A newsletter published by the Pennsylvania Public Utility Commission regarding utilitynews in the telecommunications, energy, transportation and water markets. Autumn 2007

ON THE INSIDE

Connection Utility Newsin Pennsylvania

Keystone

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10-13

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Electric

Water & Wastewater

Telecommunications

Natural Gas

Transportation

Federal News

Consumer News

Commission News

Connectingin Pennsylvania

Welcome to the eighth issueof Keystone Connection, apublication of the PennsylvaniaPublic Utility Commission (PUC)that gives a “snapshot” view ofthe utility markets under thejurisdiction of the Commission:electric, natural gas, transporta-tion, telecommunications, waterand the major issues that affecteach industry.

The publication contains cover-age of all utilities, including newson consumer issues and generalinformation on PUC happenings.

The PUC balances the needsof consumers and utilities toensure safe and reliable utilityservice at reasonable rates; pro-tect the public interest; educateconsumers to make independentand informed utility choices;further economic development;and foster new technologies andcompetitive markets in anenvironmentally sound manner.

Pennsylvania General AssemblyHolds Special Session on Energy Policy

The General Assembly began itsSpecial Session on Energy Policy inSeptember pursuant to aproclamation issued by Gov. EdwardG. Rendell. The proclamation calledfor a special session “to consider anyand all legislation regarding fundingfor and the making of investments inclean and renewable energy, energyconservation, and economic develop-

ment efforts relating thereto, and the establishment of requirements regardingthe renewable energy content of liquid fuels.” Both the House and Senateadopted rules for the special session. The House is using four committees torun legislation through: Appropriations; Consumer Affairs; EnvironmentalResources; and Energy and Finance. These are all existing committees in theHouse. The Senate is using three committees to run legislation through: Rules;Appropriations; and Energy Policies. The Energy Policies Committee wascreated solely for the special session.

On Sept. 24, Governor Rendell addressed a joint session of the House andSenate calling for action on an energy plan to reduce dependence on foreignoil, to grow the economy and to strengthen security. The Governor continuedto urge support of his Energy Independence Strategy (EIS). Key components ofthe EIS include renewable fuels and new investments in technologies, busi-nesses and products that either reduce energy use or produce clean,renewable energy. The Governor would like to dramatically increase theproduction in Pennsylvania of ethanol and bio-diesel, and has called for hisPennSecurity Fuels Initiative, requiring a set percentage of all the fuel sold inthe state to consist of renewable fuel.

He is also asking for support of a new $850 million Energy IndependenceFund to make investments to provide access to critically needed seed moneyor venture capital, working capital, loans and limited grants. The fund wouldalso be used for rebates to consumers for the purchase of new, energy efficientappliances and rebates to consumers, businesses and farmers who installsolar panels.

Another key component of the Governor’s strategy includes providing smartmeters to all customers so they can manage their electric usage. TheGovernor has stated that his strategy would cost the average residentialcustomer 45 cents a month. This cost would be passed on to all customersby use of a monthly surcharge equaling one-twentieth of one cent per kilowatthour for each kilowatt hour of retail electricity sold in the state.

Special Session Continued on Page 5.

Keystone Connection2

Keystone Connection - Electric

Chairman Testifies onEnergy Policy

PPL’s Base Rate CaseSettlement

www.puc.state.pa.us

On March 29, 2007, PPL Electric Utilities Corpora-tion filed for a proposed increase in distributionrevenues of $83.6 million, or 13.2 percent. ThePUC’s Office of Trial Staff (OTS), PPL and the otherparties of record were able to agree on a jointstipulation for settlement, which was accepted bythe administrative law judge in her recommendeddecision dated Oct. 22, 2007.

Under the terms of the settlement, if approved bythe Commission, PPL will receive an annualdistribution revenue increase of $55 million (anincrease of 8.7 percent). Additionally, PPL hasagreed to several proposals by OTS, including:1. Not to iterate Capital Stock Tax;2. To incorporate the anticipated Jan. 1, 2008,

reduction in the Pennsylvania Capital Stock Taxrate;

3. To reduce its consumer-education expenserelating to its Meter Data Management Systemby $2 million;

4. To institute a three-year average late paymentrevenue; and

5. To have a $1.2 million correction to present raterevenue.

As OTS is charged by statute to protect the publicinterest, OTS was heavily involved in this proceeding,which included extensive discovery, attendance atthe five scheduled public input hearings in thecompany’s service territory, submittal of direct andsurrebuttal testimonies of five expert witnesses, andparticipation in evidentiary hearings, and settlementnegotiations.

On Sept. 5, 2007, Chairman Wendell F. Holland testifiedbefore the state House Consumer Affairs Committee aboutelectric prices.

The Chairman told the committee the PUC anticipatessignificant changes but is working to educate customersand encouraging reduced demand. In his testimony, theChairman provided an overview of electric restructuring andthe Commission’s actions, including finalizing defaultservice policies and rules; preparing a price mitigation plan;and examining demand side response programs.

“As the Commonwealth transitions to paying marketprices for electric generation for the first time in manyyears, we will all play an important role in shaping thestate’s energy future,” Chairman Holland said.“Pennsylvania will continue to move forward inimplementing a comprehensive energy strategy whileeveryone will play a significant role in reducing demand andin the end saving money.”

Consumer-Education PlanProposed to Help PublicPrepare for Rate Increases

The Commission earlier this fall submitted aproposed 2008-09 agency budget request to theGeneral Assembly and to the Governor. The requestincludes a proposed $5 million in consumer-education funding for a statewide campaign onenergy conservation and potential significantelectricity price increases. Funding proposals forfuture years will be based on continued input fromstakeholders and survey results and othermeasures. Per its final order on strategies tomitigate potential significant electricity priceincreases, the Commission has convened allinterested stakeholders three times so far (June,August and October) as part of an ongoing series ofmeetings that will continue throughout the campaign.

PPL Remand ProceedingThe PUC approved a $137.1 million increase in PPL’s distri-

bution rates that became effective on Jan. 1, 2005. An appealto Commonwealth Court was filed by various parties to the pro-ceeding. The Commonwealth Court issued its decision in theappeal of several of the issues in 2006, reversing in part, vacat-ing in part and affirming in part the PUC’s Dec. 2004 decision.The Court sent the case back to the Commission for resolution. An administrative law judge issued a recommended decisionon June 29, 2007, approving a joint petition for settlementsubmitted by the parties during the remand. Under the terms ofthe settlement, the monthly bill for a typical residentialcustomer will increase approximately, 3.8 percent, from $96.52to $100.20 for a home that uses 1,000 kilowatt-hours (kWh) ofelectricity. Industrial and commercial customers will see adecrease of approximately 2 percent to 5 percent in theirmonthly bill, depending on each customer’s power usage. From Aug. 1, 2007, through Dec. 31, 2009, PPL Electric willprovide refunds and recoupments of previously chargeddistribution costs. The charges will be recomputed on Jan. 1,2008, and Jan. 1, 2009, to reflect under-or-over recovery ofcharges and refunds, and any revised projected sales. The parties that agreed to the settlement include PPLElectric, the PUC’s Office of Trial Staff, the United StatesDepartment of Defense, Office of Consumer Advocate, Office ofSmall Business Advocate, PPL Industrial Customer Allianceand Eric Epstein. The increase will affect about 1.2 millionresidential customers and about 174,700 commercial, industrialand municipal customers in Berks, Bucks, Carbon, Chester,Clinton, Columbia, Cumberland, Dauphin, Juniata, Lackawanna,Lancaster, Lebanon, Lehigh and Luzerne counties.

Keystone Connection 3

Keystone Connection - Electric

www.puc.state.pa.us

Second SolicitationHeld for Suppliers to PPL’sCompetitive Bridge Plan

On Aug. 2, 2006, PPL petitioned the PUC forapproval of a plan for acquisition of Provider of LastResort (POLR) supply service as a one-year “bridge”between the expiration of its POLR rate caps on Dec.31, 2009, and a fully competitive, statewide marketbeginning Jan. 1, 2011.

Under the Competitive Bridge Plan (CBP), PPLproposed a three-year competitive procurementprogram beginning in 2007 for POLR supply in 2010.The CBP was approved by the Commission’s finalorder entered on May 17, 2007.

The basic structure for residential and smallcommercial and industrial (C&I) POLR service is thatPPL will undertake a series of six solicitations overthree years to develop the POLR price separately forthe residential and small C&I classes.

For large C&I customers that express an interest ina fixed rate option, PPL will conduct a singlesolicitation for fixed price service for the large C&Icustomers in October 2009. Those large C&Icustomers would then be given 30 days to “opt in” tothe fixed price for 2010, or default to real-time hourlyservice for 2010.

On July 26, 2007, the PUC approved suppliers’contracts for 850 megawatts of generation PPL willneed for 2010. The winning suppliers from this firstsolicitation were selected from seven competitivebidders.

The PUC approved suppliers’ contracts for anadditional 850 megawatts of generation PPL will needfor 2010, on Oct. 4, 2007. The winning suppliers fromthis second solicitation were selected from ninecompetitive bidders. The average generation supplyprices from the second solicitation, including grossreceipts tax and adjustment for line losses, were$105.08 per megawatt-hour for residential customersand $105.75 per megawatt-hour for small C&Icustomers.

Combining the results of both solicitations, theaverage generation supply price for residentialcustomers is $103.43 per megawatt-hour (10.343cents per kWh) and $105.43 per megawatt-hour(10.543 cents per kWh) for small C&I customers. Ifthese prices remain the same for the following fourpurchases, the average residential customer’s monthlybill (1,000 kilowatt-hours per month) would increase byabout 34.5 percent, while small C&I bills wouldincrease approximately 22.8 percent to 42.2 percent.

