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Regulation of electricity and
        natural gas

• Electricity
  – Restructuring and timeline
  – Regulation
• Natural Gas
  – Restructuring and timeline
  – Regulation
• Consumer Protection
• Q&A
Pennsylvania Electricity Restructuring Timeline:

• 1992 EPAct sets Wholesale Restructuring in
• 1993 Pennsylvania PUC holds Symposium on
  Retail Competition
• 1996 FERC Order 888
• 1996 Pennsylvania’s Electricity Generation
  Customer Choice and Competition Act
• 1997 Pennsylvania Electric Choice Pilot
Pennsylvania Electricity Restructuring Timeline:

• 1998-2001 Phased Implementation of Electric Choice
• 2000 PPL Utility Restructuring Case leads to PUC
  creation of $21 million Green Energy Fund
• 1999 FERC Order 2000: encouraged creation of RTOs
  to operate competitive wholesale markets on a regional
• 2001 All Pennsylvania IOU customers have retail choice

Source: EIA
        Electricity Restructuring Details:

• Electric Choice Pilot Program IOU Guidelines:
    – Must cover 5% of IOUs peak load for each customer class for
      one year
    – Included technical and operational guidelines
    – Required unbundling of generation from transmission and
      distribution in utility tariffs
    – Utilities encouraged to offer distribution service and surplus
      generation on equal terms to all
    – Included methods for stranded cost recovery
    – Required utilities to plan for “customer education, safety, and
Source: Alternating Currents
      Restructured Electricity Market:

• PJM Interconnection operates wholesale
  electricity market and transmission grid
   – Non-mandated evolution from pre-existing
     PJM Power Pool
   – One of the earliest RTOs to gain FERC
• Local Utility Distribution Company (UDC) still
  provides distribution services
• Retail Customers choose between UDC and a
  competitive ESP
 PJM Interconnection Service Area:

Source: PJM website
             Electricity Regulation:

• House Bill 1509 (1996):
  – regulates customer choice in electric cooperatives
  – mandates unbundling of generation, transmission and
    retail sales
  – sets a timeline for customer choice of electric utilities
  – specifies directives for transition to market
    competition for public utilities
  – sets provisions for universal service and energy
Pennsylvania Natural Gas Restructuring Timeline:

• 1978 Natural Gas Power Act

• 1999 Pennsylvania’s Natural Gas Choice and
  Competition Act
          Natural Gas Regulation:

• House Bill 1331 (1999):
  – requires natural gas utilities to disclose
    procedures that they have obtained the least
    cost fuel
  – requires universal service and proof of
    adequate supply to meet peak day demand
  – regulates unbundling of transmission and
  – sets a timeline for customer choice of natural
    gas providers
          Wholesale Rate Protection:

• FERC oversight and enforcement of “just and
  reasonable” rates
  – Order 2000: Facilitates competitive regional wholesale markets
  – Continuous market monitoring
  – Enforces and corrects market when necessary
  – Operates independently and neutrally
  – Maintains transmission and grid reliability
  – Provides real-time information to members
• Federal Trade Commission
  – Law enforcement
  – Consumer advocacy
         Retail Consumer Protection:

• Pennsylvania Public Utility Commission
  – Regulates price safety and reliability
• Pennsylvania Office of Consumer Advocate
  – Represents consumers in cases before the PUC, Federal
    regulatory agencies and state and federal courts
  – Represents consumer interests in competition policy debates
  – Aids and resolves customer utility complaints
  – Consumer education: Residential Electric and Natural Gas
    Shopping Guides
• Pennsylvania Attorney General
  – Defends consumer’s interests in retail market
  – Example: natural gas price-fixing

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