Title 52--PUBLIC UTILITIES PENNSYLVANIA PUBLIC UTILITY COMMISSION [52 PA. CODE CH. 69] [27 Pa.B. 4102] [M-00960838]
Affiliated Interest Issues of Natural Gas Marketers The Pennsylvania Public Utility Commission (Commission) on June 5, 1997, adopted a final policy statement to provide guidance to local distribution companies (LDCs) providing natural gas service in this Commonwealth with regard to uniform standards for affiliated interests of the LDCs and for gas marketing divisions of LDCs. The contact person is Joseph K. Witmer, Assistant Counsel, Law Bureau, (717) 783-2818.
Commissioners Present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; John Hanger, statement follows; David W. Rolka Dissenting--statement follows; Nora Mead Brownell
Public Meeting held
June 5, 1997Policy Statement Addressing Affiliated Interests of Natural Gas Marketers; Doc. No. M-00960838
Final Order By the Commission:
On October 3, 1996, the Commission adopted a proposed policy statement to provide guidance to LDCs providing natural gas service in this Commonwealth. A proposed policy statement was published in the Pennsylvania Bulletin on November 23, 1996. Comments were due within 30 days after publication. A public forum was held on March 7, 1997. We issued this proposed policy statement along with a statement on policies for marketer fitness at M-960839. Most comments submitted by the interested parties1 jointly commented on both dockets.2
A. General
This Policy Statement addresses an LDC's relationship with its marketing subsidiary. That is necessary because an LDC's marketing subsidiary may be competing against other non-LDC marketers or brokers for deliveries of gas supplies to customers located on an LDC's distribution network under an LDC's transportation tariff. The parties have divergent views on handling an LDC's marketing subsidiary based on their interests.
B. Policy Statements Under Pennsylvania Law
Several comments requested that the Commission's Policy Statement be mandatory. Those comments objected to the use of the term ''should'' in the Policy Statement because the Commission's approach must be mandatory and regulatory.
We reject that suggestion because it is inconsistent with Pennsylvania law. In this Commonwealth, the language of a policy statement is generally precatory rather than mandatory. The Commission lacks statutory authority to implement mandatory policy statements, let alone enforce them unilaterally or immediately since that is the purpose of regulations under Pennsylvania law. The Commonwealth Court has commented, in relevant part, as follows:
. . .a statement of policy does not have the force of law, and is merely interpretive in nature and is not binding upon a reviewing court. The value of a policy statement is only persuasive, so long as it represents an accurate interpretation of the relevant statute or other authorities from which it is derived.
Shenago Township Board of Supervisors v. PA PUC, (No. 1387 C.D., filed December 20, 1996).
Our rejection is also based on the distinction under Pennsylvania law between a statement of general policy or guideline and a rule or regulation issued by a govern-mental body. Where an agency's guidelines are intended to provide a general statement of policy, they are not treated as binding administrative rules or regulations. Willman v. Children's Hospital of Pittsburgh, 459 A.2d 855, 859 (1983) citing Pennsylvania Human Relations Commission v. Norristown Area School District, 473 Pa. 334, 374 A.2d 671 (1977). Consequently, we view this document as a policy statement or guideline and not a binding administrative regulation.
C. The Purpose of The Policy Statement and the Creation of a Level Playing Field
The LDCs and marketers or brokers have different opinions about the Policy Statement. The Pennsylvania Gas Association (PGA) and several LDCs disputed the claim that LDCs can leverage their local distribution system so as to impede the competitive presence of competing gas suppliers.
Equitable, in particular, objected to the Commission's attempt to create a new level playing field in this proceeding and suggested that the Commission await further legislation. Equitable and UGI both claimed that LDCs, unlike a marketer or broker, had a continuing obligation to less profitable or desirable customers. They further claimed that, if anything, these legal obligations placed an LDC at a competitive disadvantage vis-a-vis large competitors of gas suppliers who are not burdened with these duties.