Foreign Load Case DecidedPPL consumers reported that three light bulbs, which

were located in a common area of the rental propertywhere they lived, were being charged to their electricmeter. When a ratepayer’s meter registers usage forutility service provided for use in a common area of abuilding, such as hallway lighting, this is called “foreignload.” Upon determining that the consumers/tenantswere correct about the foreign load, PPL transferred theirentire bill (including an unpaid balance) to the landlord’saccount. In this particular case (Docket No. C-20055547),the landlord corrected the foreign load problem a monthafter it was discovered and had the three light bulbsmoved to their own meter. The landlord then filed a formalcomplaint against PPL objecting to the transfer of thetenant’s entire household bill that accrued prior to theforeign load discovery.

After hearing, the PUC’s administrative law judge (ALJ)determined that, under 66 Pa. C.S. § 1529.1(b), thetransfer of the entire balance to the landlord’s accountwas appropriate and that the landlord was responsible forpaying the entirety. The ALJ also faulted PPL for allowingthe tenants to accrue a balance exceeding $1,000 andassessed the company a civil penalty of $700.

PPL filed exceptions to the ALJ’s decision, and byorder entered on Aug. 15, 2007, the PUC reversed theALJ’s decision. In so ruling, the Commission determinedthat subsection 1529.1(b) of the Code is silent as to whohas the responsibility for payment of any unpaid balancedue for usage prior to the discovery of foreign load.Rather, the statute requires that once foreign load isidentified, the utility must list the account in the name ofthe owner and “[t]he owner shall thereafter be responsiblefor the payment for the utility services rendered there-unto.” 66 Pa. C.S. § 1529.1(b). The PUC interpreted thisprovision as limiting the scope of the owner/landlord’sobligation for payment on the account after the discoveryof foreign load.

The amount of electricity used by the three light bulbswas deemed inconsequential when compared with anarrearage accumulated over a 13-month period; therefore,the PUC found that holding the landlord responsible for atenant’s entire past due balance was insupportable. Per-mitting a tenant to walk away from thousands of dollars inutility service that he or she consumed was viewed by thePUC as inconsistent with Chapter 14 (Responsible UtilityConsumer Protection Act) of the Public Utility Code, 66Pa. C.S. §§ 1401, et seq.

Additionally, the Commission concluded that the civilpenalty against PPL was not merited because the utilityhad properly pursued collection on the account.

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Keystone Connection - Electric

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www.puc.state.pa.us

PUC Appeals to DOE forRehearing on NIETC

The PUC filed for rehearing on Nov. 2,2007, with the United States Department ofEnergy (DOE) over its National InterestElectric Transmission Corridor (NIETC)designation for the Mid-Atlantic Regionwhile also filing suit against thedesignation in United States District Courton Nov. 1, 2007.

The NIETC for the Mid-Atlantic Regionincludes 52 out of the state’s 67 counties.The PUC has taken an active role inrepresenting the interests of Pennsylvaniabefore the federal government filingcomments on the issue and participatingas a party in this case.

In its petition for rehearing before DOEand its filing in the U.S. District Court, theCommission maintained that the NIETC isoverly broad, calling the plan beyond thescope intended by Congress in the EnergyPolicy Act of 2005. The filing before theU.S. District Court also asks the court toprevent the Federal Energy RegulatoryCommission from implementing the NIETCat this time.

According to both filings, the PUCalleges that the DOE’s “expansiveinterpretation of its own powers is neitherreasonable, nor reasonably required toeffectuate Congress’ purpose,” nor is itsupported by the Act. The PUC said:• The federal government failed to apply

the law in a manner that is minimallyintrusive on traditional state sitingauthority and jurisdiction;

• The designation is overly broad andinconsistent with Congressional intent;

• DOE failed to adequately identifycongestion levels, sources and lacksthe required findings of fact;

• The NIETC boundaries fail to adhere tothe requirements of the law;

• The federal government used aninadequate basis for the NIETCdesignation; and

• DOE failed to include the requirementthat a project not conflict with regionalplanning in its designation.

As part of the ongoing case surrounding around theTrans-Allegheny Interstate Line Co. (TrAIL Co.) proposal toconstruct a 500-kilovolt transmission line in WesternPennsylvania, 12 public input hearings were held in Augustand September, as well as visits to the properties ofaffected residents who requested a viewing.

More than 1,800 people attended the public inputhearings with about 350 people providing testimony at thehearings and site visits. By attending a public input hearing,held in Washington and Greene counties where the line isproposed to be placed and providing testimony, residentsplaced their views in the official record on which the PUCwill base its decision.

When an application of this nature is received, theCommission is required to hold hearings to consider thenecessity, safety and environmental impact of the proposedline. The Commission also considers a variety of otherissues including need for the proposed line, risk of dangerto the health and safety of the public, compliance withapplicable statutes and regulations providing for theprotection of natural resources, and minimal adverseenvironmental impact.

TrAIL Co. Update

PPL is proposing to build a six-mile-long electrictransmission line in Bucks County between Quakertown andCoopersburg. Although PPL has not yet filed an applicationwith the PUC for approval to construct the $12 million highvoltage line or exercise eminent domain to obtain privateproperty for the line, PPL’s preliminary activities have alreadyled to litigation with some property owners. According to localnews accounts, some property owners have refused to allowPPL onto their property and PPL obtained a court order fromthe Bucks County Court of Common Pleas to conduct testsand surveys. Pennsylvania’s Public Utility Code, Commission regulationsand the Eminent Domain Code require PPL to obtain pre-approval from the Commission before building high-voltagetransmission lines or exercising eminent domain proceedings ina court. When a utility files an application to build a high-voltage transmission line, Commission regulations require theapplication to be published in local newspapers and servedupon various interested parties, including affected propertyowners, municipal officials, local and state agencies and otherutilities. The Commission will assign an administrative lawjudge to hold hearings on the application and review thenecessity of the line, safety, impact of the line on variouscriteria and the feasibility of alternative routes.

PPL Proposes a Transmission Linein Bucks County

Keystone Connection

Electric Supplier Licensing Activity from Aug. 1, 2007 to Oct. 31, 2007.

Number of Licensed EGSs

0 licenses canceled 1 license approved

2 applications pending

41 Active Licenses

Keystone Connection - Electric News

5www.puc.state.pa.us

On Oct. 3, 2007, the Commission entered its opinion andorder (Docket Nos. P-00072306 and P-00072307) whichapproved a joint default service plan for Citizens’ ElectricCompany and Wellsboro Electric Company for Jan. 1, 2008,through May 31, 2010. This was the first proceeding broughtunder the Commission’s final form default service regulationsand the Commission’s policy statement on default serviceand retail markets.

As suggested in the policy statement, the companiescombined their customer bases into one plan to increase loadand attract more suppliers to bid on that supply need. Theplan provides for a program manager experienced inpurchasing supply in energy markets. It also provides forbroad parameters within which the administrator hasdiscretion to time purchases and quantities. That permits theadministrator to use the market to obtain supply at the bestprices available. The Commission provided for an evaluationin order to determine whether the operation of the plan resultsin rates that are in line with other reasonable default serviceapproaches.

Joint Default Service Plan forCitizens’ Electric Company andWellsboro Electric CompanyIn addition, multiple pieces of legislation have been

introduced in the House and the Senate since theinception of the special session. This legislationincludes pieces on the sale of transportation fuels,energy and environmental building standards, salesand use tax exemption for certain vehicles, an energy-efficient home assistance program, creation of a stateenergy office, and many others. Several bills havemade it to the House calendar for consideration. Onebill excludes compact fluorescent light bulbs fromsales tax, and another excludes washers, dishwash-ers, refrigerators, room air conditioners and ceilingfans from sales tax during a specified exclusion peri-od. Still another excludes from sales and use tax cer-tain hybrid electric vehicles and fuel efficient vehicles.

In the Senate, Special Session Senate Bill 1 (SSSB1), the Alternative Energy Investment Act, wasvoted out of the Energy Policies Committee on Oct.17. This bill creates the Alternative EnergyDevelopment Fund authorizing the CommonwealthFinancing Authority (CFA) to issue a 20-year limitedobligation revenue bond of up to $250,000,000.Proceeds from the sale of bonds would be allocated tothe Ben Franklin Technology Development Authority;to the Department of Environmental Protection (DEP)for grants for pollution control technology programs; toCFA for clean energy projects; and to CFA for energyconservation projects. Also, DEP would receive $20million annually in gross receipts tax revenue toprovide grants, reimbursements and rebates inaccordance with the Consumer Home Energy Effici-ency Program as established by the legislation.Finally, the bill would authorize $20 million annually foralternative energy production tax credits. Although SSSB1 was voted out of committee, Chair Mary Jo Whiteassured that a hearing would be held on thelegislation.

The Special Session on Energy Policy runsconcurrently with regular session in the House andSenate. At this time, there is no end date for thisspecial session.

Continued from Page 1.

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EGSs - Start of Year EGSs - End of Year/Current

Winter Reliability MeetingOn Nov. 8, natural gas utilities and suppliers told the

PUC at the annual Winter Reliability AssessmentMeeting that they are prepared to serve utilitycustomers and assist them for the upcoming winter.

Presenters from the Energy Association of Pennsyl-vania (EAPA), PECO Energy, AmeriGas and theDepartment of Public Welfare (DPW) discussed the

Winter Reliability Continued on Page 20.

Keystone Connection6

Keystone Connection - Water/Wastewater

www.puc.state.pa.us

Water and Wastewater Company Applications Approved

Applications ApprovedAug. 1, 2007, through Oct. 31, 2007

Utility

Action

Territory

Approval Date

Pennsylvania-American Water Company

Additional Territory Worcester Township, Montgomery County

08/08/07

Superior Water Company Inc. Additional Territory Douglas Township, Montgomery County

09/13/07

Superior Water Company Inc. Additional Territory New Hanover Township, Montgomery County

09/13/07

Aqua Pennsylvania Inc. Additional Territory Charlestown Township, Chester County

09/27/07

Pennsylvania-American Water Company

Additional Territory Middle Smithfield Township, Monroe County

10/11/07

Aqua Pennsylvania Inc. Acquisition and Additional Territory

East Marlborough Township, Chester County

10/11/07

Clarendon Water InvestigationA formal complaint, at Docket No. C-20067108, was filed

against Clarendon Water Company alleging poor waterquality, specifically hot water that turns black and stains.The consumer stated that she sometimes must run thewater for 30 to 45 minutes until it runs clear. Sherequested an adjustment to her account for all the waterthat she used to obtain clear water. The PUC’sadministrative law judge (ALJ) found that Clarendon hadprovided inadequate and unreasonable service in violationof Section 1501. The ALJ calculated a credit to thecustomer’s account but did not impose a fine becauseClarendon was working with the Department ofEnvironmental Protection to improve its service.

