THE CONTEXT OF
     3  EACH NATURAL GAS DISTRIBUTION COMPANY'S RESTRUCTURING
     4  PROCEEDING, ESTABLISH THE TIME FRAMES FOR IMPLEMENTATION OF
     5  SPECIFIC COMPONENTS OF EACH NATURAL GAS DISTRIBUTION COMPANY'S
     6  RESTRUCTURING PLAN.
     7     (B)  RESTRUCTURING FILINGS.--ALL NATURAL GAS DISTRIBUTION
     8  COMPANIES IN THIS COMMONWEALTH, EXCEPT CITY NATURAL GAS
     9  DISTRIBUTION OPERATIONS, SHALL FILE WITH THE COMMISSION,
    10  PURSUANT TO A SCHEDULE TO BE DETERMINED BY THE COMMISSION IN
    11  CONSULTATION WITH THE NATURAL GAS DISTRIBUTION COMPANIES, A
    12  RESTRUCTURING FILING CONSISTENT WITH THIS CHAPTER AND WITH ANY
    13  ORDERS, RULES OR REGULATIONS ADOPTED BY THE COMMISSION. A CITY
    14  NATURAL GAS DISTRIBUTION OPERATION SHALL FILE WITH THE
    15  COMMISSION ITS RESTRUCTURING FILING PURSUANT TO SECTION 2212
    16  (RELATING TO CITY NATURAL GAS DISTRIBUTION OPERATIONS).
    17     (C)  COMMISSION REVIEW.--
    18         (1)  THE COMMISSION SHALL REVIEW THE RESTRUCTURING FILING
    19     OF EACH NATURAL GAS DISTRIBUTION COMPANY AND SHALL, AFTER
    20     OPEN EVIDENTIARY HEARINGS WITH PROPER NOTICE AND OPPORTUNITY
    21     FOR ALL PARTIES TO CROSS-EXAMINE WITNESSES AND BRIEF ISSUES,
    22     ISSUE AN ORDER ACCEPTING, MODIFYING OR REJECTING SUCH FILING
    23     AT THE EARLIEST DATE POSSIBLE, BUT NO LATER THAN NINE MONTHS
    24     FROM THE FILING DATE.
    25         (2)  IN ISSUING THE RESTRUCTURING ORDER, THE COMMISSION
    26     MAY CONSIDER THE RESULTS OF ANY COLLABORATIVE PROCESS
    27     PREVIOUSLY ENGAGED IN DURING OR PRIOR TO THE RESTRUCTURING
    28     PROCEEDING.
    29         (3)  IF THE COMMISSION MODIFIES OR REJECTS A
    30     RESTRUCTURING FILING, IT SHALL STATE THE SPECIFIC REASONS FOR
    19990H1331B2112                 - 76 -

     1     MODIFICATION OR REJECTION AND DIRECT THE NATURAL GAS
     2     DISTRIBUTION COMPANY TO ADDRESS SUCH OBJECTIONS WITH ANOTHER
     3     FILING WITHIN 30 DAYS OF THE ENTRY DATE OF THE COMMISSION
     4     ORDER MODIFYING OR REJECTING THE PRIOR FILING.
     5         (4)  THE COMMISSION SHALL REVIEW THE ALTERNATIVE FILING,
     6     SOLICIT COMMENTS AND REPLY COMMENTS FROM INTERESTED PARTIES
     7     AND ISSUE A FINAL ORDER WITHIN 45 DAYS OF THE REVISED FILING.
     8         (5)  THE RESTRUCTURING FILING FOR A CITY NATURAL GAS
     9     DISTRIBUTION OPERATION SHALL ALSO INCLUDE AN INITIAL TARIFF
    10     FILING.
    11     (D)  RELEASE, ASSIGNMENT OR TRANSFER OF CAPACITY.--
    12         (1)  A NATURAL GAS DISTRIBUTION COMPANY HOLDING CONTRACTS
    13     FOR FIRM STORAGE OR TRANSPORTATION CAPACITY, INCLUDING GAS
    14     SUPPLY CONTRACTS WITH PENNSYLVANIA PRODUCERS, ON THE
    15     EFFECTIVE DATE OF THIS CHAPTER, OR A CITY NATURAL GAS
    16     DISTRIBUTION OPERATION ON THE DATE THE COMMISSION ASSUMES
    17     JURISDICTION OVER SUCH CITY NATURAL GAS DISTRIBUTION
    18     OPERATION, MAY, AT ITS OPTION, RELEASE, ASSIGN OR OTHERWISE
    19     TRANSFER SUCH CAPACITY, OR PENNSYLVANIA SUPPLY, IN WHOLE OR
    20     PART, ASSOCIATED WITH THOSE CONTRACTS ON A NONDISCRIMINATORY
    21     BASIS TO LICENSED NATURAL GAS SUPPLIERS OR LARGE COMMERCIAL
    22     OR INDUSTRIAL CUSTOMERS ON ITS SYSTEM.
    23         (2)  CONTRACTS WHICH BY THEIR TERMS MUST BE RENEWED
    24     WITHIN 150 DAYS AFTER THE EFFECTIVE DATE OF THIS CHAPTER OR,
    25     WITH RESPECT TO A CITY NATURAL GAS DISTRIBUTION OPERATION,
    26     WITHIN 90 DAYS AFTER THE DATE THE COMMISSION ASSUMES
    27     JURISDICTION OVER SUCH CITY NATURAL GAS DISTRIBUTION
    28     OPERATION OR CONTRACTS FOR WHICH THE LAST DAY FOR NOTICE OF
    29     RENEWAL OR NONRENEWAL PURSUANT TO THE NOTICE PROVISION OF THE
    30     CONTRACT HAS OCCURRED OR IS WITHIN 150 DAYS AFTER THE
    19990H1331B2112                 - 77 -

     1     EFFECTIVE DATE OF THIS CHAPTER OR, WITH RESPECT TO A CITY
     2     NATURAL GAS DISTRIBUTION OPERATION, WITHIN 90 DAYS AFTER THE
     3     DATE THE COMMISSION ASSUMES JURISDICTION OVER SUCH CITY
     4     NATURAL GAS DISTRIBUTION OPERATION AND WHICH ARE RENEWED
     5     PURSUANT TO SUCH NOTICE REQUIREMENTS SHALL ALSO BE SUBJECT TO
     6     THE PROVISIONS OF THIS SUBSECTION.
     7         (3)  SUCH RELEASE, ASSIGNMENT OR TRANSFER SHALL BE AT THE
     8     APPLICABLE CONTRACT RATE FOR SUCH CAPACITY, OR PENNSYLVANIA
     9     SUPPLY, AND SHALL BE SUBJECT TO APPLICABLE CONTRACTUAL
    10     ARRANGEMENTS AND TARIFFS. THE AMOUNT SO RELEASED, ASSIGNED OR
    11     TRANSFERRED SHALL BE SUFFICIENT TO SERVE THE LEVEL OF THE
    12     CUSTOMERS' REQUIREMENTS FOR WHICH THE NATURAL GAS
    13     DISTRIBUTION COMPANY HAS PROCURED SUCH CAPACITY,  DETERMINED
    14     IN ACCORDANCE WITH THE NATURAL GAS DISTRIBUTION COMPANY'S
    15     TARIFF OR PROCEDURES APPROVED IN ITS RESTRUCTURING
    16     PROCEEDINGS.
    17         (4)  THE LICENSED NATURAL GAS SUPPLIER SHALL ACCEPT SUCH
    18     RELEASE, ASSIGNMENT OR TRANSFER OF THAT CAPACITY, OR
    19     PENNSYLVANIA SUPPLY, AND ENTER INTO ALL APPLICABLE CONTRACTS
    20     OR AGREEMENTS, AS A CONDITION OF SERVING RETAIL GAS CUSTOMERS
    21     ON THE NATURAL GAS DISTRIBUTION COMPANY'S SYSTEM.
    22         (5)  ON OR AFTER JULY 1, 2002, OR, IN THE CASE OF A CITY
    23     NATURAL GAS DISTRIBUTION OPERATION, MARCH 1, 2005, THE
    24     COMMISSION SHALL HAVE THE AUTHORITY TO PREVENT SUCH
    25     ASSIGNMENTS, RELEASES OR TRANSFERS UNDER EITHER OF THE
    26     FOLLOWING CIRCUMSTANCES:
    27             (I)  THE NATURAL GAS DISTRIBUTION COMPANY, ALONE OR
    28         TOGETHER WITH ONE OR MORE NATURAL GAS SUPPLIERS,
    29         VOLUNTARILY PROPOSES AN ALTERNATIVE TO SUCH ASSIGNMENTS,
    30         RELEASES OR TRANSFERS AND THE COMMISSION FINDS SUCH
    19990H1331B2112                 - 78 -

     1         ALTERNATIVE TO BE IN THE PUBLIC INTEREST; OR
     2             (II)  UPON THE PETITION OF THE LICENSED NATURAL GAS
     3         SUPPLIER WHO DESIRES TO USE ALTERNATE INTERSTATE STORAGE
     4         OR TRANSPORTATION CAPACITY TO SERVE ITS CUSTOMERS ON THE
     5         NATURAL GAS DISTRIBUTION COMPANY'S SYSTEM, THE COMMISSION
     6         MAKES THE FOLLOWING FINDINGS AND ISSUES A FINAL ORDER AS
     7         TO WHICH ALL APPEALS HAVE BEEN EXHAUSTED IN WHICH:
     8                 (A)  THE COMMISSION FINDS THAT THE ALTERNATE
     9             CAPACITY WHICH THE NATURAL GAS SUPPLIER SEEKS TO
    10             UTILIZE MEETS THE OPERATIONAL NEEDS AND RELIABILITY
    11             STANDARDS OF THE NATURAL GAS DISTRIBUTION COMPANY.
    12                 (B)  THE COMMISSION CONFIRMS THAT THE NATURAL GAS
    13             DISTRIBUTION COMPANY'S SPECIFIC TRANSPORTATION AND
    14             STORAGE CAPACITY CONTRACTS TO BE DISPLACED ARE NO
    15             LONGER NEEDED TO SERVE FIRM CUSTOMERS OF THE NATURAL
    16             GAS DISTRIBUTION COMPANY.
    17                 (C)  THE COMMISSION AUTHORIZES THE NATURAL GAS
    18             DISTRIBUTION COMPANY TO FOLLOW A SPECIFIC, WRITTEN
    19             MITIGATION PLAN APPROVED BY THE COMMISSION OR, IF
    20             SUCH A PLAN IS NOT APPROVED OR APPLICABLE, TO POST
    21             THE DISPLACED CAPACITY FOR RELEASE IN ACCORDANCE WITH
    22             THE RULES AND REGULATIONS OF THE FEDERAL ENERGY
    23             REGULATORY COMMISSION AND APPLICABLE REQUIREMENTS OF
    24             INTERSTATE PIPELINES.
    25                 (D)  THE COMMISSION AUTHORIZES THE NATURAL GAS
    26             DISTRIBUTION COMPANY TO RECOVER THE DIFFERENCE
    27             BETWEEN THE AMOUNT THE NATURAL GAS DISTRIBUTION
    28             COMPANY IS REQUIRED TO PAY UNDER THE APPLICABLE
    29             CONTRACT TERMS FOR THE CAPACITY RELEASED, ASSIGNED OR
    30             TRANSFERRED PURSUANT TO CLAUSE (C) AND THE AMOUNT THE
    19990H1331B2112                 - 79 -

     1             NATURAL GAS DISTRIBUTION COMPANY RECEIVES FROM AN
     2             ENTITY, IF ANY, THAT ACQUIRES SUCH CAPACITY. UNDER NO
     3             CIRCUMSTANCES, HOWEVER, SHALL SUCH RECOVERY RESULT IN
     4             SHIFTING OF COSTS BETWEEN CUSTOMER CLASSES OR IN ANY
     5             INCREASE IN RATES TO CUSTOMERS WHO CONTINUE TO
     6             PURCHASE NATURAL GAS SUPPLIES FROM THE NATURAL GAS
     7             DISTRIBUTION COMPANY ACTING IN ITS SUPPLIER OF LAST
     8             RESORT FUNCTION.
     9         (6)  PRIOR TO MAKING THE FILING PROVIDED FOR IN PARAGRAPH
    10     (5), THE NATURAL GAS SUPPLIER SHALL MEET WITH THE NATURAL GAS
    11     DISTRIBUTION COMPANY TO DISCUSS THE NATURAL GAS SUPPLIER'S
    12     PROPOSED ALTERNATIVES TO THE EXISTING GAS SUPPLY OR CAPACITY
    13     CONTRACTS OR TO THEIR MANDATORY ASSIGNMENT.
    14         (7)  THOSE NATURAL GAS DISTRIBUTION COMPANIES HAVING GAS
    15     SUPPLY CONTRACTS WITH PENNSYLVANIA PRODUCERS MAY ADDRESS THE
    16     ISSUE OF POST-JULY 1, 2002, ASSIGNMENT OF SUCH CONTRACTS IN
    17     THEIR RESTRUCTURING PROCEEDING OR THEREAFTER.
    18     (E)  NEW AND RENEWED CAPACITY.--
    19         (1)  SUBJECT TO THE SERVICE OBLIGATIONS IMPOSED BY THIS
    20     TITLE, AND TO THE EXTENT SUCH CAPACITY IS NOT NEEDED TO MEET
    21     THE NATURAL GAS DISTRIBUTION COMPANY'S LEAST COST FUEL
    22     PROCUREMENT AND OTHER APPLICABLE STANDARDS PURSUANT TO THIS
    23     TITLE, PRIOR TO ENTERING INTO NEW OR RENEWED CONTRACTS FOR
    24     FIRM STORAGE OR TRANSPORTATION CAPACITY NOT SUBJECT TO
    25     SUBSECTION (D)(1), (2), (3) OR (4) EACH NATURAL GAS
    26     DISTRIBUTION COMPANY SHALL OFFER ON A NONDISCRIMINATORY BASIS
    27     TO EACH NATURAL GAS SUPPLIER LICENSED TO DO BUSINESS ON ITS
    28     SYSTEM, AND TO LARGE VOLUME INDUSTRIAL OR COMMERCIAL
    29     CUSTOMERS OF THE NATURAL GAS DISTRIBUTION COMPANY BEING
    30     SERVED BY SUCH CONTRACTS, THE OPPORTUNITY TO RENEW SUCH
    19990H1331B2112                 - 80 -

     1     CONTRACTS, PURSUANT TO THE RULES AND REGULATIONS OF THE
     2     FEDERAL ENERGY REGULATORY COMMISSION, OR TO ENTER INTO OTHER
     3     CONTRACTS FOR CAPACITY.
     4         (2)  THE CAPACITY SHALL MEET THE RELIABILITY CRITERIA OF
     5     THE NATURAL GAS DISTRIBUTION COMPANY AND, IN THE CASE OF
     6     LARGE VOLUME INDUSTRIAL AND COMMERCIAL CUSTOMERS BEING SERVED
     7     BY SUCH CONTRACTS, SHALL MEET THEIR CURRENT REQUIREMENTS.
     8         (3)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL UTILIZE
     9     THE COLLABORATIVE PROCESS ESTABLISHED PURSUANT TO SUBSECTION
    10     (F) TO ADDRESS ITS CAPACITY REQUIREMENTS.
    11         (4)  ABSENT THE NATURAL GAS SUPPLIER OR LARGE VOLUME
    12     INDUSTRIAL OR COMMERCIAL CUSTOMER TAKING OR PROVIDING SUCH
    13     CAPACITY, THE NATURAL GAS DISTRIBUTION COMPANY SHALL FILE
    14     WITH AND OBTAIN APPROVAL FROM THE COMMISSION FOR SUCH
    15     CONTRACTS NECESSARY TO ENSURE SUFFICIENT CAPACITY TO MEET
    16     CURRENT AND PROJECTED CUSTOMER REQUIREMENTS CONSIDERING THE
    17     COMMITMENTS OF NATURAL GAS SUPPLIERS.
    18         (5)  PRIOR TO BEING DISPLACED BY A NATURAL GAS SUPPLIER'S
    19     ALTERNATE INTERSTATE STORAGE OR TRANSPORTATION CAPACITY,
    20     CONTRACTS RENEWED OR ENTERED INTO BY THE NATURAL GAS
    21     DISTRIBUTION COMPANY PURSUANT TO THIS SUBSECTION SHALL BE
    22     SUBJECT TO THE PROCESS SET FORTH IN SUBSECTION (D).
    23     (F)  WORKING GROUP AND COLLABORATIVE PROCESS.--IN ITS
    24  RESTRUCTURING PROCEEDING, A NATURAL GAS DISTRIBUTION COMPANY
    25  SHALL SET FORTH A PROCESS TO ESTABLISH A WORKING GROUP OF
    26  LICENSED NATURAL GAS SUPPLIERS HAVING CUSTOMERS ON THE NATURAL
    27  GAS DISTRIBUTION COMPANY'S SYSTEM AND REPRESENTATIVES OF THE
    28  RESIDENTIAL, COMMERCIAL AND INDUSTRIAL CUSTOMER CLASSES TO:
    29         (1)  MEET ON A SCHEDULED BASIS.
    30         (2)  SEEK RESOLUTION OF OPERATIONAL AND CAPACITY ISSUES
    19990H1331B2112                 - 81 -