Upon consideration, we reject the marketer or broker argument. We do so because they seek to use this Policy Statement to extend the Commission's statutory authority with regard to policy statements. We also reject their position because they would use this Policy Statement as a vehicle to restructure the entire industry. That is a legislative function which should not be accomplished by the guidance set forth in this Policy Statement.
By the same token, we also reject the LDC's argument. We do so because the LDCs would limit the Commission's jurisdictional authority to review or address potentially inappropriate dealings with affiliated interests. Neither approach is acceptable.
We will not use this Policy Statement as a means to restrict our jurisdiction nor as a forum to restructure the natural gas industry. Those are legislative functions. In addition, we recognize that an LDC's statutory obligations under the Pennsylvania Code, which obligations are not imposed on a marketer or broker of gas supplies, presents a challenge to an LDC which might benefit from the guidance provided by this Policy Statement.
We conclude that the guidance of a Policy Statement and not the mandate of a regulation is the best way to manage competition between an affiliate and a competing gas supplier. We believe that interested parties are far better at protecting their interests on a tariff-by-tariff basis, which are developed in light of the LDC's situation and the legal rights and obligations of an LDC and competing gas suppliers, than by regulatory mandate.
D. Definitions Under the Policy Statement
The parties disputed the terms used in the Policy Statement. One term that caused extensive debate was the meaning and scope of ''affiliate'' as it was used in the Policy Statement.
An affiliated interest, to the extent that an LDC's affiliated marketing division or subsidiary constitutes an affiliated interest, is defined at 66 Pa.C.S. § 2101. Section 2101 provides, in relevant part, as follows:
(6) Every corporation or person which the commission may determine as a matter of fact after investigation and hearing is actually exercising any substantial influence over the policies and actions of such public utility, even though such influence is not based upon stockholding, stockholders, directors, or officers to the extent specified in this section. As used in this part substantial influence means any corporation or person which or who stands in such relationship to the public utility that there is an absence of free and equal bargaining power between it or him and the public utility.
(7) Every person or corporation who or which the commission may determine as a matter of fact after investigation and hearing is actually exercising such substantial influence over the policies and actions of such public utility in conjunction with one or more other corporations or persons, or both, with which or whom they are related by ownership or blood relationship, or both, or by action in concert that together they are affiliated with such public utility within the meaning of this section even though no one of them alone is so affiliated.
Upon analysis of the facts and arguments in this case, we conclude that, for purposes of this Policy Statement only, the comments provided during this Policy Statement's investigation and the public forum hearings provided in conjunction therewith justify a determination that the term ''affiliated interest'' as used in section 2101 includes an affiliate as used in this Policy Statement. That is because the gas supply operations of an LDC typically intertwine with the transportation tariff services and the distribution system operations of an LDC.
We conclude that such an affiliated interest includes a legally or functionally distinct entity, or both, of an LDC engaged in competition against other marketers or brokers for the supply of gas regardless of whether other marketers or brokers are themselves an affiliate as defined in our Policy Statement.
E. Specific Provisions
1. Selective Enforcement of Transportation and Balancing, for example, § 69.192(b)
Section 69.192(2) of the Proposed Policy Statement provided, in relevant part, as follows:
(2) The LDC shall likewise not apply a tariff provision in a manner that would give its affiliate or division an unreasonable preference over other marketers with regard to matters such as scheduling, balancing, transportation, storage, curtailment, or nondelivery.
Pennsylvania Bulletin, Vol 26, No. 47, November 23, 1996, p. 5721, emphasis added.
An issue arose concerning the equitable enforcement or application of these balancing and transportation regulations.
We note that 66 Pa.C.S. § 1502 prohibits unreasonable, and hence discriminatory, preferences by a public utility as regards its customers. While section 1502 does not apply directly to the relationship between the LDC and the nonutility marketer or broker, it must be recognized that the failure to treat all gas suppliers on an equal basis impacts the end user's ability to obtain the service for which it has contracted. In addition, actions taken consistent with this Policy Statement would prevent the filing of Formal Complaints by an LDC's transportation service customer and thereby avoid the expenditure of time and resources in formal proceedings. Furthermore, under sections 501(a), 1501 and 1502, we find that end-users using transportation tariffs come within the purview of this Policy Statement with respect to the enforcement of our transportation regulations and protecting the public interest.