By tentative opinion and order entered Sept. 17, 2007,the Commission increased the amount of the credit to thecustomer in order to compensate her for the excess watershe used and its poor quality. The Commission imposed a$1,000 fine on Clarendon for deficiencies in chlorinationand manganese levels. In addition, the PUC instituted anon-prosecutory investigation to be conducted by thePUC’s Law Bureau to determine whether the waterprovided at the tap is suitable for all household purposes.Comments to the tentative opinion and order were due byOct. 8, 2007. Since Clarendon filed comments on Oct. 4,the matter is now pending further review by the PUC.

Pennsylvania-AmericanWater Company’s IPO

By order (Docket No. A-212285F0136) of Aug. 22,2007, the Commission sought comments to the tenta-tive approval of a supplement to a non-unanimoussettlement agreement. Although no comments werefiled, the Office of Small Business Advocate (OSBA)filed a petition for reconsideration on Sept. 5, 2007.Specifically, the OSBA requested clarification as to theapplication of the City of York standard to divestiturecases. Although the standards of City of York v. Pa.PUC, 449 Pa. 136, 295 A.2d 825 (1972) were enunciat-ed in a merger proceeding, the OSBA argued that thePUC should expressly hold them applicable to divesti-ture cases.

By opinion and order entered Sept. 27, 2007, thePUC determined that the statutory standards of City ofYork are applicable to divestiture cases, as well ascases involving mergers, acquisitions, consolidations orother change in control vehicles, under Chapter 11 ofthe Public Utility Code. The PUC further recognizedthat, to the extent the business transaction may be adivestiture, as compared to a merger or other meansthrough which corporate control or reorganization iseffected, there are practical differences that must beanalyzed for purposes of assessing the impact on thepublic interest.

Keystone Connection

Keystone Connection - Water/Wastewater

PAWC Outages in the Pittsburgh Areaand Other Portions of their ServiceTerritory in the State

On Dec. 10, 2006, approximately 1,000 Pennsylvania American WaterCompany (PAWC) customers in the Pittsburgh area and two nearbyschools experienced extended water outages. These outages in thePittsburgh area continued for several days. Similar extended outages hadoccured in November 2006 when 2,000 PAWC customers in portions ofLackawanna County lost their water service.

As a result of these events, the Commission, at its public meeting ofDec. 15, 2006, adopted a motion that called for an investigation of theseoutages to examine the utility’s compliance with the Public Utility Codeand the PUC’s regulations regarding safe and reliable water service in theCommonwealth. To this end, it was noted in the Commission’s order thatwas entered on Jan. 5, 2007, at Docket No. I-00060112, that “theCommission has a fundamental duty to ensure that public utilities providesafe, adequate and continuous service to their customers withoutunreasonable interruptions or delay in accordance with our regulationsand orders.”

The Commission’s non-prosecutory investigation included, but was notlimited to, a determination as to whether:1. PAWC responded to the outages in an effective and timely manner;2. Adequate resources were available to effectively respond to thesituation in a timely manner;3. The public received adequate notice and were kept informed in atimely manner;4. Emergency response officials received notice and were kept informedin a timely manner;5. Adequate supplies of drinking water were provided and/or available atconvenient locations; and6. Additional steps can be taken by the utility to mitigate main breaksand to respond to future outages in a timely and effective manner. The PUC’s Law Bureau, in conjunction with the Bureau of Fixed UtilityServices, prepared a report relating to the Pittsburgh outages that wassubmitted to the Commission in April 2007. On June 21, 2007, thereport, which contained 15 directives for PAWC to implement, wasreleased to the public for comment, which was due within 15 days.

The Commission’s June 21, 2007, order tentatively directed thecompany to:

• Reevaluate its staff complement in the Pittsburgh district office on anannual basis; • Directly contact its customers through bill inserts and direct mail toensure the company has updated customer information; • Develop an effective process for providing updates to customers, localofficials, emergency services and the media as to the status of mainbreaks and service interruptions; • Maintain, at a minimum, daily contact with municipal and stateoffices in affected areas, using emails when possible; • Meet with affected municipalities and emergency managementagencies in the Pittsburgh district within six months to further discussthe appropriate notification requirements; • Review and update the training of Customer Service Centerpersonnel;

www.puc.state.pa.us 7

• Establish direct communication withall critical care customers in thePittsburgh district; • Complete the reduction of the variouspressure zones in the Pittsburgh district; • Continue efforts to minimize theoccurrence of pressure surges originatedfrom the Hay Mine production plant; and • Adjust the weighting factors in theircapital criteria related to main size suchthat the replacements of small diametermains are given higher priority.

On July 26, 2007, the Commission’sfinal order after comments was entered.The Commission’s final order adopted,with a minor clarification, theCommission’s June 21, 2007, tentativeorder. Specifically, the Commissionclarified the directive in the tentative orderthat PAWC was only required to meet withtheir critical care customers in thePittsburgh district that have uniquepressure requirements.

A second joint staff report relating to theextended outages in Lackawanna Countyand other portions of PAWC’s serviceterritory is scheduled to be submitted tothe Commission later this year.

Feedback

We welcome any feedback on thePennsylvania PUC’s quarterly newslet-ter, Keystone Connection.

Staff from the Office of AdministrativeLaw Judge, Bureau of Audits, Bureauof Conservation, Economics andEnergy Planning, Bureau of ConsumerServices, Office of Communications,Bureau of Transportation and Safety,Office of Special Assistants, Bureau ofFixed Utility Services and the LawBureau all contribute and write articlesfor this publication.

For media inquiries or to shareideas, feel free to contact Cyndi Pageof the Communications Office at (717)787-5722.

Keystone Connection

Keystone Connection - Water/Wastewater

Water and Wastewater Rate IncreasesRate Increase Request Summary

July 2007 through October 2007

8 www.puc.state.pa.us

Utility Name Amount($) Requested

Amount($) Granted

% of Increase Action

Action Date

Little Washington Wastewater Company - Rivercrest Division 63,573 Litigation 7/11/2007 Little Washington Wastewater Company - Twin Hills Division 67,749 Litigation 7/11/2007 City of Bethlehem 827,455 Mediation 8/8/2007 Keystone Utilities Group Inc. 48,816 Mediation 8/30/2007 Birch Acres Water Works Inc. 6,230 Mediation 8/30/2007 Wonderview Sanitary Facilities 18,577 Mediation 8/30/2007 Total Environmental Solutions Inc. - Beech Mountain Lakes Sewer Division 56,580* 56,580* 13.00

Approved as Filed 10/11/2007

Clarendon Water Company 21,759 Investigation 10/25/2007 * This increase was a pass-through of increased wastewater treatment charges from the Butler Township Authority.

PAWC to Add ChloramineOn July 12, 2007, Pennsylvania American Water

Company (PAWC) notified the public through a pressrelease of a change to its disinfection process whichwill involve switching from chlorine to chloramines atwater treatment facilities serving customers inCumberland and York counties. PAWC indicated theswitch to chloramines will enhance its abilities tomeet future drinking water standards related todisinfection by-products.

The formation of disinfection by-products occurswhen chlorine reacts with naturally occurring organiccompounds, as found in decaying vegetation. Chlora-mines is a combination of chlorine and ammonia. Theuse of chloramines is an effective disinfection pro-cess that is widely accepted by regulatory agencies,and has been used for decades by many cities in theUnited States. Currently, PAWC uses chloraminesfor disinfection at its Norristown, Ellwood City, Butler,Clarion, Brownell/Fallbrook and Phoenixville watertreatment systems.

The process to effect the conversion to chloraminesat both the West Shore Regional and the Silver

Spring Water Treatment Plants has been permitted by the PADepartment of Environmental Protection (DEP), the agencythat regulates and enforces water quality and drinking waterstandards set by United States Environmental ProtectionAgency (EPA). Both DEP and EPA have concluded thatchloramines do not pose health problems for humans atlevels used for drinking water disinfection.

The PUC received a number of formal complaints fromPAWC’s customers in response to the announcement, andthe company has delayed the conversion. Although thevarious complaints were not identical, each referred to thealleged adverse health effects of using water treated withchloramines and requested the PUC prevent PAWC fromproceeding with its disinfection process change until thehealth issues were addressed. These complaints wereassigned to an administrative law judge (ALJ). On Sept. 7,2007, the Office of Consumer Advocate (OCA) filed a notice ofintervention and a public statement. The ALJ dismissed thecomplaints stating that the Commission does not havejurisdiction to administer the Pennsylvania Safe DrinkingWater Act, or to review determinations made by the DEPpursuant to this Act. OCA has filed exceptions to the ALJ’sinitial decision, arguing the PUC regulates service anddisinfecting the water supply is a service issue. The ALJ’sinitial decision is now pending Commission review.

Keystone Connection 9

Keystone Connection - Water/Wastewater

Update on W.P. Waterand Sanitary Companies

www.puc.state.pa.us

Law Bureau prosecutory staff is involved in aSection 529 mandatory takeover proceeding foronly the second time since that statuatoryprovision was enacted in 1992. In 1993, theCommission instituted its first Section 529proceeding in Pa. PUC v. Tremont Water andGas Co., (Docket No. C-00935209, Sept. 23,1993). In that case, however, the complaintwas rendered moot as a result of Commissionapproval of Tremont’s application to abandonand transfer its system to Schuylkill CityMunicipal Authority.

