66 PA Cons Stat § 2212 (2021)
2021 Pennsylvania Consolidated & Unconsolidated Statutes|Title 66 - PUBLIC UTILITIES|Chapter 22 - Natural Gas Competition|Section 2212 - City natural gas distribution operations

§ 2212. City natural gas distribution operations. (a) Application.--The provisions of this section shall apply only to city natural gas distribution operations.  (b) Commission jurisdiction.--Subject to the provisions of this section, commencing July 1, 2000, public utility service being furnished or rendered by a city natural gas distribution operation within its municipal limits shall be subject to regulation and control by the commission with the same force as if the service were rendered by a public utility.  (c) Applicability of other chapters.--Commencing July 1, 2000, to the extent not inconsistent with this section, the provisions of this title, other than Chapters 11 (relating to certificates of public convenience), 19 (relating to securities and obligations) and 21 (relating to relations with affiliated interests), shall apply to the public utility service of a city natural gas distribution operation with the same force as if the city natural gas distribution operation was a public utility under section 102 (relating to definitions), provided that, upon request of a city natural gas distribution operation, the commission may suspend or waive the application to a city natural gas distribution operation of any provision of this title, including any provision of this chapter other than this section. Chapter 11 shall apply to a city natural gas distribution operation to the extent it seeks to provide natural gas distribution services outside of its corporate or municipal limits. Chapter 19 shall apply to issuances of securities for the benefit of a city natural gas distribution operation by an issuer other than a city to the extent provided in subsection (e) but shall not apply to issuances of securities by a city.  (d) Continuation of tariff.--For purposes of this section, prior tariff means the tariff, rate schedule and riders incorporated into the tariff of a city natural gas distribution operation on the date the commission assumes jurisdiction over such city natural gas distribution operation. A city natural gas distribution operation shall continue to provide natural gas supply and natural gas distribution services to its customers under the prior tariff and the policies or programs existing on the date that the commission assumes jurisdiction over the city natural gas distribution operation until the effective date of the final order entered by the commission approving the restructuring plan and new tariff of the city natural gas distribution operations unless such effective date has been stayed by a court of competent jurisdiction, in which event the prior tariff will continue in force until such stay has been dissolved. Where the prior tariff refers to, incorporates or includes a local commission, it shall be interpreted as referring to, incorporating or including the commission. Subject to subsection (s), the commission shall resolve all questions, disputes or conflicts arising under the prior tariff. Nothing contained in this section shall prevent a city natural gas distribution operation from requesting or, if so requested, the commission from approving modifications to the prior tariff at any time prior to the effective date of the final order approving the restructuring plan and new tariff.  (e) Securities of city natural gas distribution operations.--Notwithstanding any provision of this title to the contrary, in determining the city natural gas distribution operation's revenue requirement and approving overall rates and charges, the commission shall follow the same ratemaking methodology and requirements that were applicable to the city natural gas distribution operation prior to the assumption of jurisdiction by the commission, and such obligation shall continue until the date on which all approved bonds have been retired, redeemed, advance refunded or otherwise defeased. However, this section shall not prevent the commission from approving changes in the rates payable by any class of ratepayers of the city natural gas distribution operation so long as the revenue requirement and the overall rates and charges are not adversely affected by such changes. Notwithstanding any provision in this title to the contrary, the commission shall permit the city natural gas distribution operation to impose, charge or collect rates or charges as necessary to permit the city or municipal authority formed pursuant to subsection (m) that issued bonds on behalf of a city natural gas distribution operation to comply with its covenants to the holders of any approved bonds. Notwithstanding any provision in this title to the contrary, the commission shall not require a city natural gas distribution operation to take action, or omit taking any actions, pursuant to this title if such action or omission would have the effect of causing the interest on tax-exempt bonds issued by a city or municipal authority formed pursuant to subsection (m) on behalf of a city natural gas distribution operation to be includable in the gross income of the holders of such bonds for Federal income tax purposes. For purposes of this section, approved bonds shall mean all bonds:  (1) issued by a city on behalf of a city natural gas distribution operation under the act of October 18, 1972 (P.L.955, No.234), known as The First Class City Revenue Bond Act, or the act of December 7, 1982 (P.L.827, No.231), known as The City of Philadelphia Municipal Utility Inventory and Receivables Financing Act, that were issued and outstanding on the date the commission assumed jurisdiction over the city natural gas distribution operation;  (2) issued by the city after the date the commission assumed jurisdiction over the city natural gas distribution operation unless the governing body of the city, at the time of approval of the bond issuance, determines that such bonds shall not be approved bonds;  (3) issued by the city or a municipal authority, nonprofit corporation or public corporation formed pursuant to subsection (m) for the purpose of refunding, redeeming, repaying or otherwise defeasing approved bonds; or  (4) issued by a municipal authority formed pursuant to subsection (m) for purposes other than refunding, redeeming, repaying or otherwise defeasing approved bonds unless the commission determines, at the time of the registration of a securities certificate pursuant to section 1903 (relating to registration or rejection of securities certificates), that the bonds should not be approved bonds.  