     1     RELATED TO CUSTOMER CHOICE.
     2  THE FINAL DETERMINATION OF OPERATIONAL AND RELIABILITY ISSUES
     3  RESIDES WITH THE NATURAL GAS DISTRIBUTION COMPANY. IN ADDITION,
     4  THE NATURAL GAS DISTRIBUTION COMPANY SHALL INCLUDE IN ITS
     5  RESTRUCTURING FILING A COLLABORATIVE PROCESS TO ADDRESS BROADER
     6  ISSUES RELATING TO UNBUNDLING, CUSTOMER CHOICE AND DEREGULATION.
     7     (G)  INVESTIGATION AND REPORT TO GENERAL ASSEMBLY.--FIVE
     8  YEARS AFTER THE EFFECTIVE DATE OF THIS CHAPTER, THE COMMISSION
     9  SHALL INITIATE AN INVESTIGATION OR OTHER APPROPRIATE PROCEEDING,
    10  IN WHICH ALL INTERESTED PARTIES ARE INVITED TO PARTICIPATE, TO
    11  DETERMINE WHETHER EFFECTIVE COMPETITION FOR NATURAL GAS SUPPLY
    12  SERVICES EXISTS ON THE NATURAL GAS DISTRIBUTION COMPANIES'
    13  SYSTEMS IN THIS COMMONWEALTH. THE COMMISSION SHALL REPORT ITS
    14  FINDINGS TO THE GENERAL ASSEMBLY. SHOULD THE COMMISSION CONCLUDE
    15  THAT EFFECTIVE COMPETITION DOES NOT EXIST, THE COMMISSION SHALL
    16  RECONVENE THE STAKEHOLDERS IN THE NATURAL GAS INDUSTRY IN THIS
    17  COMMONWEALTH TO EXPLORE AVENUES, INCLUDING LEGISLATIVE, FOR
    18  ENCOURAGING INCREASED COMPETITION IN THIS COMMONWEALTH.
    19     (H)  DISPLACED EMPLOYEE PROGRAM.--THE DEPARTMENT OF LABOR AND
    20  INDUSTRY SHALL ESTABLISH AND IMPLEMENT A PROGRAM TO ASSIST THE
    21  NATURAL GAS DISTRIBUTION COMPANY EMPLOYEES WHO ARE DISPLACED BY
    22  THE TRANSITION TO RETAIL COMPETITION PRECIPITATED BY THIS
    23  CHAPTER. THE PROGRAM SHALL BE DESIGNED TO ASSIST EMPLOYEES IN
    24  OBTAINING EMPLOYMENT AND SHALL CONSIST OF UTILIZING THE FEDERAL
    25  FUNDS AVAILABLE FOR THE PURPOSE OF RETRAINING AND OUTPLACEMENT
    26  SERVICES FOR SUCH EMPLOYEES.
    27     (I)  AUDIT REQUIREMENT.--PRIOR TO THE COMMENCEMENT OF THE
    28  RESTRUCTURING PROCEEDING OF A CITY NATURAL GAS DISTRIBUTION
    29  OPERATION, THE COMMISSION SHALL PROVIDE FOR AN INDEPENDENT
    30  MANAGEMENT AUDIT OF ALL EMPLOYEES, RECORDS, EQUIPMENT,
    19990H1331B2112                 - 82 -

     1  CONTRACTS, ASSETS, LIABILITIES, APPROPRIATIONS AND OBLIGATIONS
     2  RELATED TO A CITY NATURAL GAS DISTRIBUTION OPERATION PURSUANT TO
     3  SECTION 516 (RELATING TO AUDITS OF CERTAIN UTILITIES). THE CITY
     4  NATURAL GAS DISTRIBUTION OPERATION SHALL HAVE A 60-DAY PERIOD TO
     5  SUBMIT WRITTEN COMMENTS ON THE AUDIT REPORT TO THE COMMISSION.
     6  § 2205.  DUTIES OF NATURAL GAS DISTRIBUTION COMPANIES.
     7     (A)  INTEGRITY OF DISTRIBUTION SYSTEM.--
     8         (1)  EACH NATURAL GAS DISTRIBUTION COMPANY SHALL MAINTAIN
     9     THE INTEGRITY OF ITS DISTRIBUTION SYSTEM AT LEAST IN
    10     CONFORMITY WITH THE STANDARDS ESTABLISHED BY THE FEDERAL
    11     DEPARTMENT OF TRANSPORTATION AND SUCH OTHER STANDARDS
    12     PRACTICED BY THE INDUSTRY IN A MANNER SUFFICIENT TO PROVIDE
    13     SAFE AND RELIABLE SERVICE TO ALL RETAIL GAS CUSTOMERS
    14     CONNECTED TO ITS SYSTEM CONSISTENT WITH THIS TITLE AND THE
    15     COMMISSION'S ORDERS OR REGULATIONS.
    16         (2)  IN PERFORMING SUCH DUTIES, THE NATURAL GAS
    17     DISTRIBUTION COMPANY SHALL IMPLEMENT PROCEDURES TO REQUIRE
    18     ALL NATURAL GAS SUPPLIERS TO SUPPLY NATURAL GAS TO THE
    19     NATURAL GAS DISTRIBUTION COMPANY AT LOCATIONS, VOLUMES,
    20     QUALITIES AND PRESSURES THAT ARE ADEQUATE TO MEET THE NATURAL
    21     GAS SUPPLIER'S SUPPLY AND RELIABILITY OBLIGATIONS TO ITS
    22     RETAIL GAS CUSTOMERS AND THE NATURAL GAS DISTRIBUTION
    23     COMPANY'S SUPPLY AND RELIABILITY OBLIGATIONS TO ITS RETAIL
    24     GAS CUSTOMERS. THE PROCEDURES SHALL INCLUDE, BUT NOT BE
    25     LIMITED TO:
    26             (I)  A COMMUNICATION PROTOCOL WITH NATURAL GAS
    27         SUPPLIERS.
    28             (II)  AN ABILITY TO ISSUE SYSTEM MAINTENANCE ORDERS
    29         TO CONTROL THE FLOW OF GAS INTO THE DISTRIBUTION SYSTEM.
    30             (III)  THE RIGHT TO ISSUE AND ENFORCE PENALTIES
    19990H1331B2112                 - 83 -

     1         PURSUANT TO COMMISSION DIRECTION, PROVIDED, HOWEVER, THAT
     2         THE COMMISSION MAY APPROVE ADDITIONAL PROCEDURES OF LIKE
     3         NATURE BY ORDER OR REGULATION TO PRESERVE RELIABILITY.
     4     (B)  INSTALLATION AND IMPROVEMENT OF FACILITIES.--
     5         (1)  THE NATURAL GAS DISTRIBUTION COMPANY SHALL NOT HAVE
     6     AN OBLIGATION TO INSTALL NONSTANDARD FACILITIES, EITHER AS TO
     7     TYPE OR LOCATION, FOR THE PURPOSE OF RECEIVING NATURAL GAS
     8     FROM THE NATURAL GAS SUPPLIER UNLESS THE NATURAL GAS SUPPLIER
     9     OR ITS RETAIL GAS CUSTOMER PAYS THE FULL COST OF THESE
    10     FACILITIES.
    11         (2)  NOTHING IN THIS CHAPTER SHALL PREVENT THE NATURAL
    12     GAS DISTRIBUTION COMPANY FROM MAINTAINING AND UPGRADING ITS
    13     SYSTEM TO MEET RETAIL GAS CUSTOMER REQUIREMENTS CONSISTENT
    14     WITH THE REQUIREMENT OF SECTION 1501 (RELATING TO CHARACTER
    15     OF SERVICE AND FACILITIES) OR COMPLIANCE WITH OTHER STATUTORY
    16     AND REGULATORY REQUIREMENTS.
    17         (3)  DISPUTES CONCERNING FACILITIES SHALL BE SUBJECT TO
    18     THE JURISDICTION OF THE COMMISSION AND MAY BE INITIATED BY
    19     THE FILING OF A COMPLAINT UNDER SECTION 701 (RELATING TO
    20     COMPLAINTS) BY THE COMMISSION OR ANY INTERESTED PARTY.
    21     (C)  CUSTOMER BILLING.--
    22         (1)  SUBJECT TO THE RIGHT OF A RETAIL GAS CUSTOMER TO
    23     CHOOSE TO RECEIVE SEPARATE BILLS FROM ITS NATURAL GAS
    24     SUPPLIER FOR NATURAL GAS SUPPLY SERVICE, THE NATURAL GAS
    25     DISTRIBUTION COMPANY SHALL BE RESPONSIBLE FOR BILLING EACH OF
    26     ITS RETAIL GAS CUSTOMERS FOR NATURAL GAS DISTRIBUTION
    27     SERVICE, CONSISTENT WITH THE ORDERS OR REGULATIONS OF THE
    28     COMMISSION, REGARDLESS OF THE IDENTITY OF THE PROVIDER OF
    29     NATURAL GAS SUPPLY SERVICES.
    30         (2)  (I)  BILLS TO RETAIL GAS CUSTOMERS SHALL CONTAIN
    19990H1331B2112                 - 84 -

     1         SUFFICIENT UNBUNDLED CHARGE INFORMATION TO ENABLE THE
     2         CUSTOMER TO DETERMINE THE BASIS FOR THOSE CHARGES AND
     3         SHALL COMPLY WITH SECTION 1509 (RELATING TO BILLING
     4         PROCEDURES). AT A MINIMUM, SUCH CHARGES SHALL INCLUDE
     5         THOSE SERVICES WHICH ARE UNBUNDLED AS A RESULT OF A
     6         RESTRUCTURING FILING OR RULEMAKING.
     7             (II)  BILLS TO RETAIL RESIDENTIAL CUSTOMERS RENDERED
     8         BY A NATURAL GAS DISTRIBUTION COMPANY FOR NATURAL GAS
     9         DISTRIBUTION SERVICES SHALL INCLUDE INFORMATION REQUIRED
    10         BY COMMISSION REGULATIONS GOVERNING STANDARDS AND BILLING
    11         PRACTICES FOR RESIDENTIAL UTILITY SERVICE.
    12             (III)  BILLS RENDERED BY A NATURAL GAS DISTRIBUTION
    13         COMPANY ON BEHALF OF A NATURAL GAS SUPPLIER SHALL
    14         INCLUDE, IN A FORM AND MANNER DETERMINED BY THE NATURAL
    15         GAS DISTRIBUTION COMPANY, IN CONSULTATION WITH THE
    16         NATURAL GAS SUPPLIER, THE FOLLOWING INFORMATION WITH
    17         RESPECT TO NATURAL GAS SUPPLIER SERVICES: THE NAME OF THE
    18         NATURAL GAS SUPPLIER; THE RATES, CHARGES OR PRICES OF
    19         NATURAL GAS SUPPLY SERVICES BILLED, INCLUDING ADJUSTMENTS
    20         TO PRIOR PERIOD BILLINGS, IF APPLICABLE, AND TAXES, IF
    21         APPLICABLE; AND THE NATURAL GAS SUPPLIER'S TOLL-FREE
    22         TELEPHONE NUMBER AND HOURS OF OPERATION FOR CUSTOMER
    23         INQUIRIES.
    24         (3)  INCREMENTAL COSTS RELATING TO BILLING SERVICES
    25     DESIGNED, IMPLEMENTED AND RENDERED BY THE NATURAL GAS
    26     DISTRIBUTION COMPANY, AT ITS ELECTION, ON BEHALF OF A NATURAL
    27     GAS SUPPLIER OR OTHER ENTITY MAY BE RECOVERED THROUGH FEES
    28     CHARGED BY THE NATURAL GAS DISTRIBUTION COMPANY TO THE
    29     NATURAL GAS SUPPLIER OR OTHER ENTITY. EITHER PARTY MAY
    30     REQUEST THAT THE COMMISSION CONSIDER THE APPROPRIATE LEVEL OF
    19990H1331B2112                 - 85 -

     1     THE FEE. IN DOING SO, THE COMMISSION SHALL CONSIDER FEES
     2     CHARGED BY OTHER NATURAL GAS DISTRIBUTION COMPANIES FOR
     3     SIMILAR SERVICES. THE COMMISSION SHALL EITHER PERMIT THE FEE
     4     TO CONTINUE AS SET OR SHALL ESTABLISH AN ALTERNATIVE
     5     MECHANISM TO PERMIT FULL RECOVERY OF UNRECOVERED JUST AND
     6     REASONABLE COSTS FROM THE SUPPLIER OR THE SUPPLIER'S
     7     CUSTOMERS. NOTHING IN THIS SECTION SHALL PERMIT THE RECOVERY
     8     OF SUCH COSTS FROM NATURAL GAS SUPPLY SERVICE CUSTOMERS OF
     9     THE NATURAL GAS DISTRIBUTION COMPANY.
    10         (4)  IF SERVICES ARE PROVIDED BY AN ENTITY OTHER THAN THE
    11     NATURAL GAS DISTRIBUTION COMPANY, THE ENTITY THAT PROVIDED
    12     THOSE SERVICES SHALL FURNISH TO THE NATURAL GAS DISTRIBUTION
    13     COMPANY BILLING DATA SUFFICIENT TO ENABLE THE NATURAL GAS
    14     DISTRIBUTION COMPANY TO TIMELY BILL RETAIL GAS CUSTOMERS. THE
    15     ENTITY SHALL PROVIDE DATA FOR BILLING PURPOSES IN A FORMAT
    16     AND IN A TIME FRAME AS REQUIRED BY THE NATURAL GAS
    17     DISTRIBUTION COMPANY. THE NATURAL GAS DISTRIBUTION COMPANY
    18     SHALL CONSIDER THE DATA AND INFORMATION  CONFIDENTIAL AND
    19     SHALL TREAT IT AS SUCH.
    20         (5)  NO NATURAL GAS DISTRIBUTION COMPANY SHALL BE
    21     REQUIRED TO FORWARD PAYMENT TO ENTITIES PROVIDING SERVICES TO
    22     CUSTOMERS AND ON WHOSE BEHALF THE NATURAL GAS DISTRIBUTION
    23     COMPANY IS BILLING THOSE CUSTOMERS BEFORE THE NATURAL GAS
    24     DISTRIBUTION COMPANY HAS RECEIVED PAYMENT FOR THOSE SERVICES
    25     FROM CUSTOMERS. THE COMMISSION SHALL ISSUE GUIDELINES
    26     ADDRESSING THE APPLICATION OF PARTIAL PAYMENTS.
    27         (6)  NATURAL GAS DISTRIBUTION COMPANIES AND NATURAL GAS
    28     SUPPLIERS SHALL TAKE REASONABLE STEPS TO ALLOW RETAIL GAS
    29     CUSTOMERS TO CONTRIBUTE VIA THEIR BILL TO HARDSHIP ENERGY
    30     FUNDS WHICH BENEFIT LOW-INCOME RESIDENTIAL RETAIL GAS
    19990H1331B2112                 - 86 -

     1     CONSUMERS.
     2     (D)  ENHANCED METERING.--SUBJECT TO COMMISSION APPROVAL, THE
     3  NATURAL GAS DISTRIBUTION COMPANY MAY REQUIRE THE INSTALLATION,
     4  AT THE RETAIL GAS CUSTOMER'S EXPENSE, OF ENHANCED METERING
     5  CAPABILITY SUFFICIENT TO MATCH THE NATURAL GAS DELIVERED BY THE
     6  RETAIL GAS CUSTOMER'S NATURAL GAS SUPPLIER OR SUPPLIERS WITH
     7  CONSUMPTION BY THAT RETAIL GAS CUSTOMER. IN EXERCISING ITS
     8  DISCRETION, THE COMMISSION SHALL CONSIDER THE EFFECT ON LOW-
     9  INCOME RETAIL GAS CUSTOMERS.
    10  § 2206.  CONSUMER PROTECTIONS AND CUSTOMER SERVICE.
    11     (A)  QUALITY.--A NATURAL GAS DISTRIBUTION COMPANY SHALL BE
    12  RESPONSIBLE FOR CUSTOMER SERVICE FUNCTIONS CONSISTENT WITH THE
    13  ORDERS AND REGULATIONS OF THE COMMISSION, INCLUDING, BUT NOT
    14  LIMITED TO, METER READING, INSTALLATION, TESTING AND MAINTENANCE
    15  AND EMERGENCY RESPONSE FOR ALL CUSTOMERS, AND COMPLAINT
    16  RESOLUTION AND COLLECTIONS RELATED TO THE SERVICE PROVIDED BY
    17  THE NATURAL GAS DISTRIBUTION COMPANY. CUSTOMER SERVICE AND
    18  CONSUMER PROTECTIONS AND POLICIES FOR RETAIL GAS CUSTOMERS
    19  SHALL, AT A MINIMUM, BE MAINTAINED  AT THE SAME LEVEL OF QUALITY
    20  UNDER RETAIL COMPETITION AS IN EXISTENCE ON THE EFFECTIVE DATE
    21  OF THIS CHAPTER.
    22     (B)  CHANGE OF SUPPLIERS.--THE COMMISSION SHALL, BY ORDER OR
    23  REGULATION, ESTABLISH PROCEDURES TO ENSURE THAT A NATURAL GAS
    24  DISTRIBUTION COMPANY DOES NOT CHANGE A RETAIL GAS CUSTOMER'S
    25  NATURAL GAS SUPPLIER WITHOUT DIRECT  ORAL CONFIRMATION FROM THE
    26  CUSTOMER OF RECORD OR WRITTEN EVIDENCE OF THE CUSTOMER'S CONSENT
    27  TO A CHANGE OF SUPPLIER.
    28     (C)  CUSTOMER INFORMATION.--THE COMMISSION SHALL, BY ORDER OR
    29  REGULATION, ESTABLISH REQUIREMENTS THAT EACH NATURAL GAS
    30  DISTRIBUTION COMPANY AND NATURAL GAS SUPPLIER PROVIDE ADEQUATE,
    19990H1331B2112                 - 87 -