The current Section 529 proceeding involvesWP Water Company and WP SanitaryCompany, which were certificated by theCommission in 1975. In fall 2005, severalcustomers filed formal complaints against bothcompanies alleging inadequate service. LawBureau prosecutory staff and the Office ofConsumer Advocate (OCA) intervened in thatconsolidated proceeding in which hearings wereheld and briefs and reply briefs were filed. APUC administrative law judge (ALJ) issued aninitial decision on Aug. 16, 2007. In thatdecision the ALJ found, inter alia, that WP’scustomers endured frequent periods of lowpressure and frequent outages.

The ALJ also found that WP Water:• Did not provide adequate notice of service

interruptions;• Has both a water storage and a water

source problem;• Did not adequately use a portion of the

rates collected for system improvements;and

• Unilaterally and willfully disregarded aCommission order to install meters.

The ALJ found that substantial evidenceshowed that WP Water violated 66 Pa. C.S.§1501 and imposed a penalty against WPWater in the amount of $547,500 for compoundviolations.

The ALJ found that WP Sanitary failed toprovide safe, adequate, reasonable and efficientservice to its patrons by:• Failing to properly collect, treat and dispose

of patrons’ sewage;• Failing to properly maintain the company

equipment and facilities; and

••••• Failing to properly enforce terms of the applicable tariff withregard to sump pumps and tree roots.

For these multiple violations, the ALJ imposed an identical civilpenalty against WP Sanitary in the amount of $547,500.

However, in the ordering paragraphs, the ALJ directed that thesecivil penalties be held in abeyance until the Section 529proceeding was resolved. In addition to the penalties assessedagainst the companies, the ALJ imposed civil penalties againstboth owners in the amount of $109,500 each for their personalmisfeasance. The ALJ found that they jointly and individually donot possess the financial, managerial or technical ability to operatea water or wastewater utility. Exceptions and reply exceptionswere filed. That case is currently before the Commission for afinal opinion and order.

In a related matter, on Feb. 26, 2007, WP Sanitary filed apetition to abandon wastewater service. Law Bureau prosecutorystaff filed a notice of intervention. Protests were filed by the OCA,Department of Environmental Protection (DEP) and WashingtonTownship. On June 7, 2007, the OCA filed a petition for aCommission order directing the acquisition of WP Water companyand WP Sanitary Company pursuant to 66 Pa. C.S. § 529. OnJune 15, 2007, the Commission granted the OCA’s petition andissued an emergency order that was ratified at the June 21, 2007,public meeting. That order directed WP to locate a new watersource, install a 50,000 gallon water storage tank and installcustomer meters.

On June 27, the OCA filed a petition to consolidate the section529 investigation with WP’s abandonment application. By orderentered July 11, the Commission granted the OCA’s petition in partby directing the Law Bureau to participate in an investigation ofwhether a capable public utility should be directed to acquire WPWater Company and WP Sanitary Company and consolidatingthat proceeding with WP’s abandonment application. Theconsolidated proceeding is currently in mediation.

In another case involving WP Water Company, WP protested theapplication of Aqua Pennsylvania Inc. for approval to begin to offer,render and supply water service to the public in portions of DallasTownship, Luzerne County. In that case, an ALJ denied WP’sprotest and found WP unfit to serve. Exceptions and replyexceptions were filed to that initial decision. By order entered July12, 2007, the Commission denied WP’s exceptions and adoptedthe initial decision. That decision has been appealed toCommonwealth Court.

Keystone Connection10

Keystone Connection - Telecommunications

Verizon-MCI Merger AppealOn Feb. 20, 2007, the Commonwealth Court reversed a

decision of the Commission that approved the merger ofMCI Inc. and Verizon Communications Inc. TheCommonwealth Court found that the Commission had notanalyzed the merger’s impact on competition in Pennsyl-vania. The Commonwealth Court also said that the PUChad failed to identify how the public would benefit asrequired by the Pennsylvania Supreme Court decision inCity of York v. Pa. Public Utility Commission, 295 A.2d825 (Pa. 1972).

The Commission appealed the decision to thePennsylvania Supreme Court citing several facts thatsupported the Commission’s analysis of the merger’simpact in Pennsylvania. The Commission also claimedthat the court incorrectly weighed all the record evidenceto reach a different result that could require future partiesin mergers to deliver concessions in a way not authorizedby City of York. Finally, the Commission reiterated all thefacts supporting a determination that the public wouldbenefit in a substantial way from the merger as requiredby the City of York case.

The Supreme Court granted the Commission’s requestfor review and established an abbreviated schedule forbriefs and argument. Philadelphia Electric Company, et al(PECO) and the Office of Small Business Advocate(OSBA) filed amicus briefs. PECO supports theCommission. The OSBA intervened in the appeal. TheOSBA and the Office of Consumer Advocate supported theCommonwealth Court decision.

At oral argument on Oct. 16, 2007, the Commissionexplained the difference between rate cap regulation andtraditional regulation. The Commission also emphasizedthat the conclusions in its decision to approve the mergerwere entirely consistent with the City of York and that theCommonwealth Court “improperly rewrote” Pennsylvanialaw. The Commission is awaiting a decision from thePennsylvania Supreme Court.

www.puc.state.pa.us

North Pittsburgh and CordiaCommunications ReachSettlement Agreements

Tour of Core CommunicationsOn Sept. 21, 2007, Core Communications hosted

several Commission staffers on a field trip to its downtownHarrisburg facilities. The topic of the day was “Bridgingthe Worlds of Internet and Telecom.” Calling itself CoreTelfor short, the company was formed in August 1997.CoreTel provides network services to other serviceproviders, not directly to end users. Its wholesaleservices include Internet backbone connectivity forInternet service providers, data server collocation, andmanaged port services. During the visit, staff had theopportunity to meet Bret Mingo, president & CEO; ChrisVan de Verg, general counsel; Rick Hicks, local counsel;and Catherine Riley, consultant.

According to the terms of the Commission-approved settlement agreement between the PUC’sLaw Bureau prosecutory staff and North PittsburghTelephone Company (NPTC), NPTC will issue a creditof approximately $1,198 to 74 affected customers.

The settlement agreement results from the informalinvestigation of NPTC. The PUC’s Bureau ofConsumer Services (BCS) discovered that NPTC wasincorrectly billing customers for certain toll calls thatused the Telecommunications Relay Service. BCSbrought the issue to the attention of the Law Bureau.The investigation revealed that NPTC failed to imple-ment a rate change in its billing program software.On Aug. 30, 2007, an order (Docket No. M-00072011)was entered approving the settlement agreement.

NPTC will also issue a general notice to allcustomers explaining that it failed to bill certaincustomers at the correct rate. In addition, thecompany will notify customers to contact NPTC ifthey believe they were incorrectly billed during theperiod of Aug. 1, 2001, through July 31, 2005; andimplement new checks and balances to ensure thatall rate changes are timely and properlyimplemented. NPTC will also pay a civil penalty of$5,500. If NPTC finds additional credit is due tocustomers, the company will deduct the credits fromthe penalty amount. The balance of the penalty willgo to the Commission’s consumer education efforts.

In a separate proceeding, Cordia CommunicationsCorporation paid a civil penalty of $5,000 andimplemented business practices to improve itscompliance with Commission regulations, accordingto the terms of a settlement agreement between theLaw Bureau’s prosecutory staff and Cordia (DocketNo. M-00072012).

The settlement agreement resolves an informalinvestigation that began in 2006 when BCS brought tothe Law Bureau’s attention the fact that Cordia hadfailed to respond within 30 days to informal consumercomplaints. Cordia’s residential customers had filedthe informal complaints with BCS from Jan. 1, 2004,through May 6, 2006. The Commission’s regulationsat Chapter 64, Section 153(b) (1) require localexchange carriers to send a utility report for eachinformal complaint to the Commission within 30 daysof notification that a consumer filed a complaint.

Keystone Connection

Keystone Connection - Telecommunications

11

New Members Appointed toTRS Advisory Board

www.puc.state.pa.us

At the public meeting held Aug. 30, 2007, the PUCacted to appoint two new members to the PennsylvaniaTelecommunications Relay Service (TRS) Advisory Board.The appointees are Todd Behanna, of Bell Vernon, Fay-ette County, and Robert J. Davis, of Throop, LackawannaCounty. Both will serve on the board for the two-yearterm ending Aug. 30, 2009. The two appointees have awealth of experience that will prove to be beneficial to theRelay Advisory Board.

Behanna currently serves as the Director of theIndependent Living Program at the Western PennsylvaniaSchool for the Deaf. Behanna has nearly eight years ofexperience working for a relay service company as acustomer service manager and contract manager and isfamiliar with the Federal Communication Commission’srules and regulations.

Davis’ experience includes 14 years as a college-levelinstructor at Pennsylvania State University and 12 yearsof experience working for the Social SecurityAdministration dealing directly with deaf and hard ofhearing persons in an effort to provide user-friendlytelephone equipment, instruction in the use of relayservice equipment, and to help solve any problems withexisting equipment.

The Relay Advisory Board is comprised of representa-tives from AT&T, the Pennsylvania Telephone Association,the Office of the Deaf and Hard of Hearing, the PUC, andfrom the community of persons who are or who have ex-perience with people who are deaf or hard of hearing orthose with language and speech disorders. It was estab-lished by the PUC in 1990 for the purpose of identifyingany improvements which might need to be implementedto ensure the continued success of the PennsylvaniaTelecommunications Relay Service. The PennsylvaniaTelecommunications Relay Service allows persons whoare deaf, hard of hearing or speech disabled to maketelephone calls with the general public, and vice versa, viaa traditional relay operator, video relay or Internet relay.

Annual ReportSubmitted for TDDP

On Sept. 28, 2007, the Commission submitted itsannual report pursuant to the Universal Telecommuni-cations and Print Media Access Act, which relates tothe Telecommunication Device Distribution Program(TDD Program) and the Print Media Access SystemProgram (PMAS Program). This was the PUC’s 12th

annual report sent to Pennsylvania’s Governor,Lieutenant Governor, and the members of the GeneralAssembly addressing the TDD Program and the thirdyear Annual Report on the PMAS Program. Bothprograms are operated by the Office of VocationalRehabilitation (OVR) in the Department of Labor andIndustry. The TDD Program is funded from theTelecommunication Relay Service Program (TRS)surcharge. The PMAS Program historically has beenfunded from special grants; however, for the 2006-07year, it was funded entirely through the TRS surchargefund. The PUC administers the TRS surcharge fund.