Finally, we conclude that this Policy Statement is not intended to prohibit any existing tariffs or tariff practices in existence before issuance of the guidance set forth in this Policy Statement. In particular, the Commission's Policy Statement is not intended to prohibit the use of bundled tariff offerings to the extent they constitute competitive responses to market circumstances so long as those practices do not contravene, inter alia, 66 Pa.C.S. § 1502 of the Public Utility Code or constitute an illicit tying arrangement in contravention of law.
2. Unreasonable ''Preferences'' Under § 69.192(b)
The Office of Consumer Advocate (OCA) and other parties questioned the use of the adjective ''unreasonable'' in § 69.192(2). They consider the adjective dangerous because it suggests that some differentiation may be acceptable and legal.
Upon consideration, we conclude that elimination of that term is unnecessary. We do so because there may be a legitimate regulatory basis for providing a local affiliate with a different requirement given the difference in the legal rights and obligations existing with regard to an LDC and a marketer or broker. In addition, a customer unhappy with an LDC's actions can challenge those actions under 66 Pa.C.S. § 1502. Finally, the Commission needs to monitor such preferences under 66 Pa.C.S. § 1317(b) whereby integrated gas companies must furnish information regarding the purchase of gas supplies from nonaffiliated interests, purchases from affiliated interests, and gas supplies withheld. Likewise, § 1318 places limitations on gas supplies purchased from affiliates.
3. Recordkeeping and Reporting Under § 69.192(e)
Section 69.192(5) of the Proposed Policy Statement provided, in relevant part, as follows:
(5) The LDC shall maintain a chronological log of tariff provisions for which it has granted waivers. Entries shall include the name of the party receiving the waiver, the date and time of the request, the specific tariff provision, the specific tariff provisions waived and the reason for the waiver.
Pennsylvania Bulletin, Vol 26, No. 47, November 23, 1996, p. 5721.
The marketers and brokers strongly urge the Commission to impose extensive reporting requirements on an affiliate.
Upon consideration, we do not believe that imposition of mandatory reporting requirements in a guidance document is necessary, appropriate, or legally sound. The concerns to be addressed by these reporting requirement suggestions are better managed through the Commission's Formal Complaint and regulatory review processes. Those concerns can also be addressed and resolved on an individual basis as part of any transportation tariff proposed by an LDC. Consequently, we are unwilling to impose those suggested reporting requirements given that other avenues exist to address them.
4. Restrictions on Disclosure and Exchange of Information Under § 69.192(h)
Section 69.192(8) of the Proposed Policy Statement provided, in relevant part, as follows:
(8) The LDC should not disclose customer proprietary information to its marketing affiliates or division, and to the extent that it does disclose customer information, it shall do so to other similarly situated marketers in a similar fashion so as not to selectively disclose, delay disclosure, or give itself or its affiliate any undue advantage related to the disclosure.
Pennsylvania Bulletin, Vol 26, No. 47, November 23, 1996, p. 5721.
PGA claimed that a categorical ban on exchanges of information would unduly restrict legitimate utility management.
Upon consideration, we would simply point out that this provision simply means that information conveyed to an LDC's affiliate must be done via public dissemination and not private disclosure.
We believe that system reliability is enhanced by public dissemination as opposed to private disclosure. That is because all the parties engaged in a competitive gas supply market would be made aware of potential gas supply customers. This will enable all gas suppliers to react to such market changes and make the adjustments needed to enhance their transportation and gas supply operations. In addition, all parties would be informed about the enhanced gas supply sales arising from plant expansions.
We do not believe that an LDC must be allowed to privately disclose to its affiliate any gas supply marketing opportunities, gleaned from its role as system operator, in advance of public dissemination. We reach that conclusion because selective disclosure of such gas supply market potential could prejudice other marketers. Such action might also be to a customer's disadvantage because that customer might lock-in gas supplies from an affiliate before other marketers or brokers have an opportunity to provide competitive gas supply options.
