Pennsylvania Lacks Competition in Retail Natural Gas Supply Market

In a recent report released to the Governor and to the state General Assembly, the Pennsylvania Public Utility Commission ("PAPUC") concluded that competition in the Pennsylvania retail natural gas supply market simply does not exist.  This, of course, is not good news for ratepayers who are watching prices skyrocket due to increased demand worldwide as well as the effects of recent hurricanes on transportation and distribution lines in the South.  As a result of its findings, the PAPUC has determined that it will convene natural gas industry stakeholders to examine ways to increase competition and develop recommendations for changes to market structure and operation.

Pursuant to the 1999 Natural Gas Choice and Competition Law, the PAPUC was required to investigate the level of competition five years after the law had gone into effect.  The purpose of the law was to create opportunities for customers to purchase gas from independent suppliers. However, the PAPUC found that it is difficult for suppliers to enter the retail natural gas market in Pennsylvania because of differing security requirements and varying penalties that are not assessed in a cost-based manner by the natural gas distribution companies.  Additionally, the PAPUC found that the marketplace currently lacks accurate and timely price signals.   Although the report was supported by all five Commissioners, Commissioner Bill Shane expressed concern that a new stakeholder process would be a "futile exercise."