The report summarizes these aspects of theprograms:• TDD Program fund balance;• TDD Program revenues received from July 2006

through June 2007;• Statement of the TRS surcharge level established

pursuant to §6701.4(c);• Disbursements and expenses of the fund;• An account of the TDD Program and PMAS

Program expenses;• OVR reported information; and• Public Utility Commission conclusion.

An electronic version of this report is available onthe Commission’s Web site at www.puc.state.pa.us.

CTRS Provider SelectedHamilton Telephone Company has been selected as

the contract provider for Pennsylvania captionedtelephone relay service (CTRS). CTRS is designed forindividuals who have understandable speech but who donot hear well over the phone; it allows them to seecaptions of their telephone conversations on a screenbuilt into their telephones or on associated monitors.

Hamilton uses CapTel® technology, equipment, and callcenters. The contract with Hamilton does not coverpremises equipment, which is the responsibility of thecustomer unless the customer qualifies for equipmentunder the Telephone Device Distribution Program.

TRS RecertificationEvery five years, each state must seek recertification of

its Telephone Relay Service (TRS) program from theFederal Communications Commission (FCC). The stateshave primary responsibility for the oversight and compen-sation of intrastate TRS operation, but the FCC regula-tions and certification process ensures that TRS isprovided in a uniform manner throughout the country.

The current Pennsylvania TRS recertification expiresJuly 26, 2008. Several of the PUC’s bureaus worked withAT&T Communications and Hamilton Telecommunica-tions to assemble the required information to submit forrecertification. The application for recertification wassubmitted on Nov. 9, 2007.

Keystone Connection

Keystone Connection - Telecommunications

12

VoIP Legislation

www.puc.state.pa.us

Request Filed for Further Stayof Access Charge Investigation

On Oct. 16, 2007, the Rural Telephone Company Coali-tion (comprised of the rural incumbent local exchangecarriers in Pennsylvania), the Office of Consumer Advo-cate, the Office of Trial Staff and Embarq Pennsylvaniafiled a joint motion requesting a further stay of the PUC’sInvestigation Regarding Intrastate Access Charges andIntraLATA Toll Rates of Rural Carriers and the Pennsyl-vania Universal Service Fund, at Docket No. I-00040105.

The PUC initially granted a stay of the investigation inAugust 2005, for one year, or until the Federal Communi-cations Commission (FCC) issues a ruling in its pendingintercarrier compensation proceeding at CC Docket No.01-92, whichever occurred earlier. By order entered Nov.15, 2006, the PUC further stayed the investigation underthe same criteria. The Nov. 15, 2006, order also directedthe parties to file a status report pertaining to common orrelated matters in the instant investigation and the FCC’sunified intercarrier compensation proceeding and theneed for any coordination of those matters or any newmatters that may arise once the instant investigation isreinstituted. The Commission is expected to considerthe status report in acting before year end on whether togrant or deny the third request for a stay.

Price Stability Index ReportThe Price Stability Mechanism (PSM) is a formula that

may be included in an incumbent local exchange carrier’s(ILEC’s) Commission-approved alternative form of regula-tion Chapter 30 plan. It permits rates for noncompetitiveservices to be adjusted upward or downward based onthe annual change in the United States CommerceDepartment’s Gross Domestic Product – Price Index(GDP-PI) inflation factor. Currently 23 ILECS operateusing a PSM. Each year, these ILECs file an annualPrice Stability Index (PSI) report based on this change inGDP-PI. The PSI is an index that tracks these GDP-PIchanges cumulatively, adjusted for any exogenousevents, indicating the maximum amount an ILEC mayraise its rates.

When the change in the GDP-PI is positive, the ILEChas the option of taking the full amount of the increaseavailable to it, taking part of the allowed increase andbanking the remainder for future use, or banking theincrease in its entirety. Most of the ILEC Chapter 30plans state that the ILEC must implement any bankedincreases within four years or forfeit them.

Since January 2007, the PUC has approved annual PSIfilings for 21 of the 23 ILECS operating with a PSM. Oneof these ILECs implemented part of the increase availableto it, while forfeiting the remainder due to a settlementagreement. Three implemented part of their allowedincrease while banking the remainder for futureapplication, and 16 ILECs banked their allowed revenueincreases in their entirety. To date in 2007, thesecompanies implemented approximately $8.88 million inincreases while banking approximately $8.02 million forfuture use.

2007 Biennial NetworkModerization Plans Update

A number of Pennsylvania incumbent local exchangecarriers (ILECs) have filed their biennial NetworkModernization Plan (NMP) update reports for 2007. Thereports detail the progress the companies have made asof Dec. 31, 2006, toward meeting commitments tomodernize their networks and eventually providebroadband availability to all customer access lines intheir service areas. These broadband commitments weremade in accordance with Chapter 30 of the Public UtilityCode, and are set forth in each company’s NMP on filewith the Commission.

Of the 33 ILECs that filed reports, two of them—VerizonPA and Verizon North—are committed to achieving 100percent broadband availability by Dec. 31, 2015. The twolarger rural companies—Embarq and Windstream—should reach this goal by Dec. 31, 2013. The remainingsmall rural companies—29 in all—are committed toreaching full broadband availability by Dec. 31, 2008. Thebiennial update reports allow Commission staff to assessthe companies’ progress toward meeting these NMPcommitments by providing detailed information on theprovisioning of various broadband technologies in theirservice areas, and their investment in broadband-relatedfacilities.

Several bills were introduced in the currentlegislative session dealing with Voice over InternetProtocol (VoIP). Although all are still pending, thevery introduction of such legislation points to theimpact that VoIP has on our daily communications.Under Pennsylvania Senate Bill 385, VoIP providerswould be required to collect monthly contributionsfrom their customers to support county 911 functions.PA Senate Bill 1000 seeks to limit regulation of VoIPwhile Pennsylvania Senate Bill 460 (caller ID fraudinvolving any telecommunications or VoIP service)advocates more consumer protections. SB 1000 wasamended and voted out of the SenateCommunications and Technology Committee on Oct.24, 2007. On the federal scene, United States SenateBill 428 (VoIP 911) indicates that amendments to thenation’s Wireless Communications & Public SafetyAct of 1999 are in order.

Keystone Connection

Keystone Connection - Telecommunications

13

On Dec. 6, 2006, the Commission allowed CoreCommunications Inc., a competitive local exchange carrier(CLEC), to amend its certificate of public convenience soCore could expand its operations from Verizon’s serviceterritory into the service territories of Pennsylvania’s ruralcarriers. The decision, at Docket Nos. A-310922F0002AMAand A-310922F0002AMB, authorized Core to providecompetitive services, primarily wholesale transmission servicefor dial-up internet service providers, in the rural carriers’service territories just like Core was already providing inVerizon’s service territory.

On April 19, 2007, the Pennsylvania Telephone Association(PTA) and the Rural Telephone Company Coalition (RTCC)filed an appeal with the Commonwealth Court. The appellantsclaim that Core’s services are “information” service not“telecommunications” service under state and federal law.The appellants also challenge the Commission’s conclusionthat Core has the facilities necessary to be a “facilities-based” CLEC. The appellants conclude that Core has noright to an amended certificate as a CLEC provider oftelecommunications.

The Commission filed its reply brief with the CommonwealthCourt on Aug. 1, 2007. The Commission asked the court toreject the appeal. Core is a facilities-based carrier fit toprovide wholesale transmission service. Core has providedwholesale transmission service in Verizon’s service territory incompetition with Verizon and there is no basis for denyingCore the right to expand its operation to provide the sameservices in the rural carriers’ service territories. The Commis-sion explained that a February 2007 decision of the FCCconsiders wholesale transmission service as telecommuni-cations service based on Pennsylvania law in DQE v. NorthPittsburgh Telephone Company at File No. EB-05-MD-027.

Oral arguments are tentatively scheduled for Dec. 11, 2007.

Core Communications Appeal

www.puc.state.pa.us

PUC Approves JointPetition in Verizon’s2007 PCO Proceeding

By order entered Oct. 12, 2007, at Docket No.R-00061914, et al., the Commission adopted therecommended decision of a PUC administrative lawjudge (ALJ), to approve a joint settlement petitionsubmitted by Verizon PA, Verizon North (jointly,Verizon Companies), the Office of Trial Staff, theOffice of Consumer Advocate, and the Office of SmallBusiness Advocate, with regard to the proceedingsaddressing the formal complaints against VerizonPA’s and Verizon North’s 2007 Price ChangeOpportunity (PCO) filings. The joint settlementresolves numerous, complex and contested issuesthat intertwine with the Verizon Companies’ 2006PCO filings, as well as a pending CommonwealthCourt appeal proceeding involving two of thecontested issues.

More specifically, the joint petition settles thefollowing matters:1. That the revenue from intercompany settlements

shall be deemed noncompetitive revenue in theVerizon Companies’ 2007 PCO calculations;

2. That the Verizon Companies’ banking proposalsassociated with unused revenue increases/decreases shall be allowed;

3. That the 12-month period used to determine thechange in the inflation rate and revenues shall bemoved back one calendar quarter for purposes ofthe 2007 PCO;

4. That the Verizon Companies shall reflect raterevisions in the 2008 PCO that are necessary toremove attribution from the 2007 PCO filingssubject to the Verizon Companies’ pendingappeal at Commonwealth Court; and

5. That the Verizon Companies shall use the actualnumber of residential and business lines inservice as of March 31, 2006, for purposes of the2007 PCO calculation subject to the VerizonCompanies’ pending appeal at CommonwealthCourt.

PUC Staff Tours VerizonIn September and October, PUC staff

visited Verizon’s Norristown TrainingCenter. Staff toured their facility, learnedhow telecommunications has evolvedand met several of Verizon’s staff.