Nevertheless, contrary to the understanding contained in some comments, we would point out that the guidance provided by this Policy Statement does not mean that all gas supply disseminations to an affiliate are prohibited. Our Policy Statement only expects that disclosures made to an LDC's affiliate with regard to gas supply changes must also be made simultaneously to other competitive gas supply participants.
6. Structural Separation Under § 69.192(i)
This provision was contested in several respects. Section 69.192(9) of the Proposed Policy Statement provided, in relevant part, as follows:
(9) An LDC shall fairly allocate to its marketing affiliate or division costs or expenses for general administration or support services so as to not give either the LDC or the affiliate an unfair advantage over competitors through an unfair allocation of these costs.
Pennsylvania Bulletin, Vol 26, No. 47, November 23, 1996, p. 5721.
a. Structural and Employee Separation
A number of comments addressed the issue of cost allocation between an LDC and its affiliate. Upon consideration, we conclude that physical separation should not be mandated in this Policy Statement. This does not mean, however, that a case cannot be made for such separations requirements depending on the size and sophistication of any given LDC. Such a matter, we believe, is best reserved for those proceedings in which we actively consider an LDC's transportation tariff. We do so in light of the fact, as the smaller LDCs have noted, that separation may be unwieldy and unnecessary for small operations but may be a practical and efficient alternative for larger operations. Such a determination can be made on an LDC-by-LDC basis. A blanket generic requirement on that issue is not a proper subject of this Policy Statement.
b. Cost Allocation
PGA claimed that § 69.192(9) posited two cost allocation standards, for example, ''fairness'' and ''competitive advantage,'' which presumably called for an assessment of other considerations. PGA suggested that the Commission intended a distinction regarding cost allocation and, that if no distinction is intended, the standards were redundant. PGA further suggested that the fairness standard was really a ''just and reasonable'' standard whereas competitive advantage implied a new standard for assessing cost allocations and deployment of assets.
Upon consideration, we conclude that the language used may create confusion. The section will be altered so as to clearly state the purposes for which it is intended.
7. Capacity and Supply Releases Under § 69.192(j)
Section 69.192(10) of the Proposed Policy Statement provided, in relevant part, as follows:
(10) An LDC selling surplus gas supplies or upstream capacity on a short-term basis to its affiliate shall make supplies available to similarly situated marketers on a nondiscriminatory basis.
Pennsylvania Bulletin, Vol 26, No. 47, November 23, 1996, p. 5721.
PGA noted that the Federal Energy Regulatory Commission (FERC) excluded short-term releases of capacity from competitive bidding and has considered further elimination of competitive bidding for released capacity. PGA suggested that the proposed policy would be an impediment to short-term transactions and that there may be no means to make pipeline capacity available to all similarly situated customers.
OCA claimed that the Commission has provided no definition of ''short-term'' nor has it explained why the nondiscriminatory requirement is limited to short-term versus long-term upstream capacity. OCA recommended defining short-term as a transaction of 31 days or less and applying this standard to long-term surpluses as well.
Upon consideration, we conclude that the FERC approach for exempting short-term transactions, as defined and set forth at FERC, is appropriate here in light of our desire to avoid imposing more requirements on Pennsylvania LDC's. However, we believe that public dissemina-tion of any availability is necessary, to enhance competition, and that a log showing such availability should be kept and remain open for inspection during normal business hours. We believe that this approach sets forth our expectations regarding competition and our desire to make sure that information concerning available gas and capacity is public. That ensures the safety and reliability of gas supplies or capacity.
8. Enforcement and Complaints Under § 69.192(l)
Section 69.192(13) of the Proposed Policy Statement provided, in relevant part, as follows:
(13) The LDC shall establish and file with the Commission a complaint procedure for dealing with alleged violations of this section.
