[BETA] Fortnightly

The staff of the New York Public Service Commission has asked for public comment on its report, which found the most effective way to establish competition in natural gas supply is to separate the merchant and distribution functions.

The report said non-regulated entities would provide all future merchant functions. These entities will share the supplier of last resort obligations along with local distribution companies and will share in costs of social programs. (Case 97-g-1380, with full text available on internet at http://www.dps.state.ny.us/fileroom/doc2990.t.)

Last year, local distribution companies gave all customers choice of natural gas suppliers. The PSC allowed, but did not require, that LDCs assign a pro rata share of pipeline capacity to customers migrating from sales to transportation. Staff said that progress had been slower than expected. As of mid-1997, only 11,000 customers comprising about 3 percent of small-customer firm gas sales, have migrated to transportation.

The staff report suggests it will take five years for LDCs to leave the merchant business, and recommended eliminating impediments to this migration. It said LDCs should eliminate or restructure any capacity contracts extending beyond five years. The preferred approach is for LDCs to sell the contract at auction.

Comments are due Nov. 20.

Lori A. Burkhart is an associate legal editor with Public Utilities Fortnightly.

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