Left: David Screven of ChairmanWendell F. Holland’s Office, volunteeredto try on a Verizon lineman’s gear toshow how much equipment they wearwhen repairing lines.

Right: Vicki Bonner and Joan Smith,both of the PUC’s Bureau of ConsumerServices, and Ted Farrar, of the Office ofSpecial Assistants, watch as Verizon’sJerry Bedell and Mike Torres splicetogether a fiber optics line.

Keystone Connection

Keystone Connection - Natural Gas

Activity from Aug. 1, 2007, to Oct. 31, 2007.

Gas Supplier Licensing

14

Number of Licensed NGSs

85 Active Licenses1 license approved

0 applications pending1 license canceled

www.puc.state.pa.us

PGW Rate FilingOn Dec. 22, 2006, Philadelphia Gas Works

(PGW) filed Supplement No. 16, calculated toproduce $100 million in additional annualrevenues. On March 5, 2007, PGW extendedthe suspension date until Sept. 28, 2007. Publicinput hearings were held on March 26, March 28and April 9, 2007. More than 60 witnesses,including state senators, state representatives,city council members, local officials, communitygroups and residential customers presentedsworn testimony. All of the elected officialsstated that the residents of Philadelphia couldnot afford an increase in rates. Evidentiaryhearings were held on May 21-24, 2007.

On July 30, the Commission issued therecommended decision, which proposed anallowed annual revenue increase of $25 million.Exceptions and reply exceptions were filed onAug. 20 and Aug. 30, respectively. At the publicmeeting of Sept. 13, 2007, the Commissionconducted a binding poll of the issues.

Within PGW’s request was a proposal tochange the regulatory treatment of capacityrelease credits and off-system sales margins.Currently these revenues are part of PGW’sannual purchased gas cost (PGC) rate filing andamount to approximately $10 million. PGWproposed to remove these revenues from thePGC rate and include them in base rates tooffset future long term debt borrowing. TheCommission rejected this proposal, whichhowever, may be considered in PGW’s next PGCproceeding. On Sept. 28, 2007, theCommission’s order was entered, allowing the$25 million annual increase in rates which will beallocated almost entirely to the residential class.

At an Oct. 16, 2007, press conference at the state Capitol,Chairman Wendell F. Holland joined House AppropriationsChairman Dwight Evans, D-Phila., and House ConsumerAffairs Chairman Joseph Preston, D-Pittsburgh, to promote abill that would establish a Distribution System ImprovementCharge (DSIC) to pay for natural gas infrastructureimprovements. The bill was introduced as part of the GeneralAssembly’s special energy session.

Chairman Holland said in his view DSIC:• Is pro-environment because it decreases line loss,

conserves natural gas resources and reduces greenhousegases;

• Increases safety;• Promotes the administration’s and legislature’s objective

of fixing aging infrastructure; and• Encourages economic development.

“DSIC is one of the most important regulatory tools of thepast decade,” Chairman Holland said. “If ever there were aregulatory tool recognized as a best practice around thecountry it is the DSIC and should be extended to utilitiessuch as natural gas. I look at these needed infrastructurerepairs just as a homeowner looks at replacing a roof or afurnace – these are not repairs you want to make, but youknow you have to for the long-term health of your home.”

Natural Gas Improvements

0

36

81 8478 78

82 83 84

36

81 8478 78

82 83 84 85

010

203040

506070

8090

1999 2000 2001 2002 2003 2004 2005 2006 2007

NGSs - Start of Year NGSs - End of Year/Current

PPL SellingNatural Gas Business

On July 30, PPL Corporation announced itsintent to conduct a sales process for the com-pany’s natural gas distribution business, PPLGas Utilities Corporation. The gas utility servesabout 77,000 natural gas distribution customersin 34 counties throughout the state. It operatesabout 3,800 miles of pipeline and owns under-ground gas storage capacity in three separatereservoirs in north-central Pennsylvania. Theexpectation is for the sale to be completed duringthe second half of 2008, following the executionof a sales agreement and the receipt of allnecessary regulatory approvals.

Keystone Connection 15

Keystone Connection - Natural Gas

Energy Price Forecast for November 2007

Wholesale Fuel Prices by Heat ContentData from EIA’s Weekly Gas Report and Weekly Petroleum Status Report

(Unweighted Average)

www.puc.state.pa.us

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

Jan-0

5

Mar-05

May-05

Jul-0

5

Sep-05

Nov-05

Jan-0

6

Mar-06

May-06

Jul-0

6

Sep-06

Nov-06

Jan-0

7

Mar-07

May-07

Jul-0

7

Sep-07

Nov-07

$/m

mbt

u

Natural Gas Henry Hub Spot Price Crude Oil W. Texas intermediate Spot price

No. 2 Fuel Oil NY Spot Price Propane Mont Belvieu, Texas

Natural gas

The Energy Information Agency’s (EIA’s) November2007 Short Term Energy Forecast reports rising con-sumption, continued geopolitical turmoil, crude oilinventory tightness, and worldwide refining bottlenecks. As a consequence, crude oil prices are expected toremain high and volatile. For the rest of this yearregular gasoline pump prices are now expected to bearound $3 per gallon.

West Texas Intermediate crude oil (WTI) is thebenchmark crude oil in the United States. In 2006 WTIcrude averaged $66.02 a barrel. WTI crude oil isexpected to average around $87 per barrel for the restof this year and $80 in 2008.

EIA shows that Henry Hub (Louisiana) wholesale naturalgas prices averaged $6.41 per Mcf in 2006 and are projectedto average $7.30 per Mcf in 2007. For 2008, the Henry Hubaverage price is projected to move up to an average of $8.01per Mcf.

Retail heating oil prices are projected to average about 40cents per gallon higher than last winter.

Additional forecast details can be found at:http://www.eia.doe.gov/oiaf/forecasting.html.

Also see “Why are oil prices so high?” at:http://www.eia.doe.gov/emeu/steo/pub/2007-oil-prices.html.

Keystone Connection16

Keystone Connection - Transportation

www.puc.state.pa.us

Pennsylvania Hosts 2007 CVSAFrom Sept. 16 to 19, 2007, the Commercial Vehicle Safety Alliance

(CVSA) held its Fall Workshop in Pittsburgh. Officers of the PUC’sMotor Carrier Division served as ambassadors to the nearly 500attendees from the United States, Canada and Mexico, providingtransportation and technical support. The PUC enforcement officersworked closely with members of the Pennsylvania State Police toensure a safe and efficient workshop for everyone involved.

CVSA is an association of state, provincial and federal officialsresponsible for the administration and enforcement of motor carriersafety laws in the United States, Canada and Mexico. Theorganization was established to promote an environment free ofcommercial vehicle accidents and incidents. The mission of CVSA isto promote commercial motor vehicle safety and security by providingleadership to enforcement, industry and policy makers. This isaccomplished by establishing effective motor carrier safety standardsthrough compliance, education, training and enforcement programs.

The work of CVSA is accomplished by its members who sit on itsvarious committees. The PUC has been a member of CVSA for almost20 years, and the Motor Carrier Division has had representatives onseveral committees over the years. Currently, Gerry Clark, SafetyCoordinator, serves as the Secretary of the CVSA Training Committee,which is responsible for developing the curriculums for each of theNorth American Standard training courses, instructor certifications, andstudent testing materials.

CVSA member jurisdictions are represented by various departmentsof transportation, public utility and service commissions, state police,highway patrols and ministries of transport. In addition, severalhundred associate industry members are also committed to helpingthe Alliance achieve its goals.

The following Motor Carrier Division employees served asambassadors during the CVSA Fall Workshop: Gerry Clark, LisaWilson, Charles Bowser, Jeff Longo, Greg English, Brian McGowan,Brian Mehus, Lonnie Blank, Alan Taylor, Phil Jones, Barry Pacovsky,Bill Lark and Charlie Myers. Thank you for a superb job!

A record number, 147 people, attended thePUC’s annual Gas Safety Division PipelineSafety Seminar in State College, on Oct. 10to 11. This year’s seminar focused uponfacility damage prevention.

The first day of the seminar centered upona four-hour presentation by Ronald Six, aconsultant for AEGIS Insurance Services.

His presentation included:• A discussion about the explosive physicalproperties of several gases;• Classification of leaks;• Proper leak location methods;• Tips for first responders to incidents;• Incident investigation; and• Lessons learned. Six provided an extremely informativediscussion, highlighted by the lessonslearned portion, which included real lifeexamples of incidents that he had beeninvolved. Also on the first day of the seminar,George Lomax of Heath Consultants providedinstruction about the classification and propermitigation methods of pipeline leaks.

The second day of the seminar focusedupon Pennsylvania’s One Call law. This daywas highlighted by presentations from BillKiger, Executive Director and President of thePA One Call System Inc., and CathyWojiechowski, Assistant Counsel for theDepartment of Labor and Industry. Theyprovided the law’s perspective. TimGreenland, Owner of Greenland Construction,discussed the One Call law from theperspective of the excavator.

Day Two also included a discussion by RayGeesey, Columbia Gas, and Gary Bartnik ofPECO Energy, regarding the damageprotection programs utilized by theirrespective companies. Paul Metro, Chief ofthe PUC’s Gas Safety Division, concludedthe session by talking about compliancemeasures of the Gas Safety Division, and toencourage companies to utilize theinformation received at the seminar asneeded in their damage prevention programs.

Attendance High atGas Safety Seminar

Rail Ethanol Shipments IncreasingAs the cost increases for petroleum distillate fuels, the use of

ethanol has dramatically grown over the past few years. Refineries inthe United States produced 4.9 billion gallons of ethanol in 2006.Ethanol is used as either a gasoline additive, or as a primary fuelingredient in a product called E85. More than 75 percent of ethanolproduced in the country is transported by rail, including shipmentsthrough Pennsylvania, which accepts trains transporting ethanol fromthe corn belt in the Midwest, to fuel terminals in New Jersey.

