Pennsylvania Code
Title 52 - PUBLIC UTILITIES
Part I - Public Utility Commission
Subpart C - Fixed Service Utilities
Chapter 69 - GENERAL ORDERS, POLICY STATEMENTS AND GUIDELINES ON FIXED UTILITIES
POLICY STATEMENT ADDRESSING AFFILIATED INTEREST ISSUES OF NATURAL GAS MARKETERS
Section 69.191 - General

(a) Given the unbundling of monopoly distribution services in the natural gas industry and the development of customer access to commodity gas and transportation services, the Commission has developed policies for local distribution companies (LDCs), marketers and customers with regard to the affiliated and nonaffiliated interests of LDCs. Unless otherwise stated, the phrase "marketer" or "marketers or brokers" includes all LDC affiliates, subsidiaries, parents, divisions, and the like providing gas supply to a respective LDC's customer. This section and § 69.192 (relating to affiliated interest-statement of policy) are intended to clarify additional aspects of the Commission's authority in this area. The Commission has a strong policy against direct or indirect discrimination by LDCs in favor of their marketing affiliates or marketing divisions and against independent gas marketers. The discrimination impermissibly hinders the unbundling of services and the entry of new competitors into the marketplace. This discrimination also violates section 1502 of the code (relating to discrimination in service).

(b) Many Pennsylvania LDCs have affiliated marketing divisions. Some Pennsylvania LDCs may have divisions or marketing sections that are not separately organized as affiliates as defined in 66 Pa.C.S. (relating to Public Utility Code). This section and § 69.192 provide guidance to an LDC's affiliate, regardless of the format used to operate an LDC's affiliate, in order to be effective, to prevent discriminatory behavior, and insure compliance with section 1502 of the code (relating to discrimination in service). This section and § 69.192 will apply without regard to the structural relationship of the LDC's marketer to the LDC.

(c) This section and § 69.192 cover both the LDC's affiliates and gas marketing divisions or marketing sections, even those without any distinct organizational structure, that do not have affiliate status. This section and § 69.192 will not require any generic structural separation of an LDC's affiliate, notwithstanding actions taken to the contrary in other states, because the Commission does not believe this is necessary as long as the LDC fairly allocates costs to an LDC's affiliate and refrains from giving the LDC's affiliate any unfair advantage vis-a-vis a marketer or broker not affiliated with an LDC. The Commission may impose such a structural requirement if and when warranted by the facts and circumstances.

(d) The Commission's authority with respect to affiliates and marketing divisions derives from different portions of the code. Chapter 21 of the code (relating to relations with affiliated interests) directly governs affiliated interests. Section 1318(b) of the code (relating to just and reasonable natural gas rates), addresses gas purchased from affiliates. Other provisions govern natural gas costs such as sections 1307, 1308, 1317, and 1318. The code requires adherence to tariffs under section 1303 (relating to adherence to tariffs) and thus prohibits a lack of uniformity or discrimination in the application of tariff provisions. Likewise under section 1304 (relating to discrimination in rates) it prohibits rate discrimination. Other provisions reenforce these policies: section 1501 (relating to character of service and facilities) requires utilities to furnish "adequate, efficient, safe and reasonable service," while section 1502 prohibits "any unreasonable preference or disadvantage" and forbids "any unreasonable prejudice or disadvantage." These provisions require equal treatment of similarly situated parties, in this case customers of an LDC's transportation tariff services, regardless of whether that customer chooses to use the gas supply services of an LDC or otherwise.

(e) Under sections 505 and 506 of the code (relating to duty to furnish information to the Commission; cooperation in valuing property; and inspection of facilities and records), the Commission has authority to require utilities to keep and furnish information in accordance with requirements set forth by the Commission. As part of this section and § 69.192 the Commission has set forth certain recordkeeping requirements to help ensure that parties are fairly treated. The Commission expects the LDC, in consultation with marketers or brokers to propose a process for reporting and managing marketer or broker complaints as part of any tariff proposed as a result of this section and § 69.192. The Commission may expect additional recordkeeping or conflict resolution processes if the parties are unable to resolve this or if warranted by subsequent facts and circumstances.