     1  ACCURATE CUSTOMER INFORMATION TO ENABLE RETAIL GAS CUSTOMERS TO
     2  MAKE INFORMED CHOICES REGARDING THE PURCHASE OF ALL NATURAL GAS
     3  SERVICES OFFERED BY THAT PROVIDER. INFORMATION SHALL BE PROVIDED
     4  TO RETAIL GAS CUSTOMERS IN AN UNDERSTANDABLE FORMAT THAT ENABLES
     5  RETAIL GAS CUSTOMERS TO COMPARE PRICES AND SERVICES ON A UNIFORM
     6  BASIS.
     7     (D)  CONSUMER EDUCATION.--PRIOR TO THE IMPLEMENTATION OF ANY
     8  RESTRUCTURING PLAN UNDER SECTION 2204 (RELATING TO
     9  IMPLEMENTATION), EACH NATURAL GAS DISTRIBUTION COMPANY, IN
    10  CONJUNCTION WITH THE COMMISSION AND CONSISTENT WITH THE
    11  GUIDELINES ESTABLISHED BY THE COMMISSION, SHALL IMPLEMENT A
    12  CONSUMER EDUCATION PROGRAM TO INFORM CUSTOMERS OF THE CHANGES IN
    13  THE NATURAL GAS UTILITY INDUSTRY. THE PROGRAM SHALL PROVIDE
    14  RETAIL GAS CUSTOMERS WITH INFORMATION NECESSARY TO HELP THEM
    15  MAKE APPROPRIATE CHOICES AS TO THEIR NATURAL GAS SERVICE. THE
    16  EDUCATION PROGRAM SHALL BE SUBJECT TO APPROVAL BY THE
    17  COMMISSION. THE CONSUMER EDUCATION PROGRAM SHALL INCLUDE GOALS,
    18  OBJECTIVES AND AN ACTION PLAN THAT IS DESIGNED TO BE OBJECTIVE,
    19  EASILY UNDERSTOOD, UTILIZES A UNIFORM MEASUREMENT AS ESTABLISHED
    20  BY THE COMMISSION FOR THE COST OF GAS, BE AVAILABLE IN LANGUAGES
    21  THAT THE COMMISSION REQUIRES TO MEET THE NEEDS OF A SERVICE
    22  TERRITORY AND BE SEPARATE AND DISTINCT FROM MARKETING.
    23     (E)  CONSUMER EDUCATION COST RECOVERY.--THE CONSUMER
    24  EDUCATION PROGRAM SHALL BE SUBJECT TO APPROVAL BY THE COMMISSION
    25  AND SHALL BE FUNDED IN EACH NATURAL GAS DISTRIBUTION SERVICE
    26  TERRITORY BY A NONBYPASSABLE, COMPETITIVELY NEUTRAL COST
    27  RECOVERY MECHANISM THAT FULLY RECOVERS THE REASONABLE COST OF
    28  SUCH PROGRAM. TO THE EXTENT THAT THE INDUSTRIAL CUSTOMER CLASS
    29  IS NOT CURRENTLY ASSIGNED SUCH COSTS ON THE EFFECTIVE DATE OF
    30  THIS CHAPTER, IT SHALL NOT BE ASSIGNED SUCH COSTS IN THE FUTURE.
    19990H1331B2112                 - 88 -

     1     (F)  TENANTS' RIGHTS.--NOTHING IN THIS CHAPTER SHALL BE
     2  CONSTRUED TO RESTRICT THE RIGHTS OF TENANTS PURSUANT TO
     3  SUBCHAPTER B OF CHAPTER 15 (RELATING TO DISCONTINUANCE OF
     4  SERVICE TO LEASED PREMISES).
     5  § 2207.  OBLIGATION TO SERVE.
     6     (A)  SUPPLIER OF LAST RESORT.--
     7         (1)  AFTER THE EFFECTIVE DATE OF THIS CHAPTER, THE
     8     NATURAL GAS DISTRIBUTION COMPANY SHALL SERVE AS THE SUPPLIER
     9     OF LAST RESORT FOR RESIDENTIAL, SMALL COMMERCIAL, SMALL
    10     INDUSTRIAL AND ESSENTIAL HUMAN NEEDS CUSTOMERS AND ANY OTHER
    11     CUSTOMER CLASSES DETERMINED BY THE COMMISSION IN THE NATURAL
    12     GAS DISTRIBUTION COMPANY'S RESTRUCTURING PROCEEDING UNTIL
    13     SUCH TIME AS THE COMMISSION, PURSUANT TO THIS SECTION,
    14     APPROVES AN ALTERNATIVE SUPPLIER OR SUPPLIERS TO PROVIDE SUCH
    15     SERVICES TO ANY OR ALL OF THE NATURAL GAS DISTRIBUTION
    16     COMPANY'S CUSTOMERS.
    17         (2)  FOR PURPOSES OF THIS SECTION, A SUPPLIER OF LAST
    18     RESORT IS A NATURAL GAS DISTRIBUTION COMPANY OR NATURAL GAS
    19     SUPPLIER WHICH IS DESIGNATED  BY THE COMMISSION TO PROVIDE
    20     NATURAL GAS SUPPLY SERVICE WITH RESPECT TO ONE OR MORE OF THE
    21     FOLLOWING SERVICES:
    22             (I)  NATURAL GAS SUPPLY SERVICES TO THOSE CUSTOMERS
    23         WHO HAVE NOT CHOSEN AN ALTERNATIVE NATURAL GAS SUPPLIER
    24         OR WHO CHOOSE TO BE SERVED BY THEIR SUPPLIER OF LAST
    25         RESORT;
    26             (II)  NATURAL GAS SUPPLY SERVICES TO THOSE CUSTOMERS
    27         WHO ARE REFUSED SUPPLY SERVICE FROM A NATURAL GAS
    28         SUPPLIER; OR
    29             (III)  NATURAL GAS SUPPLY SERVICES TO THOSE CUSTOMERS
    30         WHOSE NATURAL GAS SUPPLIER HAS FAILED TO DELIVER ITS
    19990H1331B2112                 - 89 -

     1         REQUIREMENTS.
     2     NO CUSTOMER SHALL HAVE MORE THAN ONE SUPPLIER OF LAST RESORT
     3     DESIGNATED FOR ANY OF THE SERVICES SET FORTH IN THIS
     4     PARAGRAPH.
     5     (B)  CONSUMER PROTECTION.--SERVICE BY THE SUPPLIER OF LAST
     6  RESORT SHALL BE SUBJECT TO ALL CONSUMER PROTECTION STANDARDS,
     7  INCLUDING THOSE CONTAINED IN 52 PA. CODE CH. 56 (RELATING TO
     8  STANDARDS AND BILLING PRACTICES FOR RESIDENTIAL UTILITY SERVICE)
     9  AND TO ALL UNIVERSAL SERVICE OBLIGATIONS.
    10     (C)  NATURAL GAS DISTRIBUTION COMPANY.--THE NATURAL GAS
    11  DISTRIBUTION COMPANY SHALL DELIVER NATURAL GAS TO THE EXTENT
    12  THAT IT IS PROVIDED BY ALL NATURAL GAS SUPPLIERS, OR SUPPLIERS
    13  OF LAST RESORT, AS THE CASE MAY BE, IN ACCORDANCE WITH THE
    14  NATURAL GAS DISTRIBUTION COMPANY'S TARIFF.
    15     (D)  STANDARDS OF SERVICE.--CONSISTENT WITH THE STANDARDS SET
    16  FORTH IN SECTION 1501 (RELATING TO CHARACTER OF SERVICE AND
    17  FACILITIES) AND APPLICABLE ORDERS OF THE COMMISSION, A SUPPLIER
    18  OF LAST RESORT UNDER SUBSECTION (A)(2)(III) SHALL PROVIDE
    19  SUFFICIENT SUPPLIES AS TO QUANTITY, QUALITY, PRESSURE AND
    20  LOCATION TO MEET THE OPERATIONAL RELIABILITY REQUIREMENTS OF THE
    21  NATURAL GAS DISTRIBUTION COMPANY'S SYSTEM, INCLUDING, BUT NOT
    22  LIMITED TO, A FAILURE OF ONE OR MORE NATURAL GAS SUPPLIERS TO:
    23         (1)  SUPPLY NATURAL GAS TO THEIR RETAIL GAS CUSTOMERS IN
    24     CONFORMANCE WITH THEIR CONTRACTUAL OBLIGATIONS TO SUCH
    25     CUSTOMERS; OR
    26         (2)  SATISFY APPLICABLE RELIABILITY STANDARDS AND
    27     OBLIGATIONS.
    28     (E)  DISCONTINUATION OF SERVICE.--THE NATURAL GAS
    29  DISTRIBUTION COMPANY SHALL CONTINUE PROVIDING SERVICES AS THE
    30  SUPPLIER OF LAST RESORT TO ALL OF ITS CUSTOMERS FOR ALL OF THE
    19990H1331B2112                 - 90 -

     1  NATURAL GAS SUPPLY SERVICES DESCRIBED IN SUBSECTION (A)(2),
     2  UNLESS, AT ITS DISCRETION, IT REQUESTS AND RECEIVES COMMISSION
     3  APPROVAL TO DISCONTINUE PROVIDING ONE OR MORE SUCH SUPPLIER OF
     4  LAST RESORT OBLIGATION. IN APPROVING SUCH A PETITION, THE
     5  COMMISSION SHALL ALSO APPROVE ANOTHER PARTY AS THE ALTERNATIVE
     6  SUPPLIER OF LAST RESORT FOR EACH CUSTOMER OR CUSTOMER GROUP FOR
     7  WHICH THE NATURAL GAS DISTRIBUTION COMPANY NO LONGER PROVIDES
     8  SUCH NATURAL GAS SUPPLY SERVICES.
     9     (F)  REGULATIONS.--THE COMMISSION SHALL PROMULGATE
    10  REGULATIONS SETTING FORTH THE STANDARDS FOR APPROVING AN
    11  ALTERNATIVE SUPPLIER OF LAST RESORT CONSISTENT WITH THE
    12  PROVISIONS OF THIS TITLE, INCLUDING A MECHANISM TO ENSURE THAT
    13  THE RATES CHARGED BY ANY ALTERNATE SUPPLIER OF LAST RESORT ARE
    14  JUST AND REASONABLE.
    15     (G)  ORGANIZED LABOR.--DURING THE FIVE-YEAR PERIOD FOLLOWING
    16  THE EFFECTIVE DATE OF THIS CHAPTER, APPROVAL OF AN ALTERNATIVE
    17  SUPPLIER OF LAST RESORT PURSUANT TO SUBSECTION (E) SHALL NOT BE
    18  GRANTED UNLESS THE ENTITY DESIGNATED BY THE COMMISSION TO
    19  SUCCEED THE NATURAL GAS DISTRIBUTION COMPANY IN THE PROVISION
    20  OF SERVICE TO THESE CUSTOMERS AGREES TO RECOGNIZE RELEVANT UNION
    21  AND COLLECTIVE BARGAINING AGREEMENTS OF THE NATURAL GAS
    22  DISTRIBUTION COMPANY THEN IN PLACE.
    23     (H)  PETITION TO BECOME SUPPLIER OF LAST RESORT.--AFTER THE
    24  FIVE-YEAR PERIOD FOLLOWING THE EFFECTIVE DATE OF THIS CHAPTER,
    25  ANY PARTY MAY PETITION THE COMMISSION TO BECOME THE SUPPLIER OF
    26  LAST RESORT TO SOME OR ALL CUSTOMERS EXCEPT FOR THOSE CUSTOMERS
    27  IDENTIFIED IN SUBSECTION (A)(2)(I).
    28     (I)  NOTICE REQUIRED PRIOR TO MARKET EXIT.--
    29         (1)  A NATURAL GAS SUPPLIER MAY NOT EXIT THE MARKET
    30     WITHOUT PROVIDING NOTICE AS DETERMINED BY THE COMMISSION IN
    19990H1331B2112                 - 91 -

     1     THE RESTRUCTURING PROCEEDING OF THE NATURAL GAS DISTRIBUTION
     2     COMPANY TO ITS CUSTOMERS, THE SUPPLIER OF LAST RESORT AND THE
     3     NATURAL GAS DISTRIBUTION COMPANY.
     4         (2)  IF FIRM GAS SUPPLY CONTRACTS WITH PENNSYLVANIA
     5     NATURAL GAS PRODUCERS OR STORAGE OR TRANSPORTATION CAPACITY
     6     CONTRACTS USED BY THE NATURAL GAS SUPPLIER TO SERVE SUCH
     7     RETAIL GAS CUSTOMERS WERE EITHER ASSIGNED OR RELEASED TO THE
     8     NATURAL GAS SUPPLIER OR CONSTITUTE CAPACITY WHICH WAS
     9     ACQUIRED BY THE NATURAL GAS SUPPLIER AS THE RESULT OF
    10     NONRENEWAL OF A STORAGE OR TRANSPORTATION CAPACITY CONTRACT
    11     PREVIOUSLY HELD BY THE NATURAL GAS DISTRIBUTION COMPANY, THE
    12     NATURAL GAS SUPPLIER SHALL OFFER THE SUPPLIER OF LAST RESORT
    13     OR SUCCESSOR NATURAL GAS SUPPLIER A RIGHT OF FIRST REFUSAL TO
    14     UTILIZE SUCH PENNSYLVANIA SUPPLY CONTRACTS OR STORAGE OR
    15     TRANSPORTATION CAPACITY CONTRACTS AT ITS CONTRACT COST AS
    16     LONG AS NEEDED TO SERVE THOSE CUSTOMERS.
    17         (3)  IF THE STORAGE OR TRANSPORTATION CAPACITY CONTRACTS
    18     HELD BY THE NATURAL GAS SUPPLIER WERE ACQUIRED IN ANOTHER
    19     MANNER, AND THERE WAS NOT SUFFICIENT NOTICE GIVEN TO THE
    20     SUPPLIER OF LAST RESORT AND THE NATURAL GAS DISTRIBUTION
    21     COMPANY, OR IF THERE IS NOT ALTERNATIVE STORAGE OR
    22     TRANSPORTATION CAPACITY AVAILABLE WHICH IS OPERATIONALLY
    23     SUFFICIENT TO SERVE THE MARKET THE NATURAL GAS SUPPLIER WAS
    24     SERVING, THEN THE SUPPLIER OF LAST RESORT SHALL BE PROVIDED
    25     WITH A RIGHT TO USE SUCH STORAGE OR TRANSPORTATION CAPACITY
    26     AS DESIGNATED BY THE NATURAL GAS SUPPLIER, AT THE CONTRACT
    27     COST, UNTIL THE SUPPLIER OF LAST RESORT IS ABLE TO ACQUIRE
    28     REPLACEMENT CAPACITY SUFFICIENT TO SERVE ITS CUSTOMERS USING
    29     REASONABLE AND DILIGENT EFFORTS TO DO SO.
    30         (4)  IF A DISPUTE ARISES UNDER THIS SUBSECTION, THE
    19990H1331B2112                 - 92 -