Pennsylvania Bulletin, Vol 26, No. 47, November 23, 1996, p. 5721.
The marketers and brokers suggested that the burden should not be on them to discover and prove violations. They want that burden shifted to the LDC.
Upon consideration, we note that 66 Pa.C.S. § 332(a), of the Public Utility Code states that, except in regard a public utility's rates or alleged violations investigated by the Commission, the burden of proof is on the party bringing the complaint. The Commission lacks the statutory authority to alter that requirement.
As we noted in our discussion of an LDC in § 69.191(10) of this Policy Statement, we believe that such an internal complaint procedure is appropriate and should be developed by the parties on an LDC-by-LDC basis. Where a utility has an established arrangement for conflict resolution, resolution may prove far less expensive and time consuming than resort to the Commission's Formal Complaint processes. That, however, can be examined on a case-by-case basis in conjunction with review of any tariff filing. With regard to our authority to require such a process, this Commission has the authority to address the terms and conditions of service of a public utilty under section 1501 of the Public Utility Code.
Consequently, we see no need to invoke that authority today. The fact is that competing gas suppliers and the LDCs have financial incentives for developing processes to manage any violation of the Public Utility Code that might be faster and less costly than resort to Commission processes.
Conclusion
The Commission is amending the proposed Policy Statement in several respects. The first paragraph of § 69.191(a) has been amended to clearly state that marketers or brokers come within the scope of the Policy Statement. The third paragraph of § 69.191(a) has been amended to clearly indicate the Commission's determination that a generic separations requirement is not expected as a result of this Policy Statement although separations may be expected if warranted by subsequent facts and circumstances.
Section 69.191(b) has been amended to indicate the Commission's determination that recordkeeping and conflict resolution will not be addressed on a generic basis in this Policy Statement. The Commission expects the parties in any tariff proceeding guided by this Policy Statement to resolve those concerns in joint consultation. The Commission reserves the option of addressing both recordkeeping and conflict resolution in any tariff determination guided by this Policy Statement if the parties are unable to do that or if warranted by subsequent facts or circumstances.
Section 69.192(5) has been amended to expect that the chronological log for waivers from any tariff provisions shall be open for inspection during normal business hours. Sections 69.192(5)--69.192(7), 69.192(10), and 69.192(14) have been amended to reflect the Commission's expectation that chronological logs will be kept and that such logs shall be open for public inspection during normal business hours.
Section 69.192(10) has been amended to reflect the Commission's expectation that any release of gas surplus and/or upstream capacity shall be publicly disseminated simultaneously in conjunction with any private disclosure to an LDC's affiliate. Section 69.192(13) has been amended to expect a permissive, as opposed to mandatory, conflict resolution procedure.
Accordingly, under our authority under sections 501, 508, 1301--1304, 1317, 1318, 1501, and 1502 of the Public Utility Code, 66 Pa. C.S. §§ 501, 508, 1301--1304, 1317, 1318, 1501 and 1502, as well as the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1201 et seq.), the Commission has authority to promulgate this Final Policy Statement addressing the Affiliated Interests of a Local Distribution Company to read as set forth in Annex A; Therefore, It Is Ordered That:
1. The Final Policy Statement addressing the Affiliated Interests of Natural Gas Marketers of a Local Distribution Company, as set forth in Annex A, be and hereby is adopted.
2. The Secretary shall submit this order and Annex A to the Governor's Budget Office for review of fiscal impact.
3. The Secretary shall duly certify this order and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
4. This policy statement shall become effective upon publication.
5. A copy of this Order and Annex A are to be served upon all jurisdictional gas utilities, the Office of Consumer Advocate, the Office of Small Business Advocate, and on any parties who filed comments in this proceeding.
JAMES J. MCNULTY,
Acting Secretary(Editor's Note: The regulations of the Commission, 52 Pa. Code Chapter 69, are amended by adding a statement of policy at §§ 69.191 and 69.192 to read as set forth in Annex A).