The ethanol industry currently has the potential to annually generateas much as 430,000 rail car loads. The PUC Rail Safety Division hasrecognized the increase in ethanol shipments and has likewiseincreased its safety inspections for trains transporting ethanol tankcars. Generally the inspections occur in rail yards located in Conway,Enola and Allentown. The rail safety inspectors will continue tofrequently monitor and inspect ethanol trains to ensure compliancewith the Federal Rail Administration requirements for equipment, trackand hazardous material.

Keystone Connection

Keystone Connection - Federal News

FCC Highlights

www.puc.state.pa.us

FCC HIghlights Continued on Page 18.

17

In the Matter of Verizon’s Petitions for Forbearancein the Boston, New York, Philadelphia, Pittsburgh,and Virginia Beach Metropolitan Statistical Areas,WC Docket No. 06-172, DA 06-1869.

In Jan. 2007, Verizon petitioned the FCC forforbearance under federal law from common-carrierobligations that require Verizon to offer access to itsfacilities at rates approved by the FCC as tariffed underfederal law. Verizon relied on an earlier FCC decision inthe Omaha Forbearance Order, WC Docket No. 04-233(Dec. 2, 2005) in which the FCC granted limitedforbearance, or waiver, of FCC and federal legalrequirements. Verizon’s forbearance addresses themajor coastal communications centers in Verizon’sterritory. The PUC filed comments urging the FCC tohold that any waiver the FCC grants does not overturnconditions imposed on Verizon by other statecommissions.

The PUC is very concerned that forbearance not beinterpreted as allowing Verizon to abandon conditions thePUC imposed on Verizon when the PUC issued an orderapproving the merger of MCI Inc. and Verizon. The PUCalso expressed concern that forbearance could hurtcompetition from several providers, particularly in thePhiladelphia area, because they rely on tariffed access toVerizon’s facilities to compete against Verizon.

The PUC also filed comments in a related proceeding,at Docket No. WC 04-440. In that case, the FCC grantedVerizon forbearance by operation of law because the FCCdid not decide the case by the statutory deadline. TheCommission’s comment asked the FCC to issue an orderclarifying what kind of forbearance Verizon got in thatdecision.

Finally, the PUC filed comments in the OmahaForbearance Order supporting a petition which asks theFCC to revisit it. The PUC agreed that the FCC shouldexamine the decision because Verizon relies on thatdecision in the case and because the competitive resultdid not happen as predicted. In all these proceedings,the PUC repeatedly asks the FCC to limit the scope ofthe forbearance to preserve Pennsylvania’s conditionsand to consider the impact to competition in making itsdecisions.

In the Matter of High-Cost Universal Service, Reportof the Federal-State Joint Board, CC Docket No. 96-45, WC 05-337.

Several carriers and national trade associationscontinue to file ex parte filings telling the FCC how toresolve the problem of the growing costs of universal

service. In June 2007, the FCC sought comments on aproposal of the Federal-State Board on Universal Serviceto impose an interim, emergency cap on high-costsupport that competitive eligible telecommunicationscarriers (ETCs) would receive in each state. Theproposed cap would base support on the average level ofcompetitive support distributed in 2006. The PUC filed areply comment with the FCC urging the FCC to adopt thecap and extend it to all support. Because Pennsylvaniais a net contributor to the federal universal service fund inexcess of $124 million, the PUC filed a commentexpressing concern about rising costs that are primarilyattributable to wireless carriers.

Petition of NEP Cellcorp Inc. for Designation as anEligible Telecommunications Carrier in theCommonwealth of Pennsylvania, CC Docket No. 96-45, DA 07-3602.

On Aug. 15, 2007, the FCC released a notice solicitingcomments on the request of NEP Cellcorp Inc. to receivefederal funding to provide wireless service in Pennsyl-vania. On Sept. 5, 2007, the PUC filed a reply commentopposing designation because other carriers werereceiving federal support in some of the same areasserved by NEP. The Commission is concerned that thelarge increases in this federal fund will increase costs toPennsylvania consumers because Pennsylvania paysmore than it gets.

Telecommunication Carriers’ Use of CustomerProprietary Network Information and other CustomerInformation, CC Docket No. 96-115

In April 2007, the FCC issued a final order establishingthe rules for a carrier’s protection of customer proprietarynetwork information (CPNI). Those rules allowed statesthat have more consumer privacy protections orregulations than under federal law, like Pennsylvania, toretain their rules. Since then, the FCC received severalpetitions from carriers or carrier associations asking theFCC to reconsider some parts of the rules or to refreshthe record because of changes in technology. Thosematters are pending.

IP-Enabled Services; Access to TelecommunicationsRelay Services (TRS) and Speech-to-SpeechServices for Individuals with Hearing and SpeechDisabilities, WC Docket No. 04-36, Final Order andFurther Notice of Proposed Rulemaking.On Oct. 9, 2007, the FCC issued an order granting Voiceover Internet Protocol (VoIP) providers a six-monthextension on their obligation to deliver VoIP 711 calls toan appropriate public safety answering point (PSAP). TheFCC sought comment on how to incorporate TRS/711 and911 with VoIP now that the “information service” VoIPproviders must provide this “telecommunications” service.

The Federal Communica-tions Commission (FCC)recently issued severalimportant decisions thatimpact Pennsylvania.

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FCC Highlights

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Continued from Page 17.

Recommendations of the Independent PanelReviewing the Impact of Hurricane Katrina onCommunications Networks, EB Docket No. 06-119,WC Docket No. 06-63, Petitions for Reconsideration.

On Aug. 14, 2007, the FCC published notice ofpetitions for reconsideration of the FCC’s emergencyback-up power source rules established in June 2007.They asked the FCC to reconsider the eight-hour backuprequirement for cell sites because those sites arefrequently located in areas that cannot support backuppower equipment. Parties also addressed the FCC’sdecision to stay the effective date of a requirement thatlarger wireless carriers and local exchange carriersdeploy backup power when their failicites are normallypowered by commercial AC power.

Numbering Resource Optimization, Petitions ofAlabama, Idaho and Wisconsin for Delegation ofNumbering Authority, CC Docket Nos. 96-98 and WC07-118.

On Aug. 27, 2007, the FCC granted these petitions fordelegated authority to implement thousands-blocknumbering pooling. The FCC gives authority toimplement number pooling if an area code is in jeopardy,the area code has less than one year of life, or if the areacode is located within one of the nation’s top 100Metropolitan Statistical Areas (MSAs). None of thosecriteria were met, but the FCC granted the petitionsbecause of an increase in demand for numbers and thelow utilization thresholds. The FCC recognized thatdenying these petitions would increase the use of 10,000blocks, particularly given that the area codes wereexpected to exhaust in the next five years.

Natural Gas ServiceTermination Case Resolved

A complaint (Docket No. C-20066348) arose from aservice termination after the customer failed to complywith payment agreements negotiated with National FuelGas Distribution (NFG). The Bureau of ConsumerService (BCS) determined that service should be restoredif the customer paid a small amount on his arrearage anda reconnection fee.

The PUC’s administrative law judge (ALJ) vacated theBCS informal decision, concluding that, pursuant to 66Pa. C.S. § 1407, the utility may demand payment of theentire outstanding balance and a reconnection feebecause the customer defaulted on two paymentagreements. The ALJ determined that, because theconsumer was no longer a “customer,” neither BCS northe Commission could exercise the options available

under Section 1405. NFG requested clarificationregarding:1. The precedential value of initial decisions, which

become final by operation of law, on future BCSinformal decisions; and

2. Whether the ALJ’s application of Section 1407 to thepayment arrangement applied only to this specificcase and customer or to every case or situationbrought before the BCS.

The Commission held that, pursuant to statute andexisting case law, ALJ initial decisions, which becomefinal by operation of law, are to be given the same valueas Commission orders which proceed through the PUC’spublic meetings. The PUC further determined thatSubsection 1405 gives the Commission the authority,generally, to establish payment agreements betweenpublic utilities, customers and applicants. The PUC heldthat Subsection 1407 in no way divests the Commissionof its duty to act as the final arbiter of a utility consumer’srights with respect to payment disputes.

Nevertheless, the Commission found that the facts inthis case did not warrant an order to reconnect gasservice due to the customer’s income, lack of good faitheffort to pay the bill, and failure to establish good causefor non-payment.

State Rail Managers MeetThe 2007 Annual Meeting of the Association of State

Rail Safety Program Managers was held in Fort Worth,Texas, during the week of August 27. Mike Hoffman,Director, and Patrick Edwards, Federal RailAdministration (FRA) Program Supervisor, representedthe PUC’s Bureau of Transportation and Safety. Theannual meeting provides the managers of the FRA safetyprograms in each of the participating states with theopportunity to discuss new and revised FRA safetypolicies and procedures, recent trends, and the states’best practices for inspections and investigations. Thisyear the meeting with the State Program Managers washeld in conjunction with the Motor Power and EquipmentInspectors’ annual training conference.

The meeting sessions featured presentations bysenior managers from the FRA’s Office of Safety,including:• Utilization of FRA inspection and incident data;• FRA rulemakings• Guidance for each of the various inspection

disciplines; and• States’ legal issues.

Other presentations and discussions included:highway grade crossing safety, transportation of spentnuclear fuels, and rail security issues. In addition, eachFRA state region had the opportunity to meet with JoStrang, FRA Associate Administrator for Safety, todiscuss matters within the state and/or region.

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19www.puc.state.pa.us

Consumer Reports Released

2006 Universal Service ReportOn Aug. 3, 2007, the PUC released the Bureau of

Consumer Services Report on 2006 Universal ServicePrograms and Collection Performance of the PennsylvaniaElectric Distribution Companies and Natural Gas DistributionCompanies.

The report is based primarily on 52 Pa. Code §§ 54.75 and62.5, Universal Service and Energy Conservation ReportingRequirements. The report includes reviews of the assistanceprograms that help low income customers maintain theirutility service, including the Low Income Usage ReductionProgram (LIURP), the Customer Assistance Programs(CAPs), CARES Programs and Utility Hardship FundPrograms. Residential collection data is reported for allresidential customers and further segmented for theconfirmed low income customers.