     1     AGGRIEVED PARTY MAY FILE A COMPLAINT WITH THE COMMISSION FOR
     2     RESOLUTION WITHIN 45 DAYS.
     3     (J)  DUTY INVOLVING LOST CUSTOMERS.--TO THE EXTENT THAT A
     4  NATURAL GAS SUPPLIER LOSES RETAIL GAS CUSTOMERS SUCH THAT ITS
     5  CAPACITY REQUIREMENTS TO A NATURAL GAS DISTRIBUTION COMPANY ARE
     6  REDUCED BELOW THE LEVEL ESTABLISHED BY THE COMMISSION FOR SUCH
     7  PURPOSE IN THE NATURAL GAS DISTRIBUTION COMPANY'S RESTRUCTURING
     8  PROCEEDING, THE NATURAL GAS SUPPLIER SHALL HAVE THE SAME
     9  OBLIGATIONS SET FORTH IN SUBSECTION (I).
    10     (K)  RATE AFTER SERVICE DISCONTINUED.--IN THE EVENT THE
    11  NATURAL GAS SUPPLIER DISCONTINUES SERVICE OR DEFAULTS BEFORE ITS
    12  CONTRACT WITH THE CUSTOMER EXPIRES, THE RETAIL GAS CUSTOMER
    13  SHALL BE SERVED BY THE SUPPLIER OF LAST RESORT AT THE
    14  COMMISSION-APPROVED SUPPLIER OF LAST RESORT RATE COMMENCING WITH
    15  THE NEXT BILLING CYCLE. HOWEVER, THE RETAIL GAS CUSTOMER SHALL
    16  CONTINUE TO BE CHARGED THE RATE THE CUSTOMER NEGOTIATED WITH THE
    17  DISCONTINUING OR DEFAULTING NATURAL GAS SUPPLIER FOR THE
    18  REMAINDER OF THE BILLING CYCLE. ANY DIFFERENCE BETWEEN THE COST
    19  INCURRED BY THE SUPPLIER OF LAST RESORT AND THE AMOUNT PAYABLE
    20  BY THE RETAIL GAS CUSTOMER SHALL BE RECOVERED FROM THE NATURAL
    21  GAS SUPPLIER OR FROM THE BOND OR OTHER SECURITY PROVIDED BY THE
    22  NATURAL GAS SUPPLIER WITHOUT RECOURSE TO ANY RETAIL GAS CUSTOMER
    23  NOT OTHERWISE CONTRACTUALLY COMMITTED FOR THE DIFFERENCE.
    24  § 2208.  REQUIREMENTS FOR NATURAL GAS SUPPLIERS.
    25     (A)  LICENSE REQUIREMENTS.--NO ENTITY SHALL ENGAGE IN THE
    26  BUSINESS OF A NATURAL GAS SUPPLIER UNLESS IT HOLDS A LICENSE
    27  ISSUED BY THE COMMISSION. TO THE EXTENT THAT A NATURAL GAS
    28  DISTRIBUTION COMPANY PROVIDES NATURAL GAS SUPPLY SERVICE OUTSIDE
    29  OF ITS CHARTERED OR CERTIFICATED TERRITORY, IT ALSO MUST HOLD A
    30  LICENSE. A LICENSE SHALL NOT BE REQUIRED FOR CUSTOMERS WHO MAKE
    19990H1331B2112                 - 93 -

     1  DE MINIMIS INCIDENTAL SALES OR RESALES TO THEMSELVES, AN
     2  AFFILIATE OR TO OTHER NONRESIDENTIAL RETAIL GAS CUSTOMERS.
     3     (B)  LICENSE APPLICATION AND ISSUANCE.--AN APPLICATION FOR A
     4  NATURAL GAS SUPPLIER LICENSE SHALL BE MADE TO THE COMMISSION IN
     5  WRITING, BE VERIFIED BY OATH OR AFFIRMATION AND BE IN SUCH FORM
     6  AND CONTAIN SUCH INFORMATION AS THE COMMISSION MAY, BY RULE OR
     7  ORDER, REQUIRE. A LICENSE SHALL BE ISSUED TO ANY APPLICANT,
     8  AUTHORIZING THE WHOLE OR ANY PART OF THE SERVICE COVERED BY THE
     9  APPLICATION, IF IT IS FOUND THAT THE APPLICANT IS FIT, WILLING
    10  AND ABLE TO PERFORM PROPERLY THE SERVICE PROPOSED AND TO CONFORM
    11  TO THE APPLICABLE PROVISIONS OF THIS TITLE AND THE ORDERS AND
    12  REGULATIONS OF THE COMMISSION, INCLUDING THOSE CONCERNING
    13  STANDARDS AND BILLING PRACTICES, AND THAT THE PROPOSED SERVICE,
    14  TO THE EXTENT AUTHORIZED BY THE LICENSE, WILL BE CONSISTENT WITH
    15  THE PUBLIC INTEREST. OTHERWISE, SUCH APPLICATION SHALL BE
    16  DENIED.
    17     (C)  FINANCIAL FITNESS.--
    18         (1)  IN ORDER TO ENSURE THE SAFETY AND RELIABILITY OF THE
    19     NATURAL GAS SUPPLY SERVICE IN THIS COMMONWEALTH, NO NATURAL
    20     GAS SUPPLIER LICENSE SHALL BE ISSUED OR REMAIN IN FORCE
    21     UNLESS THE APPLICANT OR HOLDER, AS THE CASE MAY BE, COMPLIES
    22     WITH ALL OF THE FOLLOWING:
    23             (I)  FURNISHES A BOND OR OTHER SECURITY IN A FORM AND
    24         AMOUNT TO ENSURE THE FINANCIAL RESPONSIBILITY OF THE
    25         NATURAL GAS SUPPLIER. THE CRITERIA EACH NATURAL GAS
    26         DISTRIBUTION COMPANY SHALL USE TO DETERMINE THE AMOUNT
    27         AND FORM OF SUCH BOND OR OTHER SECURITY SHALL BE SET
    28         FORTH IN THE NATURAL GAS DISTRIBUTION COMPANY'S
    29         RESTRUCTURING FILING. IN APPROVING THE CRITERIA,
    30         COMMISSION CONSIDERATIONS SHALL INCLUDE, BUT NOT BE
    19990H1331B2112                 - 94 -

     1         LIMITED TO, THE FINANCIAL IMPACT ON THE NATURAL GAS
     2         DISTRIBUTION COMPANY OR AN ALTERNATIVE SUPPLIER OF LAST
     3         RESORT OF A DEFAULT OR SUBSEQUENT BANKRUPTCY OF A NATURAL
     4         GAS SUPPLIER. THE COMMISSION SHALL PERIODICALLY REVIEW
     5         THE CRITERIA UPON PETITION BY ANY PARTY. THE AMOUNT AND
     6         FORM OF THE BOND OR OTHER SECURITY MAY BE MUTUALLY AGREED
     7         TO BETWEEN THE NATURAL GAS DISTRIBUTION COMPANY OR THE
     8         ALTERNATE SUPPLIER OF LAST RESORT AND THE NATURAL GAS
     9         SUPPLIER OR FAILING THAT SHALL BE DETERMINED BY CRITERIA
    10         APPROVED BY THE COMMISSION.
    11             (II)  PROVIDES THE COMMISSION WITH THE ADDRESS OF THE
    12         PARTICIPANT'S PRINCIPAL OFFICE IN THIS COMMONWEALTH OR
    13         THE ADDRESS OF THE PARTICIPANT'S REGISTERED AGENT IN THIS
    14         COMMONWEALTH, THE LATTER BEING THE ADDRESS AT WHICH THE
    15         PARTICIPANT MAY BE SERVED PROCESS.
    16         (2)  FAILURE OF A NATURAL GAS SUPPLIER TO COMPLY WITH ANY
    17     PROVISION OF THIS CHAPTER OR THE RULES, REGULATIONS, ORDERS
    18     OR DIRECTIVES OF THE DEPARTMENT OF REVENUE OR OF THE
    19     COMMISSION, INCLUDING, BUT NOT LIMITED TO, ENGAGING IN
    20     ANTICOMPETITIVE BEHAVIOR, SHALL BE CAUSE FOR THE COMMISSION
    21     TO REVOKE THE LICENSE OF THE NATURAL GAS SUPPLIER.
    22     (D)  TRANSFERABILITY OF LICENSES.--NO LICENSE ISSUED UNDER
    23  THIS CHAPTER MAY BE TRANSFERRED WITHOUT PRIOR COMMISSION
    24  APPROVAL.
    25     (E)  FORM OF REGULATION OF NATURAL GAS SUPPLIERS.--EXCEPT
    26  WHERE A NATURAL GAS SUPPLIER SERVES AS A SUPPLIER OF LAST
    27  RESORT, THE COMMISSION MAY FORBEAR FROM EXTENDING ITS REGULATION
    28  OF NATURAL GAS SUPPLIERS BEYOND LICENSING, BONDING, RELIABILITY
    29  AND CONSUMER SERVICES AND PROTECTIONS, INCLUDING ALL APPLICABLE
    30  PORTIONS OF 52 PA. CODE CH. 56 (RELATING TO STANDARDS AND
    19990H1331B2112                 - 95 -

     1  BILLING PRACTICES FOR RESIDENTIAL UTILITY SERVICE). SUBJECT TO
     2  THE PROVISIONS OF SECTION 2207 (RELATING TO OBLIGATION TO
     3  SERVE), NOTHING IN THIS SECTION SHALL PRECLUDE A NATURAL GAS
     4  SUPPLIER, UPON APPROPRIATE AND REASONABLE NOTICE TO THE RETAIL
     5  GAS CUSTOMER, SUPPLIER OF LAST RESORT, AND THE NATURAL GAS
     6  DISTRIBUTION COMPANY, FROM CANCELING ITS CONTRACT WITH ANY
     7  CUSTOMER FOR LEGAL CAUSE, SUBJECT TO THE CUSTOMER'S RIGHT TO
     8  HAVE CONTINUED SERVICE FROM THE SUPPLIER OF LAST RESORT.
     9     (F)  AVAILABILITY OF THE SERVICE OF NATURAL GAS SUPPLIERS.--
    10  PRIOR TO LICENSING ANY NATURAL GAS SUPPLIER, THE COMMISSION
    11  SHALL SET FORTH STANDARDS TO ENSURE THAT ALL CUSTOMER CLASSES
    12  MAY CHOOSE TO PURCHASE NATURAL GAS FROM A NATURAL GAS SUPPLIER.
    13  THE COMMISSION SHALL ALSO ENSURE THAT NATURAL GAS SUPPLIERS
    14  COMPLY WITH APPLICABLE PROVISIONS OF 52 PA. CODE CH. 56.
    15     (G)  OPEN AND NONDISCRIMINATORY ACCESS.--IN ADDITION TO
    16  MEETING THE LICENSE REQUIREMENTS APPLICABLE TO APPLICANTS UNDER
    17  SUBSECTION (B), A MUNICIPAL CORPORATION SHALL, BEFORE IT IS
    18  PERMITTED TO PROVIDE NATURAL GAS SUPPLY SERVICES AS A NATURAL
    19  GAS SUPPLIER, DEMONSTRATE, AND THE COMMISSION SHALL DETERMINE,
    20  THAT BY THE DATE OF THE ISSUANCE OF THE LICENSE, IT WILL PROVIDE
    21  OTHER NATURAL GAS SUPPLIERS OPEN AND NONDISCRIMINATORY ACCESS TO
    22  ITS GAS DISTRIBUTION SYSTEM UNDER STANDARDS THAT ARE COMPARABLE
    23  TO THIS TITLE, TAKING INTO CONSIDERATION THE PARTICULAR
    24  CIRCUMSTANCES OF THE MUNICIPAL CORPORATION'S OWNERSHIP AND/OR
    25  OPERATION OF THE GAS DISTRIBUTION SYSTEM.
    26  § 2209.  MARKET POWER REMEDIATION.
    27     (A)  INTERIM STANDARDS OF CONDUCT.--WITHIN 120 DAYS OF THE
    28  EFFECTIVE DATE OF THIS CHAPTER, THE COMMISSION SHALL PROVIDE BY
    29  ORDER BINDING, INTERIM GUIDELINES FOR STANDARDS OF CONDUCT
    30  GOVERNING THE ACTIVITIES OF AND RELATIONSHIPS BETWEEN NATURAL
    19990H1331B2112                 - 96 -

     1  GAS DISTRIBUTION COMPANIES AND THEIR AFFILIATED NATURAL GAS
     2  SUPPLIERS AND OTHER NATURAL GAS SUPPLIERS AND MONITOR AND
     3  ENFORCE COMPLIANCE WITH THOSE STANDARDS.
     4     (B)  PERMANENT STANDARDS OF CONDUCT.--THE COMMISSION SHALL
     5  THEREUPON PROMULGATE REGULATIONS SETTING FORTH PERMANENT
     6  STANDARDS OF CONDUCT GOVERNING THE ACTIVITIES OF AND
     7  RELATIONSHIPS BETWEEN NATURAL GAS DISTRIBUTION COMPANIES AND
     8  THEIR AFFILIATED NATURAL GAS SUPPLIERS AND OTHER NATURAL GAS
     9  SUPPLIERS AND MONITOR AND ENFORCE COMPLIANCE WITH THESE
    10  STANDARDS. THE COMMISSION SHALL NEITHER FAVOR NOR DISFAVOR
    11  CONDUCT OR OPERATIONS BY AND BETWEEN A NATURAL GAS DISTRIBUTION
    12  COMPANY AND AN AFFILIATED NATURAL GAS SUPPLIER OR A
    13  NONAFFILIATED NATURAL GAS SUPPLIER.
    14     (C)  CONTENTS OF STANDARDS.--STANDARDS OF CONDUCT SHALL
    15  PROVIDE FOR:
    16         (1)  NO DISCRIMINATION AGAINST OR PREFERENTIAL TREATMENT
    17     OF ANY NATURAL GAS SUPPLIER, INCLUDING AN AFFILIATED NATURAL
    18     GAS SUPPLIER.
    19         (2)  NO DISCLOSURE OR PREFERENTIAL SHARING OF ANY
    20     CONFIDENTIAL INFORMATION TO OR WITH ANY INDIVIDUAL NATURAL
    21     GAS SUPPLIER.
    22         (3)  ADEQUATE RULES PROHIBITING CROSS-SUBSIDIZATION OF AN
    23     AFFILIATED NATURAL GAS SUPPLIER BY A NATURAL GAS DISTRIBUTION
    24     COMPANY.
    25         (4)  MAINTENANCE OF SEPARATE BOOKS AND RECORDS BY THE
    26     NATURAL GAS DISTRIBUTION COMPANY AND ITS AFFILIATED NATURAL
    27     GAS SUPPLIER.
    28         (5)  SUFFICIENT PHYSICAL AND OPERATIONAL SEPARATION, BUT
    29     NOT INCLUDING LEGAL DIVESTITURE, TO ACCOMPLISH PARAGRAPHS
    30     (1), (2), (3) AND (4).
    19990H1331B2112                 - 97 -

     1         (6)  AN INFORMAL DISPUTE RESOLUTION PROCEDURE.
     2         (7)  A SYSTEM OF PENALTIES FOR NONCOMPLIANCE WITH THE
     3     FINAL SET OF STANDARDS OF CONDUCT CONSISTENT WITH EXISTING
     4     COMMISSION REGULATIONS.
     5     (D)  LIMITATION.--THE STANDARDS SHALL NOT PROHIBIT THE
     6  NATURAL GAS DISTRIBUTION COMPANY AND ITS AFFILIATED NATURAL GAS
     7  SUPPLIER FROM USING OR SHARING SIMILAR CORPORATE NAMES,
     8  TRADEMARKS, TRADE DRESS OR SERVICE MARKS.
     9     (E)  INITIATION OF INVESTIGATIONS.--UPON COMPLAINT OR UPON
    10  ITS OWN MOTION, FOR GOOD CAUSE SHOWN, THE COMMISSION SHALL
    11  CONDUCT AN INVESTIGATION OF THE IMPACT ON THE PROPER FUNCTIONING
    12  OF A FULLY COMPETITIVE RETAIL NATURAL GAS MARKET, OF MERGERS,
    13  CONSOLIDATIONS, ACQUISITION OR DISPOSITION OF ASSETS OR
    14  SECURITIES OF NATURAL GAS SUPPLIERS AND ANTICOMPETITIVE OR
    15  DISCRIMINATORY CONDUCT AFFECTING THE RETAIL DISTRIBUTION OF
    16  NATURAL GAS.
    17     (F)  CONDUCT OF INVESTIGATIONS.--
    18         (1)  THE COMMISSION MAY REQUIRE A NATURAL GAS SUPPLIER TO
    19     PROVIDE INFORMATION, INCLUDING DOCUMENTS AND TESTIMONY, IN
    20     ACCORDANCE WITH THE COMMISSION'S REGULATIONS REGARDING THE
    21     DISCOVERY OF INFORMATION.
    22         (2)  MATERIAL WHICH THE COMMISSION DETERMINES TO BE
    23     CONFIDENTIAL, PROPRIETARY OR TRADE SECRET INFORMATION
    24     PROVIDED UNDER THIS SUBSECTION SHALL NOT BE DISCLOSED TO ANY
    25     PERSON NOT DIRECTLY EMPLOYED OR RETAINED BY THE COMMISSION TO
    26     CONDUCT THE INVESTIGATION WITHOUT THE CONSENT OF THE PARTY
    27     PROVIDING THE INFORMATION.
    28         (3)  NOTWITHSTANDING THE PROHIBITION ON DISCLOSURE OF
    29     INFORMATION IN PARAGRAPH (2), THE COMMISSION SHALL DISCLOSE
    30     INFORMATION OBTAINED UNDER THIS SUBSECTION TO THE OFFICE OF
    19990H1331B2112                 - 98 -

