NATURAL GAS SUPPLY ASSOCIATION

CONTACT: Charlotte LeGates

PHONE: 202/326-9316

FAX: 202/326-9334

E-MAIL: clegates@ngsa.org

Producers Praise New Michigan Rules that Define Relationships Between Gas Distributors and their Unregulated Affiliates

Washington, DC--The Natural Gas Supply Association (NGSA) is pointing to recent actions by Michigan's Public Service Commission (PSC) as examples of the way states can safeguard consumers as competition changes the structure of the natural gas industry.

"Michigan's leadership in defining codes of conduct for relations between gas distributors and their unregulated affiliates will help ensure that cost-competitive natural gas will remain readily available into the future," said Bruce Craig, NGSA's director of utility regulation. He pointed in particular to the rules on transportation embodied in recent settlements between the PSC and several major Michigan gas distributors: Consumers Energy, the Wisconsin Public Service Corp., and Michigan Gas Co./Southeastern Michigan Gas Co.

"Michigan is implementing ground rules that will foster competitive markets for unregulated services and enhance consumer protections," Craig noted. "It joins a list of forward-looking states that see the need to clearly separate the competitive marketing of natural gas from regulated services like the physical movement of gas to the consumer." California, Maryland, Georgia, and a number of others have implemented similar rules, and Pennsylvania is currently considering proposals on the subject.

"There are nuances in the way legislatures and public utility commissions are working toward state-wide implementation," said Craig. "Some are approaching it utilityby utility. Others are proceeding with generic state-wide policies. The Michigan PSC chose to start with a generic platform, then apply it to individual utilities as the Commission settles individual cases."

Natural gas producers have worked with regulatory bodies in a number of states to help define emerging relationships between utilities and their marketing affiliates using concepts such as those in NGSA's paper on LDC/affiliate codes of conduct. "Producers have a strong interest in ensuring that downstream markets are more competitive," said Craig, "because competition can help hold down costs for consumers. That's particularly important as we try to maintain and increase the natural gas market share in markets where we compete head-to-head with electricity." In many regions, electricity prices are projected to fall as electric-industry restructuring lowers system-wide costs.

Two of the Michigan decisions, along with codes of conduct implemented by several other states, are available on this site, as are NGSA's recommendations for rules governing LDC/affiliate relationships. (Click on "Distribution Issues.) The documents are also available via fax from the NGSA receptionist at 202/326-9300.

This page was last updated January 8, 1998.