Statement of Commissioner Hanger This Policy Statement provides guidelines for the parties to use in jointly developing amendments to transportation tariffs or in developing new transportation tariffs for the possible expansion of customer choice to all customers in the near future. The Policy Statement places natural gas market participants on notice that the Commission expects that the tariff amendments to be filed will not tolerate discrimination in the provision of unbundled monopoly elements, including scheduling, balancing transportation, storage, curtailment or nondelivery; that information an LDC gives to its subsidiary must also be publicly available; that transportation discounts provided to a marketing affiliate or the LDC's favored customers must be offered to the affiliate's competitors; and that LDCs must maintain and make publicly available during normal business hours a chronological log of tariff provisions for which it has granted waivers. Finally, the affiliate interest rules ultimately have to be approved by the Commission. Any standard that is anticompetitive will not be approved by me.
There is one item that I would like to see considered by the LDC and the parties. That issue involves the physical separation of the LDC marketing function from the LDC monopoly business. For many LDCs in this Commonwealth, physical separation of the affiliate already is a reality. But there exists other LDCs that should consider the separation of monopoly and competitive functions as well. In fully competitive markets where unlimited cross subsidies from the competitive core business to the fledgling new enterprise could mean the demise of the core business, the commingling of subsidiary financial resources is not an issue because there is a competitive limit to the resources the parent firm will commit to the subsidiary.
By contrast, a regulated monopoly such as an LDC has a captive source of resources, both financial and informational, to fund the LDC affiliate's competitive ventures. This is why regulated monopoly industries are different from competitive retail firms. The playing field cannot be level, and competition cannot maximally flourish, unless, in addition to the Policy Statement items, there is a structural separation of staffing and locations. For these reasons, it is not surprising that physical separation of affiliates either in location or staffing has been required by the Wisconsin Public Service Commission, the New York Public Service Commission, New Jersey Board of Public Utilities, and the Maryland Public Service Commission.
Statement of Commissioner David W. Rolka This Policy Statement is intended to provide guidance to, but not restructure, Pennsylvania's natural gas industry. The Policy Statement recognizes that the industry restructuring is an issue that is within the General Assembly's purview and not the Pennsylvania Public Utility Commission's. To the extent that the will of the General Assembly is known, this knowledge should be reflected in any Policy Statement issued by this agency.
An indication of the current thinking of the General Assembly regarding the structural separation of local distribution companies (LDCs) is set forth in the present version of House Bill 1968, Printer's Number 1193. This proposed bill is being considered actively, as demonstrated by the recent round of both House and Senate hearings on gas restructuring.
Section 2203(4) of House Bill 1068 would require LDCs to ''separate physically, operationally and legally all natural gas supply facilities and functions from gas operations.'' Section 69.192 of the Commission's Policy Statement urges LDCs to apply their tariffs ''in a nondiscriminatory manner.'' It contemplates a system of cost allocations and fire walls between LDCs and their marketing affiliates. Experience in the telecommunications industry demonstrates that fire walls based on cost allocations are actually more rather than less regulatory and are as difficult to maintain.
On an issue such as this, under active consideration by the Legislature, it is in my opinion more appropriately the subject of legislative testimony and consideration prior to our agency taking action. I, therefore, do not support the issuance of this Policy Statement at this time.
Fiscal Note: Fiscal Note 57-180 remains valid for the final adoption of the subject regulations.
Annex A 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 § 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.
§ 69.192. Affiliated interest--statement of policy.
The following policies should be applied by the local distribution companies (LDCs):
(1) The LDC should apply its tariffs in a nondiscriminatory manner to its affiliate, its own marketing division and any nonaffiliate.
(2) The LDC should likewise not apply a tariff provision in any manner that would give its affiliate or division an unreasonable preference over other marketers with regard to matters such as scheduling, balancing, transportation, storage, curtailment or nondelivery.
(3) If a tariff provision is mandatory, the LDC should not waive the provision for its affiliate or division absent prior approval of the Commission.
(4) If a tariff provision is not mandatory or provides for waivers, the LDC should grant the waivers without preference to affiliates and divisions or nonaffiliates.