     1     CONSUMER ADVOCATE AND THE OFFICE OF SMALL BUSINESS ADVOCATE
     2     UNDER AN APPROPRIATE CONFIDENTIALITY AGREEMENT. THE
     3     COMMISSION MAY DISCLOSE THE INFORMATION TO APPROPRIATE
     4     FEDERAL OR STATE LAW ENFORCEMENT OFFICIALS IF IT DETERMINES
     5     THAT THE DISCLOSURE OF THE INFORMATION IS NECESSARY TO
     6     PREVENT OR RESTRAIN A VIOLATION OF FEDERAL OR STATE LAW AND
     7     IT PROVIDES THE PARTY THAT PROVIDED THE INFORMATION WITH
     8     REASONABLE NOTICE AND OPPORTUNITY TO PREVENT OR LIMIT
     9     DISCLOSURE.
    10     (G)  REFERRALS AND INVESTIGATION.--IF, AS A RESULT OF THE
    11  INVESTIGATION CONDUCTED UNDER THIS SECTION, THE COMMISSION HAS
    12  REASON TO BELIEVE THAT ANTICOMPETITIVE OR DISCRIMINATORY
    13  CONDUCT, INCLUDING THE UNLAWFUL EXERCISE OF MARKET POWER, IS
    14  PREVENTING THE RETAIL GAS CUSTOMERS FROM OBTAINING THE BENEFITS
    15  OF A PROPERLY FUNCTIONING AND EFFECTIVELY COMPETITIVE RETAIL
    16  NATURAL GAS MARKET, THE COMMISSION, PURSUANT TO ITS REGULATIONS,
    17  SHALL:
    18         (1)  REFER ITS FINDINGS TO THE ATTORNEY GENERAL, THE
    19     UNITED STATES DEPARTMENT OF JUSTICE, THE SECURITIES AND
    20     EXCHANGE COMMISSION OR THE FEDERAL ENERGY REGULATORY
    21     COMMISSION.
    22         (2)  SUBJECT TO SUBSECTION (C)(3), DISCLOSE ANY
    23     INFORMATION IT HAS OBTAINED IN THE COURSE OF ITS
    24     INVESTIGATION TO THE AGENCY OR AGENCIES TO WHICH IT HAD MADE
    25     A REFERRAL UNDER PARAGRAPH (1).
    26         (3)  INTERVENE, AS PROVIDED AND PERMITTED BY LAW OR
    27     REGULATION, IN ANY PROCEEDINGS INITIATED AS A RESULT OF A
    28     REFERRAL MADE UNDER PARAGRAPH (1).
    29     (H)  MARKETING STANDARDS.--AS PART OF EACH NATURAL GAS
    30  DISTRIBUTION COMPANY'S RESTRUCTURING PROCEEDING, THE COMMISSION
    19990H1331B2112                 - 99 -

     1  MAY, IN ITS DISCRETION, DEVELOP AND APPLY DIFFERENT STANDARDS OF
     2  CONDUCT TO THE NATURAL GAS DISTRIBUTION COMPANY'S MARKETING
     3  ACTIVITIES RELATED TO NATURAL GAS SUPPLY SERVICES. NO SUCH
     4  STANDARDS SHALL APPLY TO THE NATURAL GAS DISTRIBUTION COMPANY'S
     5  MARKETING DIVISION OR OPERATIONS UNTIL THE COMMISSION ISSUES AN
     6  ORDER IN THE CONTEXT OF THAT NATURAL GAS DISTRIBUTION COMPANY'S
     7  RESTRUCTURING PROCEEDING.
     8     (I)  DEFINITION.--SUBJECT TO THE CONDITIONS SET FORTH IN
     9  SUBSECTION (H), FOR THE PURPOSES OF THIS SECTION, THE TERM
    10  "AFFILIATED NATURAL GAS SUPPLIER" INCLUDES MARKETING ACTIVITIES
    11  RELATED TO NATURAL GAS SUPPLY SERVICES BY THE MARKETING DIVISION
    12  OR THE MARKETING OPERATION OF A NATURAL GAS DISTRIBUTION
    13  COMPANY.
    14  § 2210.  APPROVAL OF PROPOSED MERGERS, CONSOLIDATIONS,
    15             ACQUISITIONS OR DISPOSITIONS.
    16     (A)  GENERAL RULE.--IN THE EXERCISE OF AUTHORITY THE
    17  COMMISSION OTHERWISE MAY HAVE TO APPROVE MERGERS OR
    18  CONSOLIDATIONS INVOLVING NATURAL GAS DISTRIBUTION COMPANIES OR
    19  NATURAL GAS SUPPLIERS OR THE ACQUISITION OR DISPOSITION OF
    20  ASSETS OR SECURITIES OF NATURAL GAS DISTRIBUTION COMPANIES OR
    21  NATURAL GAS SUPPLIERS, THE COMMISSION SHALL CONSIDER:
    22         (1)  WHETHER THE PROPOSED MERGER, CONSOLIDATION,
    23     ACQUISITION OR DISPOSITION IS LIKELY TO RESULT IN
    24     ANTICOMPETITIVE OR DISCRIMINATORY CONDUCT, INCLUDING THE
    25     UNLAWFUL EXERCISE OF MARKET POWER, WHICH WILL PREVENT RETAIL
    26     GAS CUSTOMERS FROM OBTAINING THE BENEFITS OF A PROPERLY
    27     FUNCTIONING AND EFFECTIVELY COMPETITIVE RETAIL NATURAL GAS
    28     MARKET.
    29         (2)  THE EFFECT OF THE PROPOSED MERGER, CONSOLIDATION,
    30     ACQUISITION OR DISPOSITION ON THE EMPLOYEES OF THE NATURAL
    19990H1331B2112                 - 100 -

     1     GAS DISTRIBUTION COMPANY AND ON ANY AUTHORIZED COLLECTIVE
     2     BARGAINING AGENT REPRESENTING THOSE EMPLOYEES.
     3     (B)  PROCEDURE.--UPON REQUEST FOR ANY APPROVAL IDENTIFIED IN
     4  SUBSECTION (A), THE COMMISSION SHALL PROVIDE NOTICE AND AN
     5  OPPORTUNITY FOR OPEN, PUBLIC EVIDENTIARY HEARINGS. IF THE
     6  COMMISSION FINDS, AFTER HEARING, THAT A PROPOSED MERGER,
     7  CONSOLIDATION, ACQUISITION OR DISPOSITION IS LIKELY TO RESULT IN
     8  ANTICOMPETITIVE OR DISCRIMINATORY CONDUCT, INCLUDING THE
     9  UNLAWFUL EXERCISE OF MARKET POWER, WHICH WILL PREVENT RETAIL GAS
    10  CUSTOMERS FROM OBTAINING BENEFITS OF A PROPERLY FUNCTIONING AND
    11  EFFECTIVELY COMPETITIVE RETAIL NATURAL GAS MARKET, THE
    12  COMMISSION SHALL NOT APPROVE SUCH PROPOSED MERGER,
    13  CONSOLIDATION, ACQUISITION OR DISPOSITION, EXCEPT UPON SUCH
    14  TERMS AND CONDITIONS AS IT FINDS NECESSARY TO PRESERVE THE
    15  BENEFITS OF A PROPERLY FUNCTIONING AND EFFECTIVELY COMPETITIVE
    16  RETAIL NATURAL GAS MARKET.
    17     (C)  PRESERVATION OF RIGHTS.--NOTHING IN THIS SECTION SHALL
    18  RESTRICT THE RIGHT OF ANY PARTY TO PURSUE ANY OTHER REMEDY
    19  AVAILABLE TO IT.
    20  § 2211.  RATE CAPS.
    21     (A)  GENERAL RULE.--EXCEPT AS PROVIDED UNDER SUBSECTIONS (D),
    22  (E), (F) AND (G) AND SECTION 2212 (RELATING TO CITY NATURAL GAS
    23  DISTRIBUTION OPERATIONS), FOR A PERIOD FROM THE EFFECTIVE DATE
    24  OF THIS CHAPTER UNTIL JANUARY 1, 2001, THE TOTAL NON-GAS COST
    25  CHARGES OF A NATURAL GAS DISTRIBUTION COMPANY FOR SERVICE TO ANY
    26  RETAIL GAS CUSTOMER SHALL NOT EXCEED THE MAXIMUM NON-GAS COST
    27  CHARGES THAT ARE CONTAINED IN THE NATURAL GAS DISTRIBUTION
    28  COMPANY'S TARIFF AS OF THE EFFECTIVE DATE OF THIS CHAPTER.
    29     (B)  RECOVERY OF DEFERRED COSTS.--
    30         (1)  IN A RESTRUCTURING PROCEEDING, THE NATURAL GAS
    19990H1331B2112                 - 101 -

     1     DISTRIBUTION COMPANY MAY IDENTIFY CATEGORIES OF COSTS
     2     RESULTING FROM THIS CHAPTER.
     3         (2)  THE NATURAL GAS DISTRIBUTION COMPANY MAY SEEK
     4     PERMISSION IN ITS RESTRUCTURING PROCEEDING TO CAPITALIZE AND
     5     TO AMORTIZE SUCH COSTS OVER AN APPROPRIATE PERIOD TO BE
     6     DETERMINED BY THE COMMISSION. THE AMORTIZATION SHALL COMMENCE
     7     AT THE TIME WHEN RESTRUCTURING ORDERS ARE ISSUED. THE NATURAL
     8     GAS DISTRIBUTION COMPANY MAY SEEK RECOVERY OF THE UNAMORTIZED
     9     BALANCE OF SUCH COSTS IN A FUTURE RATE PROCEEDING, AND THE
    10     COMMISSION SHALL ALLOW RECOVERY OF SUCH COSTS PROVIDED THAT
    11     THE COMMISSION DETERMINES THAT SUCH COSTS ARE REASONABLE AND
    12     THAT THE RESULTING RATES ARE JUST AND REASONABLE.
    13     (C)  DEFERRAL OF COSTS.--COSTS RECOVERABLE UNDER SECTIONS
    14  2203(6) (RELATING TO STANDARDS FOR RESTRUCTURING OF NATURAL GAS
    15  UTILITY INDUSTRY) AND 2206(E) (RELATING TO CONSUMER PROTECTIONS
    16  AND CUSTOMER SERVICE), IN EXCESS OF AMOUNTS ALREADY REFLECTED IN
    17  A NATURAL GAS DISTRIBUTION COMPANY'S RATES, WHICH ARE INCURRED
    18  BETWEEN THE DATE OF ENTRY OF THE COMMISSION'S RESTRUCTURING
    19  ORDER AND THE EARLIER OF THE DATE ON WHICH THE COMMISSION
    20  AUTHORIZES COMMENCEMENT OF RECOVERY OR JUNE 30, 2002, MAY BE
    21  DEFERRED FOR RECOVERY IN THE FUTURE. SUCH DEFERRALS SHALL BE
    22  WITHOUT INTEREST.
    23     (D)  CIRCUMSTANCES FOR EXCEPTIONS.--A NATURAL GAS
    24  DISTRIBUTION COMPANY MAY SEEK, AND THE COMMISSION MAY APPROVE,
    25  AN EXCEPTION TO THE LIMITATIONS SET FORTH IN THIS SECTION UNDER
    26  ANY OF THE FOLLOWING CIRCUMSTANCES:
    27         (1)  THE NATURAL GAS DISTRIBUTION COMPANY MEETS THE
    28     REQUIREMENTS FOR EXTRAORDINARY RELIEF UNDER SECTION 1308(E)
    29     (RELATING TO VOLUNTARY CHANGES IN RATES).
    30         (2)  THE NATURAL GAS DISTRIBUTION COMPANY DEMONSTRATES
    19990H1331B2112                 - 102 -

     1     THAT A RATE INCREASE IS NECESSARY IN ORDER TO PRESERVE THE
     2     RELIABILITY OF THE NATURAL GAS DISTRIBUTION SYSTEM.
     3         (3)  THE NATURAL GAS DISTRIBUTION COMPANY IS SUBJECT TO
     4     SIGNIFICANT INCREASES IN THE RATE OF FEDERAL TAXES OR OTHER
     5     SIGNIFICANT INCREASES IN COSTS RESULTING FROM CHANGES IN LAW
     6     OR REGULATIONS THAT WOULD NOT ALLOW THE NATURAL GAS
     7     DISTRIBUTION COMPANY TO EARN A FAIR RATE OF RETURN.
     8     (E)  INTERCLASS AND INTRACLASS COST SHIFTS.--EXCEPT AS
     9  PROVIDED IN SECTION 2212, FOR THE PERIOD FROM THE EFFECTIVE DATE
    10  OF THIS CHAPTER UNTIL JANUARY 1, 2001, INTERCLASS OR INTRACLASS
    11  COST SHIFTS ARE PROHIBITED. THIS PROHIBITION AGAINST COST
    12  SHIFTING MAY BE ACCOMPLISHED BY MAINTAINING THE COST ALLOCATION
    13  METHODOLOGY ACCEPTED BY THE COMMISSION FOR EACH NATURAL GAS
    14  DISTRIBUTION COMPANY IN THE COMPANY'S MOST RECENT BASE RATE
    15  PROCEEDING.
    16     (F)  STATE TAX ADJUSTMENT SURCHARGE.--THE NATURAL GAS
    17  DISTRIBUTION COMPANY, OTHER THAN A CITY NATURAL GAS DISTRIBUTION
    18  OPERATION, SHALL REMAIN SUBJECT TO THE STATE TAX ADJUSTMENT
    19  SURCHARGE AND SHALL BE PERMITTED TO ADJUST ITS STATE TAX
    20  ADJUSTMENT SURCHARGE MECHANISM TO REFLECT STATE TAX CHANGES OR
    21  ADDITIONS. THE NATURAL GAS DISTRIBUTION COMPANY SHALL ALSO
    22  REMAIN SUBJECT TO EXISTING RIDERS OR SURCHARGES FOR THE
    23  COLLECTION OF NON-GAS TRANSITION COSTS PURSUANT TO FEDERAL
    24  ENERGY REGULATORY COMMISSION DECISIONS.
    25     (G)  PROVISIONS RELATING TO INTERSTATE PIPELINES.--
    26         (1)  NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS
    27     CHAPTER, IF A NATURAL GAS DISTRIBUTION COMPANY'S CURRENT BASE
    28     RATE REVENUES REFLECT THE MARGINS REALIZED THROUGH THE
    29     UTILIZATION OF FIRM INTERSTATE PIPELINE TRANSPORTATION AND
    30     STORAGE CAPACITY TO SERVE THE INTERRUPTIBLE MARKET WHEN SUCH
    19990H1331B2112                 - 103 -

     1     CAPACITY IS NOT NEEDED TO MAKE FIRM RETAIL DELIVERIES, THEN
     2     THE NATURAL GAS DISTRIBUTION COMPANY SHALL BE PERMITTED TO
     3     INCREASE BASE RATES AND, AT THE SAME TIME, REDUCE PURCHASED
     4     GAS COST RATES, AS DESCRIBED IN THIS CHAPTER.
     5         (2)  THE NATURAL GAS DISTRIBUTION COMPANY MAY PROPOSE
     6     SUCH A CHANGE IN TREATMENT, CONSISTENT WITH THE FOLLOWING
     7     REQUIREMENTS:
     8             (I)  BASE RATES OF CUSTOMERS WHO PAY PURCHASED GAS
     9         COST RATES PURSUANT TO SECTION 1307(F) (RELATING TO
    10         SLIDING SCALE OF RATES; ADJUSTMENTS) SHALL BE INCREASED
    11         BY AN AMOUNT EQUAL TO THE MARGIN RECEIVED FOR SERVICE
    12         PROVIDED TO EXISTING INTERRUPTIBLE SALES AND
    13         TRANSPORTATION SERVICE CUSTOMERS USING CAPACITY REFLECTED
    14         IN RATES ESTABLISHED UNDER SECTION 1307(F) BASED UPON THE
    15         REVENUE FOR SUCH SERVICES FOR THE MOST RECENT 12-MONTH
    16         PERIOD IMMEDIATELY PRECEDING THE APPLICATION.
    17             (II)  PURCHASED GAS COST RATES ESTABLISHED PURSUANT
    18         TO SECTION 1307(F) SHALL BE DECREASED BY AN AMOUNT EQUAL
    19         TO THE AMOUNT BY WHICH BASE RATES ARE INCREASED IN
    20         SUBPARAGRAPH (I).
    21             (III)  PURCHASED GAS COST RATES ESTABLISHED PURSUANT
    22         TO SECTION 1307(F)SHALL THEREAFTER BE RECONCILED TO
    23         REFLECT THE MARGINS REALIZED FROM INTERRUPTIBLE SALES AND
    24         INTERRUPTIBLE TRANSPORTATION CUSTOMERS UTILIZING CAPACITY
    25         REFLECTED IN RATES ESTABLISHED UNDER SECTION 1307(F).
    26     (H)  INTERSTATE PIPELINE TRANSPORTATION.--
    27         (1)  EXCEPT AS SPECIFICALLY SET FORTH IN THIS SUBSECTION,
    28     NOTHING IN THIS SECTION OR SECTION 2204(D) (RELATING TO
    29     IMPLEMENTATION) SHALL PREVENT A NATURAL GAS DISTRIBUTION
    30     COMPANY FROM RECOVERING COSTS PAID UNDER THE TERMS OF
    19990H1331B2112                 - 104 -

