On September 28, 2016, the Pennsylvania Supreme Court (Court) ruled on a Commonwealth Court remand decision of the Robinson Township 2013 Court decision, where the Court held key provisions of Act 13 (the statute implementing major changes in Pennsylvania’s oil and gas laws and the ability of local government to regulate this industry) were unconstitutional (HMS Blog). In the 2016 Robinson Township decision, the Court: (1) upheld the Commonwealth Court’s holding that provisions related to Public Utility Commission (PUC) review of local ordinances are unseverable from unconstitutional provisions and thus unenforceable, and (2) held four additional provisions of Act 13, including the grant of eminent domain, unconstitutional.
HMS Legal Blog
On August 1, 2016, The Pennsylvania Department of Environmental Protection (DEP) released its 2015 Oil and Gas Annual Report (Report). In additional to natural gas production details, the Report provides information on natural gas data trends in Pennsylvania and details on DEP inspections. 2015 was a difficult year for the natural gas industry as it faced record inventory levels, declining prices, and decreases in newly drilled wells. DEP confirms Pennsylvania was not immune to the national downturn in natural gas drilling with only 1,070 newly drilled wells in 2015 – more than a 50% decrease from the 2,163 new wells drilled in 2014.
Yesterday, President Obama signed into law the “Protecting our Infrastructure of Pipelines and Enhancing Safety” (PIPES) Act. This bi-partisan bill was the culmination of efforts by both the Energy and Commerce Committee and the Transportation and Infrastructure Committee. This Act is intended to increase the efficiency and transparency of the Pipeline and Hazardous Materials Safety Administration (PHMSA) while enlarging safety inspections and audits of the natural gas pipeline industry.
Tuesday night, the U.S. Senate passed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act (PIPES Act). This bill is now headed to President Obama to be signed into law. In addition to reauthorizing the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) through FY2019, this soon-to-be law enacts substantive changes in the pipeline industry’s regulatory landscape.
On March 17, 2016 Pipeline and Hazardous Materials Safety Administration (PHMSA) released a 549 page Notice of Proposed Rulemaking (NPRM) that significantly changes regulations for transmission lines and imposes regulations on previously unregulated gathering lines carrying, inter alia, natural gas and petroleum products.
The Pennsylvania Public Utility Commission (PUC) recently issued a final rule making order concerning recovery of fuel costs by gas utilities at Docket No. L-2013-2346923. The full order can be found here: http://www.pabulletin.com/secure/data/vol46/46-4/110.html The Order is designed to simplify and streamline information and procedures for small gas utilities (gross intrastate operating revenues of $40 million or less) when submitting gas cost rate (GCR) filings with the PUC.
On February 18, 2016, EPA Announced its Triennial National Enforcement Initiatives (“Initiatives”). The EPA issues these Initiatives once every three years in order to help “focus time and resources on national pollution problems” according to Cynthia Giles, assistant administrator for enforcement and compliance assurance at EPA. The latest round of Initiatives will begin on October 1, 2016 and once again will list natural gas producers and water authorities as targets for EPA inspections and enforcement.
Almost one year to the day from its 2014 rate increase filing, Columbia Gas of Pennsylvania is back before the Pennsylvania Public Utility Commission seeking an additional $46 million in revenue.
As the PA PUC embarks on its investigation of the natural gas markets, what evidence can we discern about how the agency sees competitive energy markets and how those markets should evolve?
Historically the Pennsylvania Public Utility Commission (PUC) has permitted natural gas distribution companies (NGDCs) to use flexible pricing or “flex” contract rates to attract or retain large customers who have other energy alternatives. The reasoning has been that “half a loaf is better than none,” and that such revenues, which cover and exceed marginal cost, contribute positively to overall cost of service. The result is a benefit to the large customer, the utility, and all customers generally. Moreover, in terms of retaining a customer, the argument in favor of the status quo is that other ratepayers benefit as they do not bear the revenue burden of stranded investment or a smaller revenue pot over which to apply costs. The NGDCs have generally been able to recover from other ratepayers the difference between the “flex” rate and what would have otherwise been charged under an ordinary general tariff rate.
Does a natural gas company that is not currently authorized to provide service in a territory, but with future plans to file for such authorization, have standing to contest another gas company’s application to provide service in that same territory? This issue was addressed in an Initial Decision by ALJ David A. Salapa, who answered it in the negative. Application of Leatherstocking Gas Co., L.L.C. for Approval To Supply Natural Gas Service to the Public, A-2011-2275595 (Initial Decision, issued March 20, 2012).
On June 4, 2011, the PUC reduced its majority motion to a written order and has remanded the case to an Administrative Law Judge for a ruling on whether the service and terms of the partial settlement are in the public interest. The Order essentially follows Commissioner Wayne E. Gardner’s Motion, which was joined by Chairman Robert F. Powelson and Vice-Chairman John F. Coleman, Jr. at the May 19, 2011 public meeting. It accepted the position of Laser and other parties, such as the PUC’s Office of Trial Staff, that the service proposed by Laser will be public utility service because it will be open to any member of the public requiring service to the extent of capacity.
There are two natural gas pipeline safety bills pending before the Pennsylvania General Assembly: House Bill 344 and Senate Bill 325. Each was met with overwhelming approval in the chamber in which it was proposed, and the passage of either would result in additional safety regulation of the natural gas industry in Pennsylvania by the Pennsylvania Public Utility Commission.
After only a few months of collecting the newly increased rates from its 2010 Rate Case, Columbia Gas of Pennsylvania is back before the Pennsylvania Public Utility Commission seeking an additional $37.8 million in annual revenue.
Today, in split vote, the PUC approved new regulations intended to level the playing field for natural gas competition.