In its recent Orders on Type II Standard Offer Service the Commission directed Staff to convene working group meetings to "explore the next phase in the provision of Standard Offer Service for residential and Type I and Type II commercial customers." The work groups, "should consider all feasible program designs for SOS, including multiple procurements of generation per year by the utilities, potential indexing methods for pricing SOS, which would result in more market-responsive rates, and the potential provision of SOS through a retail bidding regime." Staff has announced that the initial meeting of the working group will be convened on Friday, November 18, 2005, at 10 AM, at PHI on the 12th floor of 10 E. Baltimore St., which is the building next door to the Commission. A conference call number will also be provided. The initial topic for discussion will be processes and procedures for moving forward on the issues raised by the Commission's Order. NEM has intervened in this proceeding.

The Board opened a separate docket from the Basic Generation Service proceeding to consider the issue of the use of retail margin funds. The Board requests recommendations for use of the retail margin funds that include supporting data and reasoning. Comments are due November 22, 2005. The Board intends to consider the proposals shortly thereafter.

NYSEG filed a Motion requesting that NYPSC Chairman Flynn recuse himself from considering its Retail Access Plan and its electric rate case. NYSEG alleged Chairman Flynn has prejudged its fixed rate plan because of his consistent support for New York state policy that utilities exit competitive functions, and in particular, that utilities cease offering competitive fixed rate products. NEM argued that NYSEG confused “prejudgment” and what is in fact taking place – intentionally filing a retail access plan and rate case in contravention of longstanding state and Commission policy. Knowing full well that the Retail Policy Statement issued in 2004 found that utilities should exit competitive functions, NYSEG seeks yet again to defy the Commission and preserve the competitive advantages inherent in its competitive fixed price product offering. Having failed to seek rehearing of the Retail Policy Statement, NYSEG is now using this Motion as another means to avoid compliance with Commission best practices. NEM argued that NYSEG’s Motion and unfounded attack against Chairman Flynn does not prove personal and improper bias, it merely illustrates that Chairman Flynn has been a staunch supporter of Commission policy in furtherance of competitive markets fully consistent with previously rendered Commission decisions. The full text of NEM's Response is available on the NEM Website.

The Commission has instituted a formal proceeding to address the expected, impending gas shortage at Corning Gas. "Information to date suggests the additional gas needed by Corning amounts to 24,500 dekatherms (dth), 213,000 dth, and 86,800 dth, respectively in the months of December 2005 and January and February 2006 assuming average temperatures. If temperatures are more than ten percent colder than average, the additional gas needed is estimated to be 67,500 dth, 291,500 dth, and 141,000 dth in December 2005 and January and February 2006. We have also been advised that Corning projects no need for aid in March 2006. Corning currently receives deliveries on the Dominion and Columbia pipelines." While the Commission's formal proceeding is investigating measures that the state's utilities could take, informal agreements with other gas suppliers for aid to Corning Gas are to be pursued as well. A Procedural Ruling detailing the matter is available on the NEM Website.

Columbia proposed to offer two new fixed-rate sales service riders to customers: 1) Rider PPS - Price Protection Service, a firm sales service option for residential customers and small commercial customers using less than 600 Mcf per year; and 2) Rider OSS – Optional Sales Service, a firm or interruptible sales service for customers with annual usage that equals or exceeds 600 Mcf/year. The Commission determined that Riders PPS and OSS are competitive offerings and that therefore the Commission's Standards of Conduct are applicable. (Columbia had indicated it would not provide PPS or OSS if it was required to comply with the Standards of Conduct). The Commission determined that Rider PPS could be offered as a pilot program subject to certain modifications, and it rejected Rider OSS finding that Columbia failed to prove it was just and reasonable. "It is apparent from the record that Rider OSS is a competitive offering that exceeds Columbia’s Supplier of Last Resort obligation, and, as such, will have an adverse effect on retail gas competition. The parties to this proceeding have raised important issues about the competitive fairness of the OSS proposal, many of which have been referenced as raising barriers to competition in the Report to the General Assembly on Competition in Pennsylvania’s Retail Natural Gas Supply Market. The Commission believes it is therefore prudent to address some of these issues in the Natural Gas Industry Stakeholders process before potentially causing any harm to the development of competitive markets."

The PPS pilot is to be two years in length, and offerings during the pilot are not to exceed one year in length. Columbia must provide the applicable price cap and floor formula calculations as an attachment to each new PPS offering. Furthermore, Columbia must provide a fully allocated cost of service study concerning Rider PPS in its next rate case to address concerns about cross-subsidization.

The full text of the Order is available on the NEM Website.