     1     INTERSTATE PIPELINE TRANSPORTATION AND STORAGE CAPACITY
     2     CONTRACTS WHICH ARE NOT FULLY RECOVERED THROUGH A RELEASE,
     3     ASSIGNMENT OR TRANSFER OF SUCH CAPACITY TO ANOTHER NATURAL
     4     GAS SUPPLIER IF SUCH UNRECOVERED COSTS ARISE UNDER THE TERMS
     5     OF A NATURAL GAS TRANSPORTATION PILOT PROGRAM APPROVED BY THE
     6     COMMISSION FOR SUCH COMPANY ON OR BEFORE FEBRUARY 1, 1999.
     7         (2)  SUCH UNRECOVERED INTERSTATE PIPELINE TRANSPORTATION
     8     AND CAPACITY COSTS INCURRED UNDER SUCH PROGRAMS THROUGH
     9     OCTOBER 31, 2004, MAY BE RECOVERED FROM A CLASS OR CLASSES OF
    10     CUSTOMERS IN ACCORDANCE WITH SUCH PROGRAM PROVIDED THAT THE
    11     TOTAL VOLUMETRIC CHARGE FOR SUCH COSTS DOES NOT EXCEED 1% OF
    12     THE VOLUMETRIC CHARGE FOR RESIDENTIAL NATURAL GAS SALES
    13     SERVICE SET FORTH IN THE NATURAL GAS DISTRIBUTION COMPANY'S
    14     TARIFF IN EFFECT AT THE TIME.
    15         (3)  WITH RESPECT TO SUCH PILOT PROGRAMS, THE COMMISSION
    16     MAY DETERMINE TO EXTEND SUCH PROGRAMS TO INCLUDE ALL
    17     CUSTOMERS OF THAT COMPANY PURSUANT TO THE REQUIREMENTS OF
    18     THIS CHAPTER, AND NOTHING IN THIS SECTION OR SECTION 2204(D)
    19     SHALL PREVENT UNRECOVERED INTERSTATE PIPELINE AND
    20     TRANSPORTATION CAPACITY COSTS INCURRED THROUGH OCTOBER 31,
    21     2004, UNDER SUCH PROGRAMS FROM BEING RECOVERED IN ACCORDANCE
    22     WITH SUCH PROGRAMS PROVIDED THAT THE TOTAL VOLUMETRIC CHARGE
    23     FOR SUCH COSTS DOES NOT EXCEED THE 1% LIMIT SPECIFIED IN
    24     PARAGRAPH (2) FOR PILOT PROGRAMS.
    25  § 2212.  CITY NATURAL GAS DISTRIBUTION OPERATIONS.
    26     (A)  APPLICATION.--THE PROVISIONS OF THIS SECTION SHALL APPLY
    27  ONLY TO CITY NATURAL GAS DISTRIBUTION OPERATIONS.
    28     (B)  COMMISSION JURISDICTION.--SUBJECT TO THE PROVISIONS OF
    29  THIS SECTION, COMMENCING JULY 1, 2000, PUBLIC UTILITY SERVICE
    30  BEING FURNISHED OR RENDERED BY A CITY NATURAL GAS DISTRIBUTION
    19990H1331B2112                 - 105 -

     1  OPERATION WITHIN ITS MUNICIPAL LIMITS SHALL BE SUBJECT TO
     2  REGULATION AND CONTROL BY THE COMMISSION WITH THE SAME FORCE AS
     3  IF THE SERVICE WERE RENDERED BY A PUBLIC UTILITY.
     4     (C)  APPLICABILITY OF OTHER CHAPTERS.--COMMENCING JULY 1,
     5  2000, TO THE EXTENT NOT INCONSISTENT WITH THIS SECTION, THE
     6  PROVISIONS OF THIS TITLE, OTHER THAN CHAPTERS 11 (RELATING TO
     7  CERTIFICATES OF PUBLIC CONVENIENCE), 19 (RELATING TO SECURITIES
     8  AND OBLIGATIONS) AND 21 (RELATING TO RELATIONS WITH AFFILIATED
     9  INTERESTS), SHALL APPLY TO THE PUBLIC UTILITY SERVICE OF A CITY
    10  NATURAL GAS DISTRIBUTION OPERATION WITH THE SAME FORCE AS IF THE
    11  CITY NATURAL GAS DISTRIBUTION OPERATION WAS A PUBLIC UTILITY
    12  UNDER SECTION 102 (RELATING TO DEFINITIONS), PROVIDED THAT UPON
    13  REQUEST OF A CITY NATURAL GAS DISTRIBUTION OPERATION THE
    14  COMMISSION MAY SUSPEND OR WAIVE THE APPLICATION TO A CITY
    15  NATURAL GAS DISTRIBUTION OPERATION OF ANY PROVISION OF THIS
    16  TITLE, INCLUDING ANY PROVISION OF THIS CHAPTER OTHER THAN THIS
    17  SECTION. CHAPTER 11 SHALL APPLY TO A CITY NATURAL GAS
    18  DISTRIBUTION OPERATION TO THE EXTENT IT SEEKS TO PROVIDE NATURAL
    19  GAS DISTRIBUTION SERVICES OUTSIDE OF ITS CORPORATE OR MUNICIPAL
    20  LIMITS. CHAPTER 19 SHALL APPLY TO ISSUANCES OF SECURITIES FOR
    21  THE BENEFIT OF A CITY NATURAL GAS DISTRIBUTION OPERATION BY AN
    22  ISSUER OTHER THAN A CITY TO THE EXTENT PROVIDED IN SUBSECTION
    23  (E) BUT SHALL NOT APPLY TO ISSUANCES OF SECURITIES BY A CITY.
    24     (D)  CONTINUATION OF TARIFF.--FOR PURPOSES OF THIS SECTION,
    25  PRIOR TARIFF MEANS THE TARIFF, RATE SCHEDULE AND RIDERS
    26  INCORPORATED INTO THE TARIFF OF A CITY NATURAL GAS DISTRIBUTION
    27  OPERATION ON THE DATE THE COMMISSION ASSUMES JURISDICTION OVER
    28  SUCH CITY NATURAL GAS DISTRIBUTION OPERATION. A CITY NATURAL GAS
    29  DISTRIBUTION OPERATION SHALL CONTINUE TO PROVIDE NATURAL GAS
    30  SUPPLY AND NATURAL GAS DISTRIBUTION SERVICES TO ITS CUSTOMERS
    19990H1331B2112                 - 106 -

     1  UNDER THE PRIOR TARIFF AND THE POLICIES OR PROGRAMS, EXISTING ON
     2  THE DATE THAT THE COMMISSION ASSUMES JURISDICTION OVER THE CITY
     3  NATURAL GAS DISTRIBUTION OPERATION, UNTIL THE EFFECTIVE DATE OF
     4  THE FINAL ORDER ENTERED BY THE COMMISSION APPROVING THE
     5  RESTRUCTURING PLAN AND NEW TARIFF OF THE CITY NATURAL GAS
     6  DISTRIBUTION OPERATIONS UNLESS SUCH EFFECTIVE DATE HAS BEEN
     7  STAYED BY A COURT OF COMPETENT JURISDICTION, IN WHICH EVENT THE
     8  PRIOR TARIFF WILL CONTINUE IN FORCE UNTIL SUCH STAY HAS BEEN
     9  DISSOLVED. WHERE THE PRIOR TARIFF REFERS TO, INCORPORATES OR
    10  INCLUDES A LOCAL COMMISSION, IT SHALL BE INTERPRETED AS
    11  REFERRING TO, INCORPORATING OR INCLUDING THE COMMISSION. SUBJECT
    12  TO SUBSECTION (S), THE COMMISSION SHALL RESOLVE ALL QUESTIONS,
    13  DISPUTES OR CONFLICTS ARISING UNDER THE PRIOR TARIFF. NOTHING
    14  CONTAINED IN THIS SECTION SHALL PREVENT A CITY NATURAL GAS
    15  DISTRIBUTION OPERATION FROM REQUESTING, OR, IF SO REQUESTED, THE
    16  COMMISSION FROM APPROVING, MODIFICATIONS TO THE PRIOR TARIFF AT
    17  ANY TIME PRIOR TO THE EFFECTIVE DATE OF THE FINAL ORDER
    18  APPROVING THE RESTRUCTURING PLAN AND NEW TARIFF.
    19     (E)  SECURITIES OF CITY NATURAL GAS DISTRIBUTION
    20  OPERATIONS.--NOTWITHSTANDING ANY PROVISION OF THIS TITLE TO THE
    21  CONTRARY, IN DETERMINING THE CITY NATURAL GAS DISTRIBUTION
    22  OPERATION'S REVENUE REQUIREMENT AND APPROVING OVERALL RATES AND
    23  CHARGES, THE COMMISSION SHALL FOLLOW THE SAME RATEMAKING
    24  METHODOLOGY AND REQUIREMENTS THAT WERE APPLICABLE TO THE CITY
    25  NATURAL GAS DISTRIBUTION OPERATION PRIOR TO THE ASSUMPTION OF
    26  JURISDICTION BY THE COMMISSION AND SUCH OBLIGATION SHALL
    27  CONTINUE UNTIL THE DATE ON WHICH ALL APPROVED BONDS HAVE BEEN
    28  RETIRED, REDEEMED, ADVANCE REFUNDED OR OTHERWISE DEFEASED.
    29  HOWEVER, THIS SECTION SHALL NOT PREVENT THE COMMISSION FROM
    30  APPROVING CHANGES IN THE RATES PAYABLE BY ANY CLASS OF
    19990H1331B2112                 - 107 -

     1  RATEPAYERS OF THE CITY NATURAL GAS DISTRIBUTION OPERATION SO
     2  LONG AS THE REVENUE REQUIREMENT AND THE OVERALL RATES AND
     3  CHARGES ARE NOT ADVERSELY AFFECTED BY SUCH CHANGES.
     4  NOTWITHSTANDING ANY PROVISION IN THIS TITLE TO THE CONTRARY, THE
     5  COMMISSION SHALL PERMIT THE CITY NATURAL GAS DISTRIBUTION
     6  OPERATION TO IMPOSE, CHARGE OR COLLECT RATES OR CHARGES AS
     7  NECESSARY TO PERMIT THE CITY OR MUNICIPAL AUTHORITY FORMED
     8  PURSUANT TO SUBSECTION (M) THAT ISSUED BONDS ON BEHALF OF A CITY
     9  NATURAL GAS DISTRIBUTION OPERATION TO COMPLY WITH ITS COVENANTS
    10  TO THE HOLDERS OF ANY APPROVED BONDS. NOTWITHSTANDING ANY
    11  PROVISION IN THIS TITLE TO THE CONTRARY, THE COMMISSION SHALL
    12  NOT REQUIRE A CITY NATURAL GAS DISTRIBUTION OPERATION TO TAKE
    13  ACTION, OR OMIT TAKING ANY ACTIONS, PURSUANT TO THIS TITLE IF
    14  SUCH ACTION OR OMISSION WOULD HAVE THE EFFECT OF CAUSING THE
    15  INTEREST ON TAX-EXEMPT BONDS ISSUED BY A CITY OR MUNICIPAL
    16  AUTHORITY FORMED PURSUANT TO SUBSECTION (M) ON BEHALF OF A CITY
    17  NATURAL GAS DISTRIBUTION OPERATION TO BE INCLUDABLE IN THE GROSS
    18  INCOME OF THE HOLDERS OF SUCH BONDS FOR FEDERAL INCOME TAX
    19  PURPOSES. FOR PURPOSES OF THIS SECTION, APPROVED BONDS SHALL
    20  MEAN ALL BONDS:
    21         (1)  ISSUED BY A CITY ON BEHALF OF A CITY NATURAL GAS
    22     DISTRIBUTION OPERATION UNDER THE ACT OF OCTOBER 18, 1972
    23     (P.L.955, NO.234), KNOWN AS THE FIRST CLASS CITY REVENUE BOND
    24     ACT OR THE ACT OF DECEMBER 7, 1982 (P.L.827, NO.231), KNOWN
    25     AS THE CITY OF PHILADELPHIA MUNICIPAL UTILITY INVENTORY AND
    26     RECEIVABLES FINANCING ACT, THAT WERE ISSUED AND OUTSTANDING
    27     ON THE DATE THE COMMISSION ASSUMED JURISDICTION OVER THE CITY
    28     NATURAL GAS DISTRIBUTION OPERATION;
    29         (2)  ISSUED BY THE CITY AFTER THE DATE THE COMMISSION
    30     ASSUMED JURISDICTION OVER THE CITY NATURAL GAS DISTRIBUTION
    19990H1331B2112                 - 108 -

     1     OPERATION UNLESS THE GOVERNING BODY OF THE CITY, AT THE TIME
     2     OF APPROVAL OF THE BOND ISSUANCE, DETERMINES THAT SUCH BONDS
     3     SHALL NOT BE APPROVED BONDS;
     4         (3)  ISSUED BY THE CITY OR A MUNICIPAL AUTHORITY,
     5     NONPROFIT CORPORATION OR PUBLIC CORPORATION FORMED PURSUANT
     6     TO SUBSECTION (M) FOR THE PURPOSE OF REFUNDING, REDEEMING,
     7     REPAYING OR OTHERWISE DEFEASING APPROVED BONDS; OR
     8         (4)  ISSUED BY A MUNICIPAL AUTHORITY FORMED PURSUANT TO
     9     SUBSECTION (M) FOR PURPOSES OTHER THAN REFUNDING, REDEEMING,
    10     REPAYING OR OTHERWISE DEFEASING APPROVED BONDS UNLESS THE
    11     COMMISSION DETERMINES, AT THE TIME OF THE REGISTRATION OF A
    12     SECURITIES CERTIFICATE PURSUANT TO SECTION 1903 (RELATING TO
    13     REGISTRATION OR REJECTION OF SECURITIES CERTIFICATES), THAT
    14     THE BOND SHOULD NOT BE APPROVED BONDS.
    15  NOTWITHSTANDING ANY PROVISION OF THIS TITLE TO THE CONTRARY, A
    16  CITY OWNING A CITY NATURAL GAS DISTRIBUTION OPERATION MAY
    17  CONTINUE TO ISSUE BONDS ON BEHALF OF THE CITY NATURAL GAS
    18  DISTRIBUTION OPERATION PURSUANT TO THE FIRST CLASS CITY REVENUE
    19  BOND ACT AND UNDER THE CITY OF PHILADELPHIA MUNICIPAL UTILITY
    20  INVENTORY AND RECEIVABLES FINANCING ACT, AND ANY MUNICIPAL
    21  AUTHORITY FORMED PURSUANT TO SUBSECTION (M) MAY ISSUE BONDS ON
    22  BEHALF OF THE CITY NATURAL GAS DISTRIBUTION OPERATION PURSUANT
    23  TO THE ACT OF MAY 2, 1945 (P.L.382, NO.164), KNOWN AS THE
    24  MUNICIPALITY AUTHORITIES ACT OF 1945, AND AS OTHERWISE PROVIDED
    25  BY LAW. ALL DOCUMENTS THAT ARE REQUIRED TO BE SUBMITTED TO THE
    26  GOVERNING BODY OF THE CITY BY THE FIRST CLASS CITY REVENUE BOND
    27  ACT OR THE CITY OF PHILADELPHIA MUNICIPAL UTILITY INVENTORY AND
    28  RECEIVABLES FINANCING ACT OR, IN THE CASE OF AN ISSUANCE OF
    29  SECURITIES BY A MUNICIPAL AUTHORITY, THE MUNICIPALITY
    30  AUTHORITIES ACT OF 1945, SHALL ALSO BE SUBMITTED TO THE
    19990H1331B2112                 - 109 -