Notwithstanding any provision of this title to the contrary, a city owning a city natural gas distribution operation may continue to issue bonds on behalf of the city natural gas distribution operation pursuant to The First Class City Revenue Bond Act and under The City of Philadelphia Municipal Utility Inventory and Receivables Financing Act, and any municipal authority formed pursuant to subsection (m) may issue bonds on behalf of the city natural gas distribution operation pursuant to the act of May 2, 1945 (P.L.382, No.164), known as the Municipality Authorities Act of 1945, and as otherwise provided by law. All documents that are required to be submitted to the governing body of the city by The First Class City Revenue Bond Act or The City of Philadelphia Municipal Utility Inventory and Receivables Financing Act or, in the case of an issuance of securities by a municipal authority, the Municipality Authorities Act of 1945 shall also be submitted to the commission for its information. Any issuance of securities by a municipal authority formed pursuant to subsection (m) on behalf of a city natural gas distribution operation, other than issuances of bonds for the purpose of refunding, redeeming, repaying or otherwise defeasing approved bonds, shall be subject to the provisions of Chapter 19 provided that commission determinations with respect to the registration of a securities certificate under Chapter 19 for the issuance of securities by a municipal authority formed pursuant to subsection (m) shall be determinations with respect to public debt and the commission shall employ its abbreviated securities certificate process to such issuances.  (f) Transfers to city.--The commission shall permit the city natural gas distribution operation to impose, charge or collect rates and charges as necessary to permit the city natural gas distribution operation to transfer or pay to the city that is the owner of the city natural gas distribution operation, on an annual basis, such amount as may be specified from time to time in the applicable ordinances of the city or agreements of the city approved by ordinances. If the amount so specified shall exceed 110% of the amount that was authorized for transfer or payment to the city at the close of the fiscal year of the city ending June 30, 2000, such additional amount shall be subject to review and approval of the commission, which approval shall be given unless such additional amount would not be just and reasonable.  (g) Restructuring and tariff filings.--A city natural gas distribution operation shall file with the commission an initial tariff and a restructuring filing consistent with this chapter, and with any orders, rules or regulations adopted by the commission after the effective date of this chapter no later than July 1, 2002, and, unless the city natural gas operation agrees, no earlier than December 31, 2001, pursuant to a schedule to be determined by the commission in consultation with a city natural gas distribution operation. The commission shall conduct an initial rate proceeding pursuant to its procedures for such filings. Hearings on the tariff and restructuring filings shall be held within the municipal limits of the city in which the city natural gas distribution operation is located to the extent practicable.  (h) Restructuring proceedings.--In the restructuring proceeding of a city natural gas distribution operation, in addition to the requirements of section 2204(c) (relating to implementation):  (1) The city natural gas distribution operation shall file a plan to convert its existing information technology, accounting, billing, collection, gas purchasing and other operating systems and procedures to comply with the requirements applicable to jurisdictional natural gas utilities under this title and the applicable rules, regulations and orders. The commission shall examine the cost and burdens of converting existing systems and procedures of a city natural gas distribution operation to meet the requirements of this title generally applicable to natural gas distribution companies. If requested by the city natural gas distribution operation, the commission shall determine whether the cost of conversion of any system or procedure is prudent in light of the benefits to be obtained. In the event that the commission determines that the costs would not be prudent, it may waive application to the city natural gas distribution operation of any provision of this title or the commission's rules, regulations and orders as appropriate. In the event that the commission determines that such costs should be incurred, the commission shall permit the city natural gas distribution operation to fully recover such costs through a nonbypassable charge imbedded in the distribution rates of the city natural gas distribution operation.  (2) In its restructuring proceeding, a city natural gas distribution operation may propose an automatic adjustment mechanism or mechanisms in lieu of or as a supplement to section 1307 (relating to sliding scale of rates; adjustments) to adjust rates for fluctuations in gas and nongas costs, including, but not limited to, an automatic adjustment mechanism or mechanisms to recover the costs of providing programs for low-income ratepayers and other assisted ratepayers. The commission may approve or modify the automatic adjustment mechanism or mechanisms proposed by the city natural gas distribution operation, or the commission may approve a section 1307 adjustment for a city natural gas distribution operation. However, the automatic adjustment mechanism, whether section 1307 or any alternative proposed by the city natural gas distribution operation, utilized for city natural gas distribution operations must enable the city or municipal authority formed pursuant to subsection (m) that issued bonds on behalf of a city natural gas distribution operation to fully comply at all times with its covenants to the holders of any approved bonds.  (i) Powers of the Consumer Advocate; Small Business Advocate.--The Consumer Advocate shall represent the interests of consumers as a party, or otherwise participate for the purpose of representing an interest of consumers, before the commission in any matter properly before the commission relating to a city natural gas distribution operation. The Consumer Advocate is authorized, in addition to any other authority conferred on him, to represent an interest of consumers which is presented to him for his consideration upon petition in writing by a substantial number of persons who make, direct, use or are ultimate recipients of a product or services supplied by a city natural gas distribution operation. The Small Business Advocate shall represent the interest of small business consumers as a party, or otherwise participate for the purpose of representing an interest of small business consumers, before the commission in any matter properly before the commission relating to a city natural gas distribution operation. The Small Business Advocate is authorized, in addition to any other authority conferred on him, to represent an interest of small business consumers which is presented to him for his consideration upon petition in writing by a substantial number of small business consumers who make, direct, use or are ultimate recipients of a product or services supplied by a city natural gas distribution operation.  (j) Commencement of customer choice.--Beginning with the commencement of the first fiscal year of a city natural gas distribution operation after the order approving the restructuring plan of a city natural gas distribution operation becomes effective, all retail gas customers of city natural gas distribution operations shall have the opportunity to purchase natural gas supply services from a natural gas supplier or the city natural gas distribution operation to the extent it offers the service. After that date, the choice of natural gas suppliers shall rest with the retail gas customer.  (k) City instrumentality.--Unless and until the governing body of a city that owns a city natural gas distribution operation otherwise provides:  (1) a city natural gas distribution operation shall be deemed an instrumentality of the city that owns it and independently authorized to establish and maintain pension, welfare and other employee benefit plans for the benefit of those individuals who render services in connection with its operations; and  (2) for the purpose of being a participant in such plans or programs, those individuals who render services exclusively and directly related to the operations of the city natural gas distribution operation shall be deemed employees of the city natural gas distribution operation as a distinct entity from the city. If any pension plan established and maintained by or on behalf of a city natural gas distribution operation is or becomes subject to the act of December 18, 1984 (P.L.1005, No.205), known as the Municipal Pension Plan Funding Standard and Recovery Act, the provisions of Chapters 5 and 6 of that act (relating to financially distressed municipal pension system recovery programs) shall not require any pension plan of a city natural gas distribution operation to be aggregated with any pension plan established and maintained by the city.  (l) Assisted cities.--Notwithstanding any other provision of this title, no assisted city shall be required to take any action under this title if the effect of the action is to cause a variation in the financial plan of such assisted city approved pursuant to section 209 of the act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class. As used in this subsection, "assisted city" and "variation" shall have the meanings set forth or construed in the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class.  (m) Corporate action.--A city that owns a city natural gas distribution operation may form a nonprofit corporation or public corporation or municipal authority under the Municipality Authorities Act of 1945 in order to own, manage, operate, lease or carry out natural gas supply and/or distribution services for, in place of or on behalf of the city natural gas distribution operation, provided that no such entity shall provide natural gas supply services outside of the municipal limits of the city unless licensed as a natural gas supplier. Notwithstanding subsections (b) and (c), if a city forms an entity pursuant to this section to provide natural gas supply services, whether inside or outside of the city, the entity shall be deemed an affiliated interest of the city natural gas distribution operation, and Chapter 21 shall apply with respect to that affiliated interest. A municipal authority formed pursuant to the authorization of this section shall not exercise the power of eminent domain outside of the municipal limits of the city in which it is seated. Any entity created under this section or otherwise to own, manage, operate, lease or carry out natural gas supply and/or distribution services for or on behalf of a city or a city natural gas distribution operation shall be deemed a local agency for purposes of 42 Pa.C.S. Ch. 85 (relating to matters affecting government units).  (n) Collections.--Nothing contained in this title shall abrogate the power of a city natural gas distribution operation to collect delinquent receivables through the imposition of liens pursuant to section 3 of the act of May 16, 1923 (P.L.207, No.153), referred to as the Municipal Claim and Tax Lien Law, or otherwise.  (o) Existing customer contracts.--Notwithstanding the provisions of this chapter, where an agreement for natural gas service, evidenced by a signed writing between a city natural gas distribution operation and any customer, exists prior to the date the commission assumes jurisdiction over a city natural gas distribution operation, the customer shall be bound by its terms and conditions and shall not have the right to receive natural gas service from another source until the expiration of the term of the agreement or otherwise pursuant to the terms and conditions of the agreement.  (p) License application and issuance.--A city natural gas distribution operation may apply for a license pursuant to the procedures under section 2208 (relating to requirements for natural gas suppliers). Subject to the requirement that it qualify for and obtain a natural gas supplier's license under section 2208, a city natural gas distribution operation is authorized to engage in the business of a natural gas supplier outside its municipal or corporate limits.  (q) Commission assessment.--In order to ensure that the commission will be able to carry out its obligations with respect to city natural gas operations, the chief executive officer of a city natural gas distribution operation shall file, no later than March 31, 2000, a sworn statement showing its gross intrastate operating revenues for the immediately preceding fiscal year in the same manner as required by section 510(b) (relating to assessment for regulatory expenses upon public utilities). The commission shall use such revenues in accordance with the procedures set forth in section 510(b) and shall bill, no earlier than July 1, 2000, each city natural gas distribution operation its proportional share of the commission's expenses pursuant to section 510(b)(4). A city natural gas distribution operation shall pay the resulting assessment in accordance with and subject to the provisions contained in section 510.  (r) Senior citizens.-- (1) The commission may approve a program designed to provide discounted rates for natural gas distribution and supply services to senior citizens residing in the service territory of a city natural gas distribution operation provided that such rates and the terms of such program are just and reasonable.  (2) Individual ratepayers who, as of the date the initial tariff of a city natural gas distribution operation becomes effective pursuant to subsection (d), are properly receiving discounted gas rates pursuant to the terms of a program specifically designed to provide assistance to senior citizens contained in the prior tariff shall be entitled to continue to receive such discount under the terms of the prior tariff unless and until the program is modified by ordinance of the governing body of the city, in which event such individuals shall be entitled to receive only the discount provided under the terms of the modified program, as it may be further modified by ordinance from time to time thereafter.  (3) Nothing in this title shall require the commission to approve the continuation of the program identified in paragraph (2) in whole or part for any person other than an individual identified in paragraph (2).  (s) Powers preserved.--Nothing contained in this title shall be construed to abrogate or limit the executive or legislative powers of a city that owns a city natural gas distribution operation to legislate or otherwise determine the powers, functions, budgets, activities and mission of the city natural gas distribution operation or any related entity created under subsection (m), including, but not limited to, the ownership, governance, management or control thereof. Nothing in this title shall limit or prevent the proper city officials and agencies from conducting audits and examinations of the financial affairs of the city natural gas distribution operation in accordance with their official duties.  (t) Proprietary information.--Proprietary information, trade secrets and competitively sensitive information of a city natural gas distribution operation shall not be public records for purposes of the act of June 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know Law, and shall not be subject to mandatory public disclosure. Nothing in this section shall exempt a city natural gas distribution operation from providing information to the commission pursuant to its obligation under sections 501 (relating to general powers), 504 (relating to reports by public utilities), 505 (relating to duty to furnish information to commission; cooperation in valuing property) and 506 (relating to inspection of facilities and records).    References in Text. The act of June 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know Law, referred to in subsec. (t), was repealed by the act of Feb. 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law.  The act of May 2, 1945 (P.L.382, No.164), known as the Municipality Authorities Act of 1945, referred to in subsec. (e), was repealed by the act of June 19, 2001 (P.L.287, No.22). The subject matter is now contained in Chapter 56 of Title 53 (Municipalities Generally).  Cross References. Section 2212 is referred to in sections 102, 2204, 2211 of this title.