Energy and Technology Committee
Judiciary Committee
Government Administration and Elections Committee
AN ACT ESTABLISHING A CODE OF CONDUCT FOR THE TRANSACTIONS BETWEEN NATURAL GAS DISTRIBUTION COMPANIES AND THEIR AFFILIATES, PREVENTING PROPANE TERMINATIONS FOR CERTAIN CUSTOMERS AND CONCERNING THE STATE'S ENERGY ASSESSMENT
SUMMARY: This act requires the Department of Public Utility Control (DPUC) to establish a code of conduct setting minimum standards for transactions between gas companies and their affiliates. The act gives DPUC various investigative powers regarding affiliates and their transactions with gas companies. It allows DPUC to issue enforcement orders against entities subject to the code, including cease and desist orders, and impose civil penalties of up to $10,000 per violation of the code. DPUC must adopt regulations by November 1, 2010 establishing the code and related accounting and reporting requirements and procedures.
The act limits when propane dealers can terminate service to eligible residential customers for nonpayment of their bills. These limits are similar to those that apply to electric and natural gas utilities under current law.
The act requires electric companies to submit integrated resources assessments by January 1 of every even-numbered year, rather than every year.
EFFECTIVE DATE: Upon passage
CODE OF CONDUCT
Under the act, DPUC must establish a code of conduct setting standards for gas company transactions with its affiliates to achieve specified goals. The act defines a gas company “affiliate” as an entity or class of entities that (1) is under the control of a gas company holding company or (2) DPUC finds, after notice and hearing, has a relationship to a gas company conducting business and financial transactions that involve cross-subsidization or preferential treatment between the company and the affiliate that makes it necessary to protect ratepayers.
The code must provide rules:
1. for when the purchases or sales of goods or services between a gas company and an affiliate should be by written contract based on such factors as the nature, value, and term of the purchase or sale and
2. for sharing or giving access to certain types of customer-identifying or commercially sensitive information to affiliates that may differ between regulated and unregulated affiliates.
The code must provide for:
1. a system of records and reporting for transactions between a gas company and its affiliates and
2. a standard for avoiding conflicts of interest between a gas company and affiliates.
In addition, the code must ensure:
1. that transactions between the company and its affiliate do not have an improper and adverse impact on the company's costs or revenue, customer rates and charges, or on the quality of service provided by the company;
2. that gas company ratepayers do not subsidize affiliate operations;
3. fair, appropriate, and equitable standards for purchases, sales, leases, asset transfers, and cost or profit-sharing transactions or any type of financing or encumbrance involving a gas company and its affiliates; and
4. that gas supply and distribution services are provided by a gas company in an appropriate manner to affiliates and nonaffiliates alike.
Finally, the code must establish standards to ensure that any payment by a gas company to any affiliate or from any affiliate to a gas company is appropriate and reasonable.
The code cannot prohibit communications needed to restore gas service or prevent or respond to emergencies. And it may not interfere with interactions with regulated affiliates that are consistent with appropriate and efficient business practice or the public interest.
The act requires any method for allocating costs between a gas company and other companies under the control of the same holding company currently approved by, or under current orders issued by, the Securities and Exchange Commission or the Federal Energy Regulatory Commission under relevant federal law to be entitled to a rebuttable presumption of reasonableness. (By law, charges must be reasonable in order to be recoverable in rates. ) Under the act, charges rendered to a gas company by an affiliate that is a traditional centralized service company must be at cost. Affiliates also must be entitled to a rebuttable presumption of reasonableness.
INVESTIGATORY POWERS REGARDING GAS COMPANY AFFILIATES
DPUC, on its own motion, may investigate a gas company's compliance with the code. DPUC must conduct these investigations as contested cases, a quasi-judicial proceeding.
The act allows DPUC, in the course of a rate case, to:
1. summon witnesses from an affiliate with which a gas company has had direct or indirect transactions;
2. examine the affiliate under oath; and
3. order production, inspection, and audit of the affiliate's books, records, or any type of information that the department has reason to believe has or will have adverse impact on the gas company.
DPUC must protect proprietary commercial and financial information of affiliates as DPUC considers appropriate, subject to the protections of the Freedom of Information Act.
Each gas company must submit to DPUC records and information on affiliate transactions as DPUC requires, at intervals it requires, and in the form it specifies.
PROPANE DEALER TERMINATIONS
The act restricts when propane suppliers may terminate service to eligible residential customers. It applies to service to residential propane customers who meet certain criteria living at a location served by 10 or more vapor meters for central heating purposes. Under the act, an eligible customer is a propane customer (1) who receives local, state, or federal public assistance; (2) whose sole source of financial support is Social Security, Veterans' Administration, or unemployment compensation benefits; (3) who is an unemployed head of household whose household income is less than 300%, and any individual whose income is below 200% of the federal poverty level; (4) who is seriously ill or who has a household member who is seriously ill; or (5) whose circumstances threaten a deprivation of food and the necessities of life for himself or herself or dependent children if payment of a delinquent bill is required. Household income is the combined income over a 12-month period of the customer and all adults, except the customer's children, who are and have been members of the household for six months or more.
The act bars terminations for all of these customers (1) on a Friday, Saturday, Sunday, legal holiday, the day before a legal holiday, or less than one hour before the supplier's offices close for the day and (2) without 14 days' written notice of the termination, including the date of termination, and steps a customer can take to reinstate service. The notice must go to the customer and the owner of record (presumably of the property). In addition, the act prohibits terminations between November 1 and May 1 for customers who provide documentation that they have applied for energy assistance.
A propane supplier may collect finance charges of up to 1. 5% per month on past due balances. A supplier may terminate any service at any time without notice if it determines that a dangerous condition exists.
BACKGROUND
Integrated Resources Assessment
By law, the assessment covers:
1. the energy and capacity requirements of customers for the next three, five, and 10 years;
2. how best to eliminate growth in electric demand;
3. how best to level electric demand in the state by reducing peak demand and shifting demand to off-peak periods;
4. the impact of current and projected environmental standards, such as those related to greenhouse gas emissions and the federal Clean Air Act goals and how different resources could help achieve those standards and goals;
5. energy security and economic risks associated with potential energy resources; and
6. the estimated lifetime cost and availability of potential energy resources.
OLR Tracking: KM: SP: JM: DF