(5) The LDC should maintain a chronological log of tariff provisions for which it has granted waivers. Entries should include the name of the party receiving the waiver, the date and time of the request, the specific tariff provision waived and the reason for the waiver. Any chronological log should be open for public inspection during normal business hours.
(6) The LDC should process requests for transportation promptly and in a nondiscriminatory fashion with respect to other requests received in the same or a similar period. The LDC should maintain a chronological log showing the processing of requests for transportation services. Any chronological log should be open for public inspection during normal business hours.
(7) Transportation discounts provided to the LDC's or its marketing affiliate's favored customers should be offered to other similarly situated customers and should not be tied to any unrelated service, incentive or offer on behalf of either the parent or affiliate. A chronological log should be maintained showing the date, party, time and rationale for the action. Any chronological log should be open for public inspection during normal business hours.
(8) The LDC should not disclose any customer proprietary information to its marketing affiliate or division, and to the extent that it does disclose customer information, it should do so to other similarly situated marketers in a similar fashion so as not to selectively disclose, delay disclosure, or give itself or its affiliate any undue advantage related to the disclosure. A chronological log should be maintained showing the date, time and rationale for the disclosure. Any chronological log should be open for public inspection during normal business hours.
(9) An LDC should justly and reasonably allocate to its marketing affiliate or division the costs or expenses for general administration or support services.
(10) An LDC selling surplus gas supplies and/or upstream capacity on a short-term basis (as defined by the Federal Energy Regulatory Commission's definition) to its affiliate should make supplies available to similarly situated marketers on a nondiscriminatory basis. An LDC should not make any gas supplies and/or upstream capacity available through private disclosure to an LDC's affiliate unless the availability is made simultaneously with public dissemination in a manner that fairly apprises interested parties of the availability of the gas supplies and/or upstream capacity. An LDC should maintain a chronological log of these public disseminations. Any chronological log should be open for public inspection during normal business hours.
(11) The LDC should not condition or tie agreements to release interstate pipeline capacity to any service in which the LDC or affiliate is involved.
(12) The LDC should not directly or by implication unfairly represent to any customer, supplier or third party that an advantage may accrue to any party through use of the LDC's affiliate or subsidiary.
(13) The LDC should establish and file with the Commission a complaint procedure for dealing with any alleged violations of any of the standards listed in paragraphs (1)--(12), this paragraph or paragraphs (14) and (15), excepting for paragraph (9), which should be exclusively under the purview of the Commission. These procedures should be developed in consultation with interested parties during consideration of any tariff guided by this section and §69.191 (relating to general). The Commission may expect establishment of a complaint procedure or other recordkeeping requirements if warranted by subsequent facts or circumstances.
(14) The LDC should keep a chronological log of any complaints, excepting paragraph (9), regarding discriminatory treatment of brokers. This chronological log should include the date and nature of the complaint and the LDC's resolution of it. Any chronological log should be open for public inspection during normal business hours.
(15) Parties alleging violations of these standards may pursue their allegations through the Commission's established complaint procedures. A complainant bears the burden of proof consistent with 66 Pa.C.S. (relating to Public Utility Code) in regard to the allegations.
[Pa.B. Doc. No. 97-1302. Filed for public inspection August 15, 1997, 9:00 a.m.] _______
1 Unless otherwise stated, the phrase ''marketers'' and/or ''marketers or brokers'' includes all LDC affiliates, subsidiaries, parents, divisions, and the like providing gas supply to a respective LDC's customer.
2 The Commission received comments from the Office of Consumer Advocate (OCA); the Independent Oil and Gas Association of Pennsylvania (IOGA); the Pennsylvania Gas Association (PGA); and the Industrial Energy Consumers of Pennsylvania (IECPA); Eastern Energy Marketing; Enron Capital and Trade Resources; KCS, LG&E, MidCon and Natural Gas Clearing House (Clearinghouse); Open Flow Gas Supply Corporation, and T.W. Phillips; and UGI.
