Before Senator Gene Yaw and The Center For Rural Pennsylvania
Hearing on Natural Gas Extension Services
Terrance J. Fitzpatrick
President and CEO
April 11, 2012
Good morning, Senator Yaw, fellow presenters and guests. I am Terry Fitzpatrick, President and CEO of the Energy Association of Pennsylvania (“EAP” or “Association”), a trade association comprised of electric and natural gas utilities operating in Pennsylvania. Thank you for this opportunity to participate today in this public information hearing on behalf of EAP’s natural gas utility members regarding natural gas extension services in Pennsylvania.
By way of background, the Energy Association’s main functions are to advocate positions before state agencies (most notably the Public Utility Commission) and the General Assembly, and to assist its members in sharing best practices. EAP also provides educational opportunities for its members (as well as for out-of-state utilities, government employees, and other interested parties) through its annual conferences on electric and gas operational issues and consumer service issues.
I’ll begin with a brief description of how gas utilities fit into the overall structure of the natural gas industry in Pennsylvania. The technical name for gas utilities under the Natural Gas Choice and Competition Act of 1999 is “natural gas distribution companies,” because they own and operate gas distribution systems. Gas utilities do not own gas wells or interstate pipelines, although they may have corporate affiliates that operate independently of the utility and are involved in these other businesses. Gas utilities are regulated by the Pennsylvania Public Utility Commission (PUC), which oversees the reasonableness of their rates and the quality of their service. Since the passage of the Gas Competition Act, all customers have the opportunity to purchase supplies of gas from competitive natural gas suppliers. However, if customers choose not to purchase from these suppliers, gas utilities continue to serve them as the “default supplier.” Gas utilities purchase gas for non-shopping customers pursuant to a “least cost” purchasing strategy that is approved by the PUC. Gas utilities earn a profit on their distribution services, but not on their sales to default service customers. Finally, gas utilities provide bills to customers and administer Universal Service Programs to assist their low-income customers.
Please direct any questions or requests for more information to Debra Kitner by email or phone at (717) 901-0607.