     1  COMMISSION FOR ITS INFORMATION. ANY ISSUANCE OF SECURITIES BY A
     2  MUNICIPAL AUTHORITY FORMED PURSUANT TO SUBSECTION (M) ON BEHALF
     3  OF A CITY NATURAL GAS DISTRIBUTION OPERATION, OTHER THAN
     4  ISSUANCES OF BONDS FOR THE PURPOSE OF REFUNDING, REDEEMING,
     5  REPAYING OR OTHERWISE DEFEASING APPROVED BONDS, SHALL BE SUBJECT
     6  TO THE PROVISIONS OF CHAPTER 19 (RELATING TO SECURITIES AND
     7  OBLIGATIONS) PROVIDED THAT COMMISSION DETERMINATIONS WITH
     8  RESPECT TO THE REGISTRATION OF A SECURITIES CERTIFICATE UNDER
     9  CHAPTER 19 FOR THE ISSUANCE OF SECURITIES BY A MUNICIPAL
    10  AUTHORITY FORMED PURSUANT TO SUBSECTION (M) SHALL BE
    11  DETERMINATIONS WITH RESPECT TO PUBLIC DEBT AND THE COMMISSION
    12  SHALL EMPLOY ITS ABBREVIATED SECURITIES CERTIFICATE PROCESS TO
    13  SUCH ISSUANCES.
    14     (F)  TRANSFERS TO CITY.--THE COMMISSION SHALL PERMIT THE CITY
    15  NATURAL GAS DISTRIBUTION OPERATION TO IMPOSE, CHARGE OR COLLECT
    16  RATES AND CHARGES AS NECESSARY TO PERMIT THE CITY NATURAL GAS
    17  DISTRIBUTION OPERATION TO TRANSFER OR PAY TO THE CITY THAT IS
    18  THE OWNER OF THE CITY NATURAL GAS DISTRIBUTION OPERATION, ON AN
    19  ANNUAL BASIS, SUCH AMOUNT AS MAY BE SPECIFIED FROM TIME TO TIME
    20  IN THE APPLICABLE ORDINANCES OF THE CITY OR AGREEMENTS OF THE
    21  CITY APPROVED BY ORDINANCES. IF THE AMOUNT SO SPECIFIED SHALL
    22  EXCEED 110% OF THE AMOUNT THAT WAS AUTHORIZED FOR TRANSFER OR
    23  PAYMENT TO THE CITY AT THE CLOSE OF THE FISCAL YEAR OF THE CITY
    24  ENDING JUNE 30, 2000, SUCH ADDITIONAL AMOUNT SHALL BE SUBJECT TO
    25  REVIEW AND APPROVAL OF THE COMMISSION, WHICH APPROVAL SHALL BE
    26  GIVEN UNLESS SUCH ADDITIONAL AMOUNT WOULD NOT BE JUST AND
    27  REASONABLE.
    28     (G)  RESTRUCTURING AND TARIFF FILINGS.--A CITY NATURAL GAS
    29  DISTRIBUTION OPERATION SHALL FILE WITH THE COMMISSION AN INITIAL
    30  TARIFF AND A RESTRUCTURING FILING CONSISTENT WITH THIS CHAPTER,
    19990H1331B2112                 - 110 -

     1  AND WITH ANY ORDERS, RULES OR REGULATIONS ADOPTED BY THE
     2  COMMISSION AFTER THE EFFECTIVE DATE OF THIS CHAPTER NO LATER
     3  THAN JULY 1, 2002, AND, UNLESS THE CITY NATURAL GAS OPERATION
     4  AGREES, NO EARLIER THAN DECEMBER 31, 2001, PURSUANT TO A
     5  SCHEDULE TO BE DETERMINED BY THE COMMISSION IN CONSULTATION WITH
     6  A CITY NATURAL GAS DISTRIBUTION OPERATION. THE COMMISSION SHALL
     7  CONDUCT AN INITIAL RATE PROCEEDING PURSUANT TO ITS PROCEDURES
     8  FOR SUCH FILINGS. HEARINGS ON THE TARIFF AND RESTRUCTURING
     9  FILINGS SHALL BE HELD WITHIN THE MUNICIPAL LIMITS OF THE CITY IN
    10  WHICH THE CITY NATURAL GAS DISTRIBUTION OPERATION IS LOCATED TO
    11  THE EXTENT PRACTICABLE.
    12     (H)  RESTRUCTURING PROCEEDINGS.--IN THE RESTRUCTURING
    13  PROCEEDING OF A CITY NATURAL GAS DISTRIBUTION OPERATION, IN
    14  ADDITION TO THE REQUIREMENTS OF SECTION 2204(C) (RELATING TO
    15  IMPLEMENTATION):
    16         (1)  THE CITY NATURAL GAS DISTRIBUTION OPERATION SHALL
    17     FILE A PLAN TO CONVERT ITS EXISTING INFORMATION TECHNOLOGY,
    18     ACCOUNTING, BILLING, COLLECTION, GAS PURCHASING AND OTHER
    19     OPERATING SYSTEMS AND PROCEDURES TO COMPLY WITH THE
    20     REQUIREMENTS APPLICABLE TO JURISDICTIONAL NATURAL GAS
    21     UTILITIES UNDER THIS TITLE AND THE APPLICABLE RULES,
    22     REGULATIONS AND ORDERS. THE COMMISSION SHALL EXAMINE THE COST
    23     AND BURDENS OF CONVERTING EXISTING SYSTEMS AND PROCEDURES OF
    24     A CITY NATURAL GAS DISTRIBUTION OPERATIONS TO MEET THE
    25     REQUIREMENTS OF THIS TITLE GENERALLY APPLICABLE TO NATURAL
    26     GAS DISTRIBUTION COMPANIES. IF REQUESTED BY THE CITY NATURAL
    27     GAS DISTRIBUTION OPERATION, THE COMMISSION SHALL DETERMINE
    28     WHETHER THE COST OF CONVERSION OF ANY SYSTEM OR PROCEDURE IS
    29     PRUDENT IN LIGHT OF THE BENEFITS TO BE OBTAINED. IN THE EVENT
    30     THAT THE COMMISSION DETERMINES THAT THE COSTS WOULD NOT BE
    19990H1331B2112                 - 111 -

     1     PRUDENT, IT MAY WAIVE APPLICATION TO THE CITY NATURAL GAS
     2     DISTRIBUTION OPERATION OF ANY PROVISION OF THIS TITLE OR THE
     3     COMMISSION'S RULES, REGULATIONS AND ORDERS AS APPROPRIATE. IN
     4     THE EVENT THAT THE COMMISSION DETERMINES THAT SUCH COSTS
     5     SHOULD BE INCURRED, THE COMMISSION SHALL PERMIT THE CITY
     6     NATURAL GAS DISTRIBUTION OPERATION TO FULLY RECOVER SUCH
     7     COSTS THROUGH A NONBYPASSABLE CHARGE IMBEDDED IN THE
     8     DISTRIBUTION RATES OF THE CITY NATURAL GAS DISTRIBUTION
     9     OPERATION.
    10         (2)  IN ITS RESTRUCTURING PROCEEDING, A CITY NATURAL GAS
    11     DISTRIBUTION OPERATION MAY PROPOSE AN AUTOMATIC ADJUSTMENT
    12     MECHANISM OR MECHANISMS IN LIEU OF, OR AS A SUPPLEMENT TO,
    13     SECTION 1307 (RELATING TO SLIDING SCALE OF RATES;
    14     ADJUSTMENTS) TO ADJUST RATES FOR FLUCTUATIONS IN GAS AND
    15     NONGAS COSTS INCLUDING, BUT NOT LIMITED TO, AN AUTOMATIC
    16     ADJUSTMENT MECHANISM OR MECHANISMS TO RECOVER THE COSTS OF
    17     PROVIDING PROGRAMS FOR LOW-INCOME RATEPAYERS AND OTHER
    18     ASSISTED RATEPAYERS. THE COMMISSION MAY APPROVE OR MODIFY THE
    19     AUTOMATIC ADJUSTMENT MECHANISM OR MECHANISMS PROPOSED BY THE
    20     CITY NATURAL GAS DISTRIBUTION OPERATION, OR THE COMMISSION
    21     MAY APPROVE A SECTION 1307 ADJUSTMENT FOR A CITY NATURAL GAS
    22     DISTRIBUTION OPERATION. HOWEVER, THE AUTOMATIC ADJUSTMENT
    23     MECHANISM, WHETHER SECTION 1307 OR ANY ALTERNATIVE PROPOSED
    24     BY THE CITY NATURAL GAS DISTRIBUTION OPERATION, UTILIZED FOR
    25     CITY NATURAL GAS DISTRIBUTION OPERATIONS MUST ENABLE THE CITY
    26     OR MUNICIPAL AUTHORITY FORMED PURSUANT TO SUBSECTION (M) THAT
    27     ISSUED BONDS ON BEHALF OF A CITY NATURAL GAS DISTRIBUTION
    28     OPERATION TO FULLY COMPLY AT ALL TIMES WITH ITS COVENANTS TO
    29     THE HOLDERS OF ANY APPROVED BONDS.
    30     (I)  POWERS OF THE CONSUMER ADVOCATE; SMALL BUSINESS
    19990H1331B2112                 - 112 -

     1  ADVOCATE.--THE CONSUMER ADVOCATE SHALL REPRESENT THE INTERESTS
     2  OF CONSUMERS AS A PARTY, OR OTHERWISE PARTICIPATE FOR THE
     3  PURPOSE OF REPRESENTING AN INTEREST OF CONSUMERS, BEFORE THE
     4  COMMISSION IN ANY MATTER PROPERLY BEFORE THE COMMISSION RELATING
     5  TO A CITY NATURAL GAS DISTRIBUTION OPERATION. THE CONSUMER
     6  ADVOCATE IS AUTHORIZED, IN ADDITION TO ANY OTHER AUTHORITY
     7  CONFERRED ON HIM, TO REPRESENT AN INTEREST OF CONSUMERS WHICH IS
     8  PRESENTED TO HIM FOR HIS CONSIDERATION UPON PETITION IN WRITING
     9  BY A SUBSTANTIAL NUMBER OF PERSONS WHO MAKE, DIRECT, USE OR ARE
    10  ULTIMATE RECIPIENTS OF A PRODUCT OR SERVICES SUPPLIED BY A CITY
    11  NATURAL GAS DISTRIBUTION OPERATION. THE SMALL BUSINESS ADVOCATE
    12  SHALL REPRESENT THE INTEREST OF SMALL BUSINESS CONSUMERS AS A
    13  PARTY, OR OTHERWISE PARTICIPATE FOR THE PURPOSE OF REPRESENTING
    14  AN INTEREST OF SMALL BUSINESS CONSUMERS, BEFORE THE COMMISSION
    15  IN ANY MATTER PROPERLY BEFORE THE COMMISSION RELATING TO A CITY
    16  NATURAL GAS DISTRIBUTION OPERATION. THE SMALL BUSINESS ADVOCATE
    17  IS AUTHORIZED, IN ADDITION TO ANY OTHER AUTHORITY CONFERRED ON
    18  HIM, TO REPRESENT AN INTEREST OF SMALL BUSINESS CONSUMERS WHICH
    19  IS PRESENTED TO HIM FOR HIS CONSIDERATION UPON PETITION IN
    20  WRITING BY A SUBSTANTIAL NUMBER OF SMALL BUSINESS CONSUMERS WHO
    21  MAKE, DIRECT, USE OR ARE ULTIMATE RECIPIENTS OF A PRODUCT OR
    22  SERVICES SUPPLIED BY A CITY NATURAL GAS DISTRIBUTION OPERATION.
    23     (J)  COMMENCEMENT OF CUSTOMER CHOICE.--BEGINNING WITH THE
    24  COMMENCEMENT OF THE FIRST FISCAL YEAR OF A CITY NATURAL GAS
    25  DISTRIBUTION OPERATION AFTER THE ORDER APPROVING THE
    26  RESTRUCTURING PLAN OF A CITY NATURAL GAS DISTRIBUTION OPERATION
    27  BECOMES EFFECTIVE, ALL RETAIL GAS CUSTOMERS OF CITY NATURAL GAS
    28  DISTRIBUTION OPERATIONS SHALL HAVE THE OPPORTUNITY TO PURCHASE
    29  NATURAL GAS SUPPLY SERVICES FROM A NATURAL GAS SUPPLIER OR THE
    30  CITY NATURAL GAS DISTRIBUTION OPERATION TO THE EXTENT IT OFFERS
    19990H1331B2112                 - 113 -

     1  THE SERVICE. AFTER THAT DATE, THE CHOICE OF NATURAL GAS
     2  SUPPLIERS SHALL REST WITH THE RETAIL GAS CUSTOMER.
     3     (K)  CITY INSTRUMENTALITY.--UNLESS AND UNTIL THE GOVERNING
     4  BODY OF A CITY THAT OWNS A CITY NATURAL GAS DISTRIBUTION
     5  OPERATION OTHERWISE PROVIDES:
     6         (1)  A CITY NATURAL GAS DISTRIBUTION OPERATION SHALL BE
     7     DEEMED AN INSTRUMENTALITY OF THE CITY THAT OWNS IT AND
     8     INDEPENDENTLY AUTHORIZED TO ESTABLISH AND MAINTAIN PENSION,
     9     WELFARE AND OTHER EMPLOYEE BENEFIT PLANS FOR THE BENEFIT OF
    10     THOSE INDIVIDUALS WHO RENDER SERVICES IN CONNECTION WITH ITS
    11     OPERATIONS; AND
    12         (2)  FOR THE PURPOSE OF BEING A PARTICIPANT IN SUCH PLANS
    13     OR PROGRAMS, THOSE INDIVIDUALS WHO RENDER SERVICES
    14     EXCLUSIVELY AND DIRECTLY RELATED TO THE OPERATIONS OF THE
    15     CITY NATURAL GAS DISTRIBUTION OPERATION SHALL BE DEEMED
    16     EMPLOYEES OF THE CITY NATURAL GAS DISTRIBUTION OPERATION AS A
    17     DISTINCT ENTITY FROM THE CITY. IF ANY PENSION PLAN
    18     ESTABLISHED AND MAINTAINED BY OR ON BEHALF OF A CITY NATURAL
    19     GAS DISTRIBUTION OPERATION IS OR BECOMES SUBJECT TO THE ACT
    20     OF DECEMBER 18, 1984 (P.L.1005, NO.205), KNOWN AS THE
    21     MUNICIPAL PENSION PLAN FUNDING STANDARD AND RECOVERY ACT, THE
    22     PROVISIONS OF CHAPTERS 5 AND 6 OF THAT ACT (RELATING TO
    23     FINANCIALLY DISTRESSED MUNICIPAL PENSION SYSTEM RECOVERY
    24     PROGRAMS) SHALL NOT REQUIRE ANY PENSION PLAN OF A CITY
    25     NATURAL GAS DISTRIBUTION OPERATION TO BE AGGREGATED WITH ANY
    26     PENSION PLAN ESTABLISHED AND MAINTAINED BY THE CITY.
    27     (L)  ASSISTED CITIES.--NOTWITHSTANDING ANY OTHER PROVISION OF
    28  THIS TITLE, NO ASSISTED CITY SHALL BE REQUIRED TO TAKE ANY
    29  ACTION UNDER THIS TITLE IF THE EFFECT OF THE ACTION IS TO CAUSE
    30  A VARIATION IN THE FINANCIAL PLAN OF SUCH ASSISTED CITY APPROVED
    19990H1331B2112                 - 114 -

     1  PURSUANT TO SECTION 209 OF THE ACT OF JUNE 5, 1991 (P.L.9,
     2  NO.6), KNOWN AS THE PENNSYLVANIA INTERGOVERNMENTAL COOPERATION
     3  AUTHORITY ACT FOR CITIES OF THE FIRST CLASS. AS USED IN THIS
     4  SUBSECTION, "ASSISTED CITY" AND "VARIATION" SHALL HAVE THE
     5  MEANINGS SET FORTH OR CONSTRUED IN THE PENNSYLVANIA
     6  INTERGOVERNMENTAL COOPERATION AUTHORITY ACT FOR CITIES OF THE
     7  FIRST CLASS.
     8     (M)  CORPORATE ACTION.--A CITY THAT OWNS A CITY NATURAL GAS
     9  DISTRIBUTION OPERATION MAY FORM A NONPROFIT CORPORATION OR
    10  PUBLIC CORPORATION OR MUNICIPAL AUTHORITY UNDER THE MUNICIPALITY
    11  AUTHORITIES ACT OF 1945, IN ORDER TO OWN, MANAGE, OPERATE, LEASE
    12  OR CARRY OUT NATURAL GAS SUPPLY AND/OR DISTRIBUTION SERVICES
    13  FOR, IN PLACE OF, OR ON BEHALF OF, THE CITY NATURAL GAS
    14  DISTRIBUTION OPERATION, PROVIDED THAT NO SUCH ENTITY SHALL
    15  PROVIDE NATURAL GAS SUPPLY SERVICES OUTSIDE OF THE MUNICIPAL
    16  LIMITS OF THE CITY UNLESS LICENSED AS A NATURAL GAS SUPPLIER.
    17  NOTWITHSTANDING SUBSECTIONS (B) AND (C), IF A CITY FORMS AN
    18  ENTITY PURSUANT TO THIS SECTION TO PROVIDE NATURAL GAS SUPPLY
    19  SERVICES, WHETHER INSIDE OR OUTSIDE OF THE CITY, THE ENTITY
    20  SHALL BE DEEMED AN AFFILIATED INTEREST OF THE CITY NATURAL GAS
    21  DISTRIBUTION OPERATION AND CHAPTER 21 SHALL APPLY WITH RESPECT
    22  TO THAT AFFILIATED INTEREST. A MUNICIPAL AUTHORITY FORMED
    23  PURSUANT TO THE AUTHORIZATION OF THIS SECTION SHALL NOT EXERCISE
    24  THE POWER OF EMINENT DOMAIN OUTSIDE OF THE MUNICIPAL LIMITS OF
    25  THE CITY IN WHICH IT IS SEATED. ANY ENTITY CREATED UNDER THIS
    26  SECTION OR OTHERWISE TO OWN, MANAGE, OPERATE, LEASE OR CARRY OUT
    27  NATURAL GAS SUPPLY AND/OR DISTRIBUTION SERVICES, FOR, OR ON
    28  BEHALF OF, A CITY OR A CITY NATURAL GAS DISTRIBUTION OPERATION
    29  SHALL BE DEEMED A LOCAL AGENCY FOR PURPOSES OF 42 PA.C.S. CH.85
    30  (RELATING TO MATTERS AFFECTING GOVERNMENT UNITS).
    19990H1331B2112                 - 115 -

     1     (N)  COLLECTIONS.--NOTHING CONTAINED IN THIS TITLE SHALL
     2  ABROGATE THE POWER OF A CITY NATURAL GAS DISTRIBUTION OPERATION
     3  TO COLLECT DELINQUENT RECEIVABLES THROUGH THE IMPOSITION OF
     4  LIENS PURSUANT TO SECTION 3 OF THE ACT OF MAY 16, 1923 (P.L.207,
     5  NO.153), REFERRED TO AS THE MUNICIPAL CLAIM AND TAX LIEN LAW, OR
     6  OTHERWISE.
     7     (O)  EXISTING CUSTOMER CONTRACTS.--NOTWITHSTANDING THE
     8  PROVISIONS OF THIS CHAPTER, WHERE AN AGREEMENT FOR NATURAL GAS
     9  SERVICE, EVIDENCED BY A SIGNED WRITING BETWEEN A CITY NATURAL
    10  GAS DISTRIBUTION OPERATION AND ANY CUSTOMER, EXISTS PRIOR TO THE
    11  DATE THE COMMISSION ASSUMES JURISDICTION OVER A CITY NATURAL GAS
    12  DISTRIBUTION OPERATION, THE CUSTOMER SHALL BE BOUND BY ITS TERMS
    13  AND CONDITIONS AND SHALL NOT HAVE THE RIGHT TO RECEIVE NATURAL
    14  GAS SERVICE FROM ANOTHER SOURCE UNTIL THE EXPIRATION OF THE TERM
    15  OF THE AGREEMENT OR OTHERWISE PURSUANT TO THE TERMS AND
    16  CONDITIONS OF THE AGREEMENT.
    17     (P)  LICENSE APPLICATION AND ISSUANCE.--A CITY NATURAL GAS
    18  DISTRIBUTION OPERATION MAY APPLY FOR A LICENSE PURSUANT TO THE
    19  PROCEDURES UNDER SECTION 2208 (RELATING TO REQUIREMENTS FOR
    20  NATURAL GAS SUPPLIERS). SUBJECT TO THE REQUIREMENT THAT IT
    21  QUALIFY FOR AND OBTAIN A NATURAL GAS SUPPLIERS LICENSE UNDER
    22  SECTION 2208, A CITY NATURAL GAS DISTRIBUTION OPERATION IS
    23  AUTHORIZED TO ENGAGE IN THE BUSINESS OF A NATURAL GAS SUPPLIER
    24  OUTSIDE ITS MUNICIPAL OR CORPORATE LIMITS.
    25     (Q)  COMMISSION ASSESSMENT.--IN ORDER TO ENSURE THAT THE
    26  COMMISSION WILL BE ABLE TO CARRY OUT ITS OBLIGATIONS WITH
    27  RESPECT TO CITY NATURAL GAS OPERATIONS, THE CHIEF EXECUTIVE
    28  OFFICER OF A CITY NATURAL GAS DISTRIBUTION OPERATION SHALL FILE,
    29  NO LATER THAN MARCH 31, 2000, A SWORN STATEMENT SHOWING ITS
    30  GROSS INTRASTATE OPERATING REVENUES FOR THE IMMEDIATELY
    19990H1331B2112                 - 116 -

     1  PRECEDING FISCAL YEAR IN THE SAME MANNER AS REQUIRED BY SECTION
     2  510(B) (RELATING TO ASSESSMENT FOR REGULATORY EXPENSES UPON
     3  PUBLIC UTILITIES). THE COMMISSION SHALL USE SUCH REVENUES IN
     4  ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 510(B) AND
     5  SHALL BILL, NO EARLIER THAN JULY 1, 2000, EACH CITY NATURAL GAS
     6  DISTRIBUTION OPERATION ITS PROPORTIONAL SHARE OF THE
     7  COMMISSION'S EXPENSES PURSUANT TO SECTION 510(B)(4). A CITY
     8  NATURAL GAS DISTRIBUTION OPERATION SHALL PAY THE RESULTING
     9  ASSESSMENT IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS
    10  CONTAINED IN SECTION 510.
    11     (R)  SENIOR CITIZENS.--
    12         (1)  THE COMMISSION MAY APPROVE A PROGRAM DESIGNED TO
    13     PROVIDE DISCOUNTED RATES FOR NATURAL GAS DISTRIBUTION AND
    14     SUPPLY SERVICES TO SENIOR CITIZENS RESIDING IN THE SERVICE
    15     TERRITORY OF A CITY NATURAL GAS DISTRIBUTION OPERATION
    16     PROVIDED THAT SUCH RATES, AND THE TERMS OF SUCH PROGRAM, ARE
    17     JUST AND REASONABLE.
    18         (2)  INDIVIDUAL RATEPAYERS WHO, AS OF THE DATE THE
    19     INITIAL TARIFF OF A CITY NATURAL GAS DISTRIBUTION OPERATION
    20     BECOMES EFFECTIVE PURSUANT TO SUBSECTION (D), ARE PROPERLY
    21     RECEIVING DISCOUNTED GAS RATES PURSUANT TO THE TERMS OF A
    22     PROGRAM SPECIFICALLY DESIGNED TO PROVIDE ASSISTANCE TO SENIOR
    23     CITIZENS CONTAINED IN THE PRIOR TARIFF SHALL BE ENTITLED TO
    24     CONTINUE TO RECEIVE SUCH DISCOUNT UNDER THE TERMS OF THE
    25     PRIOR TARIFF UNLESS AND UNTIL THE PROGRAM IS MODIFIED BY
    26     ORDINANCE OF THE GOVERNING BODY OF THE CITY, IN WHICH EVENT
    27     SUCH INDIVIDUALS SHALL BE ENTITLED TO RECEIVE ONLY THE
    28     DISCOUNT PROVIDED UNDER THE TERMS OF THE MODIFIED PROGRAM, AS
    29     IT MAY BE FURTHER MODIFIED BY ORDINANCE FROM TIME TO TIME
    30     THEREAFTER.
    19990H1331B2112                 - 117 -

     1         (3)  NOTHING IN THIS TITLE SHALL REQUIRE THE COMMISSION
     2     TO APPROVE THE CONTINUATION OF THE PROGRAM IDENTIFIED IN
     3     PARAGRAPH (2) IN WHOLE OR PART FOR ANY PERSON OTHER THAN AN
     4     INDIVIDUAL IDENTIFIED IN PARAGRAPH (2).
     5     (S)  POWERS PRESERVED.--NOTHING CONTAINED IN THIS TITLE SHALL
     6  BE CONSTRUED TO ABROGATE OR LIMIT THE EXECUTIVE OR LEGISLATIVE
     7  POWERS OF A CITY THAT OWNS A CITY NATURAL GAS DISTRIBUTION
     8  OPERATION TO LEGISLATE OR OTHERWISE DETERMINE THE POWERS,
     9  FUNCTIONS, BUDGETS, ACTIVITIES AND MISSION OF THE CITY NATURAL
    10  GAS DISTRIBUTION OPERATION OR ANY RELATED ENTITY CREATED UNDER
    11  SUBSECTION (M), INCLUDING BUT NOT LIMITED TO, THE OWNERSHIP,
    12  GOVERNANCE, MANAGEMENT OR CONTROL THEREOF. NOTHING IN THIS TITLE
    13  SHALL LIMIT OR PREVENT THE PROPER CITY OFFICIALS AND AGENCIES
    14  FROM CONDUCTING AUDITS AND EXAMINATIONS OF THE FINANCIAL AFFAIRS
    15  OF THE CITY NATURAL GAS DISTRIBUTION OPERATION IN ACCORDANCE
    16  WITH THEIR OFFICIAL DUTIES.
    17     (T)  PROPRIETARY INFORMATION.--PROPRIETARY INFORMATION, TRADE
    18  SECRETS AND COMPETITIVELY SENSITIVE INFORMATION OF A CITY
    19  NATURAL GAS DISTRIBUTION OPERATION SHALL NOT BE PUBLIC RECORDS
    20  FOR PURPOSES OF THE ACT OF JUNE 21, 1957 (P.L.390, NO.212),
    21  REFERRED TO AS THE RIGHT-TO-KNOW LAW, AND SHALL NOT BE SUBJECT
    22  TO MANDATORY PUBLIC DISCLOSURE. NOTHING IN THIS SECTION SHALL
    23  EXEMPT A CITY NATURAL GAS DISTRIBUTION OPERATION FROM PROVIDING
    24  INFORMATION TO THE COMMISSION PURSUANT TO ITS OBLIGATION UNDER
    25  SECTIONS 501 (RELATING TO GENERAL POWERS), 504 (RELATING TO
    26  REPORTS BY PUBLIC UTILITIES), 505 (RELATING TO DUTY TO FURNISH
    27  INFORMATION TO COMMISSION; COOPERATION IN VALUING PROPERTY) AND
    28  506 (RELATING TO INSPECTION OF FACILITIES AND RECORDS).
    29     SECTION 4.  SECTIONS 3-100, 3-909 AND 5-902 OF THE
    30  PHILADELPHIA HOME RULE CHARTER ARE ABROGATED ON JUNE 30, 2000,
    19990H1331B2112                 - 118 -

     1  INSOFAR AS THEY ARE INCONSISTENT WITH THIS ACT.
     2     SECTION 5.  THE PROVISIONS OF THIS ACT SHALL NOT SUPERSEDE:
     3     ACT OF MAY 2, 1945 (P.L.382, NO.164), KNOWN AS THE
     4  MUNICIPALITY AUTHORITIES ACT OF 1945, EXCEPT FOR SECTION 4B(L)
     5  OF THAT ACT TO THE EXTENT THAT SECTION 4B(1) GRANTS A MUNICIPAL
     6  AUTHORITY FORMED PURSUANT TO 66 PA.C.S. § 2212(M) THE POWER OF
     7  EMINENT DOMAIN OUTSIDE ITS MUNICIPAL LIMITS.
     8     ACT OF OCTOBER 18, 1972 (P.L.955, NO.234), KNOWN AS THE FIRST
     9  CLASS CITY REVENUE BOND ACT.
    10     ACT OF DECEMBER 7, 1982 (P.L.827, NO.231), KNOWN AS THE CITY
    11  OF PHILADELPHIA MUNICIPAL UTILITY INVENTORY AND RECEIVABLES
    12  FINANCING ACT.
    13     SECTION 6.  THE PROVISIONS OF THIS ACT ARE SEVERABLE. IF ANY
    14  PROVISION OF THIS ACT OR ITS APPLICATION TO ANY PERSON OR
    15  CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY SHALL NOT AFFECT
    16  OTHER PROVISIONS OR APPLICATIONS OF THIS ACT WHICH CAN BE GIVEN
    17  EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION.
    18     SECTION 7.  THIS ACT CONSTITUTES THE LEGISLATION REFERRED TO
    19  IN SECTION 33(3) OF THE ACT OF MAY 12, 1999 (P.L.  , NO.4),
    20  ENTITLED "AN ACT AMENDING THE ACT OF MARCH 4, 1971 (P.L.6,
    21  NO.2), ENTITLED 'AN ACT RELATING TO TAX REFORM AND STATE
    22  TAXATION BY CODIFYING AND ENUMERATING CERTAIN SUBJECTS OF
    23  TAXATION AND IMPOSING TAXES THEREON; PROVIDING PROCEDURES FOR
    24  THE PAYMENT, COLLECTION, ADMINISTRATION AND ENFORCEMENT THEREOF;
    25  PROVIDING FOR TAX CREDITS IN CERTAIN CASES; CONFERRING POWERS
    26  AND IMPOSING DUTIES UPON THE DEPARTMENT OF REVENUE, CERTAIN
    27  EMPLOYERS, FIDUCIARIES, INDIVIDUALS, PERSONS, CORPORATIONS AND
    28  OTHER ENTITIES; PRESCRIBING CRIMES, OFFENSES AND PENALTIES,'
    29  REVISING AND ADOPTING SALES AND USE TAX PROVISIONS ON PROCESSING
    30  EXCLUSIONS, CREDIT SALES AND BAD DEBT SALES; REVISING PERSONAL
    19990H1331B2112                 - 119 -

     1  INCOME TAX PROVISIONS ON SMALL CORPORATIONS; EXPANDING
     2  ELIGIBILITY FOR SPECIAL POVERTY PROVISIONS; REVISING ESTIMATED
     3  TAX DECLARATIONS; ELIMINATING LOTTERY FUND TRANSFERS; REVISING
     4  CORPORATE NET INCOME TAX PROVISIONS ON NONPROFIT ORGANIZATIONS,
     5  NET LOSS DEDUCTIONS AND APPORTIONMENT OF BUSINESS INCOME;
     6  REVISING CAPITAL STOCK FRANCHISE TAX PROVISIONS TO REDUCE THE
     7  RATE OF TAXATION, REDUCE THE MINIMUM TAX, AND FURTHER PROVIDE
     8  FOR CAPITAL STOCK FRANCHISE TAX EXEMPTIONS, EXCLUSIONS AND
     9  PROCEEDS; ELIMINATING THE UTILITIES GROSS RECEIPTS TAX ON
    10  NATURAL GAS; MAKING OMNIBUS AMENDMENTS TO THE PUBLIC UTILITY
    11  REALTY TAX; PROVIDING FOR A TAX CREDIT FOR COAL WASTE REMOVAL
    12  AND ULTRACLEAN FUELS; FURTHER PROVIDING FOR MALT BEVERAGE TAX
    13  CREDITS; FURTHER PROVIDING FOR THE RATE OF TAXATION FOR THE
    14  PUBLIC TRANSPORTATION ASSISTANCE FUND; FURTHER PROVIDING FOR
    15  ESTIMATED TAX, FOR PAYMENT OF HARNESS AND THOROUGHBRED RACING
    16  TAXES AND FOR CORPORATE TAX TREATMENT OF AUTOMOBILE CLUBS; AND
    17  MAKING A REPEAL." THE SECRETARY OF REVENUE SHALL PUBLISH NOTICE
    18  OF THE ENACTMENT OF THIS ACT IN THE PENNSYLVANIA BULLETIN.
    19     SECTION 8.  THE FOLLOWING ACTS AND PARTS OF ACTS ARE REPEALED
    20  INSOFAR AS THEY ARE INCONSISTENT WITH THIS ACT:
    21     ACT OF JUNE 25, 1919 (P.L.581, NO.274), REFERRED TO AS THE
    22  FIRST CLASS CITY GOVERNMENT LAW.
    23     ACT OF APRIL 21, 1949 (P.L.665, NO.155), KNOWN AS THE FIRST
    24  CLASS CITY HOME RULE ACT.
    25     SECTION 9.  THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
    26         (1)  THE FOLLOWING PROVISIONS SHALL TAKE EFFECT JUNE 30,
    27     2000:
    28             (I)  THE ADDITION OF THE DEFINITION OF "CITY NATURAL
    29         GAS DISTRIBUTION OPERATION" IN 66 PA.C.S. § 102.
    30             (II)  THE INCLUSION OF A CITY NATURAL GAS
    19990H1331B2112                 - 120 -

     1         DISTRIBUTION OPERATION IN THE DEFINITION OF "NATURAL GAS
     2         DISTRIBUTION COMPANY" IN 66 PA.C.S. § 2202.
     3             (III)  THE ADDITION OF 66 PA.C.S. § 2212.
     4             (IV)  SECTION 4 OF THIS ACT.
     5             (V)  SECTION 8 OF THIS ACT.
     6         (2)  THE FOLLOWING PROVISIONS SHALL TAKE EFFECT
     7     IMMEDIATELY:
     8             (I)  THE ADDITION OF 66 PA.C.S. § 2203(15).
     9             (II)  THIS SECTION.
    10         (3)  THE FOLLOWING PROVISIONS SHALL TAKE EFFECT JULY 1,
    11     1999, OR IMMEDIATELY, WHICHEVER IS LATER:
    12             (I)  THE AMENDMENT OF 66 PA.C.S. §§ 1307(F) AND (G),
    13         1317 AND 1318.
    14             (II)  THE ADDITION OF 66 PA.C.S. § 2201.
    15             (III)  EXCEPT AS PROVIDED IN PARAGRAPH (1)(II), THE
    16         ADDITION OF 66 PA.C.S. § 2202.
    17             (IV)  EXCEPT AS PROVIDED IN PARAGRAPH (2)(I), THE
    18         ADDITION OF 66 PA.C.S. § 2203.
    19             (V)  THE ADDITION OF 66 PA.C.S. §§ 2204 THROUGH 2211.








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