Overall, 929,824 out of the 7,282,163 households receivingservice from the major electric and gas companies wereconfirmed to be low income. Of those, 410,524 participatedin CAP in 2006. Overall, the utilities spent $28,324,226 in2006 on the Low Income Usage Reduction Program (LIURP)while treating 23,757 households. Overall, 21,079 customersreceived $7.2 million in Hardship Fund benefits in 2006.

2006 UCARE ReportOn Oct. 15, 2007, the Commission released the 2006

Utility Consumer Activities Report and Evaluation (UCARE).According to the report, the Commission’s Bureau ofConsumer Services (BCS) received 70,690 contacts fromutility customers that required review in 2006, a decrease of19 percent from 2005. Of these contacts, 21,310 wereconsumer complaints and 49,380 were payment arrangementrequests. In addition, BCS received almost 91,000 consumercontacts that did not require investigation.

In the electric industry, service interruptions produced thehighest number of consumer complaints from residentialcustomers in 2006. For the gas industry, credit and depositissues generated the most residential consumer complaints.The number one reason that residential water customerscontacted BCS was to resolve billing disputes with theircompanies, while service delivery issues yielded the mostcomplaints from residential telephone customers.

The newly released report shows that 82 percent ofconsumers reported that they would contact the PUC again ifthey were to have another problem with a utility that theycould not settle by talking with the company. In addition, 78percent rated the service they received from the PUC as“good” or “excellent.”

The report, prepared by BCS, is available on the PUC Website (www.puc.state.pa.us) under Publications & Reports.

2006 Customer ServicePerformance

The Commission released the 2006 CustomerService Performance Report: Pennsylvania Electric &Natural Gas Distribution Companies on Sept. 24,2007. The report, prepared by the Bureau ofConsumer Services, appears on the PUC Web site(www.puc.state.pa.us) under Publications & Reports.

The report’s data falls into two categories:company-reported performance data and customersurvey results. The company-reported data measurestelephone access, the timeliness of meter readingand billing, and the time a company takes to respondto disputes. The report measures three differentfactors to ascertain the quality of telephone access:the percent of calls that received a busy signal; thepercent of calls abandoned by callers; and thepercent of calls answered within 30 seconds.

The second section of the report provides theresults of uniform surveys of randomly selectedconsumers who interacted with the electricdistribution companies and the natural gasdistribution companies during 2006. The purpose ofthe transaction survey is to assess those consumers’perceptions regarding the interactions. The surveyquestions the consumers on different aspects ofcustomer service such as ease of reaching thecompany, employee courtesy and knowledge,promptness and timeliness of a company’s responseor visit, and satisfaction with the handling of theinteraction.

OALJ Held ConferenceOver two days in September, the PUC’s Office of

Administrative Law Judge (OALJ) held their annualconference. Guest speakers reviewed utility issuesand recent developments in administrative law.

Chief ALJ Veronica Smith presented John Corbett(center) with the OALJ’s Golden Gavel Award as WayneWeismandel displays the plaque with past recipients.The award is presented annually to the ALJ who hasgone above and beyond their duty as an ALJ.

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PUC Submits2008-09 Budget

Early in December, the Commission’s new case anddocument management system will go live! Development ofInfoMAP (Information Management and Access Project) hasbeen underway since March 2006. At that time, Unisyspartnered with the PUC to replace an antiquated system withone that reduces reliance on paper, automates workflows andenhances internal efficiencies by improving the tracking,sharing and updating of information throughout the agency.

The second and third phases will provide better publicaccess to information, permit electronic filings and enableexternal users to engage in e-commerce. These capabilitieswill be available in 2008.

Implementing electronic filings requires changes to theCommission’s procedural regulations. Proposed revisionswere adopted on Aug. 30, 2007, and were published in thePennsylvania Bulletin on Nov. 17, 2007. Comments are dueon the proposed regulations within 60 days, or by Jan. 16,2008.

Various topics are covered in the proposed electronic filingrules. They include: registration as a filing user; the filing offormal complaints; an acknowledgement of the electronicreceipt of a document; the format and size of electronically-filed documents; and the electronic service of documents onother parties. These changes were developed through anextensive stakeholder process that included a review of therules in place in other state utility commissions, federalagencies, and state and federal courts. Interested parties areencouraged to review those proposed rules and support thisimportant first step toward enhancing access to the PUC andpermitting e-filings.

InfoMAP Update

www.puc.state.pa.us20

On Oct. 11, 2007, the PUC submitted itsExecutive Budget Request for fiscal year 2008-09. By that request, the Commission soughtapproval for state funds in the amount of$56,779,000, as well as authority to spendanticipated federal funds in the amount of$2,564,000, for a total budget of $59,343,000.

This submission seeks an increase of lessthan $300,000 from current levels to fundmandated increases in salaries and benefits for509 employees. The balance of the proposedincrease is to fund a $5 million statewideconsumer-education campaign to prepareelectricity consumers for potential rising powercosts and to offer ways to conserve energy.

Budget hearing materials will be furnished tothe House and Senate appropriationscommittees in advance of hearings during thefirst quarter of 2008.

Chairman Testifies onState’s Utility Infrastruture

Chairman Wendell F. Holland testified on Sept. 12,2007, before the state House Consumer Affairs Com-mittee on the status of infrastructure for the state’sjurisdictional utilities and offered his thoughts onmoving forward with any needed improvements.

Chairman Holland testified that improvement to theutility infrastructure in the Commonwealth is criticalto promote reliability, economic development and theenvironment. While the status of Pennsylvania’sinfrastructure related to jurisdictional utilities isgenerally acceptable and receiving appropriate levelsof necessary maintenance, incidents have requiredspecial attention, he said, adding that he believedthat a distribution system improvement charge(DSIC) is a proven method for accomplishing thisresult.

“The PUC continues to be actively engaged in theissues surrounding the state’s utility infrastructure,”Chairman Holland said. “We are not afraid to takenew and innovative approaches to funding theinfrastructure needs such as with the implementationof the DSIC 10 years ago. I strongly supportimplementing distribution system improvementmechanisms for other utilities and am willing to workclosely with the legislature to develop a program thatwould benefit utility customers through betterservice, increased reliability and rate stability.”

various conditions that may affect supply, price and servicereliability of natural gas this winter.

Both the EAPA and PECO reported adequate natural gassupplies to meet winter demands, and that gas prices wouldlikely be at least 10 percent higher this winter compared tolast winter.

AmeriGas told the Commission that propane users wouldbe paying more for propane this winter because the UnitedStates propane inventory remains below the five-year average.

DPW representatives reported on the Low-Income HomeEnergy Assistance Program (LIHEAP), which began takingapplications on Nov. 5. Consumers can apply for heating billassistance for this winter until March 21, 2008.

Winter Reliability MeetingContinued from Page 5.

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Spotlight on New Bureau Directors

www.puc.state.pa.us

The PUC recently appointed M. Carl Lesney of Allegheny County asthe Director of the Bureau of Audits and Robert F. Wilson ofCumberland County as the Director of the Bureau of Fixed UtilityServices (FUS). A Certified Public Accountant working as a PUC auditor in WesternPennsylvania, Lesney replaced Bureau of Audits Director Tom Sheets,who retired. Lesney previously served as Energy and Policy Advisorto the late Commissioner Aaron Wilson Jr. from 1998 to 2003. Beforejoining the Commission, Lesney worked as the Chief Financial Officer,Comptroller, Secretary and Treasurer for the Carnegie Natural GasCompany, the Carnegie Interstate Pipeline Company, and theCarnegie Production Company, all subsidiaries of USX Corp. Wilson is a Certified Public Accountant with extensive experience infinancial and regulatory accounting and federal and state tax law.Previously serving as Manager of Finance and Tariffs in FUS, Wilsonreplaced Director Robert A. Rosenthal, who retired. Since 1978,Wilson has served various roles in FUS, and previously worked in thePUC Bureau of Rates and the Office of Special Assistants. Hisresponsibilities have included management of financial and regulatoryaccounting and reporting, taxation, cost of capital, securities,mergers and tariffs, as well as issues related to the regulation andrestructuring of the electric, natural gas and telecommunicationsindustries. The Bureau of Audits performs financial, management andspecialized audits on electric, natural gas, water andtelecommunications utilities. The Bureau of Fixed Utility Services advises the PUC on technicalissues related to energy, telecommunications and water/wastewater;offers policy recommendations on rates, tariffs and regulatorymatters; processes fixed utility applications for PUC authority; andcoordinates emergency operations of utilities.

On Sept. 27, the Public Utility Commissioncelebrated its 70th Anniversary. TheCommission has a rich and proud history ofserving Pennsylvanians. Since 1937 (anddating back to predecessor agencies),utilities and customers have counted on thePUC to balance their needs, and theGovernor and General Assembly have reliedon the Commission to fulfill its mission.

At the anniversary event, presentCommissioners recounted the PUC’s historyand recognized several past Commissionerswho were able to attend. Those who attendedwere: Lisa Crutchfield; Glen R. Thomas;Terrance J. Fitzpatrick; John Quain; DavidRolka; and Joseph Rhodes Jr.

Audio from the event can be found on theCommission’s Web site atwww.puc.state.pa.us/general/PMAudio.asp.

The PUC is an active and vital participant in the emergencyresponse function of the Commonwealth of Pennsylvania and thePennsylvania Emergency Management Agency (PEMA). A key partof the PUC role in this function is the Emergency PreparednessLiaison Officer (EPLO). Several PUC employees volunteered tobecome EPLOs following a request for more participants. The newEPLOs began their training online and with a trip to Valley Forge fortraining in PJM’s emergency procedures. Several of the new EPLOsalso participated in the winter storm exercise at the PEMA StateEmergency Operations Center in Harrisburg on Oct. 9.

In addition to the PUC EPLOs, over the next year the PUC as awhole will begin training certain personnel in emergency response andthe Incident Command System in order to comply with the NationalIncident Management System (NIMS) guidelines. The Governormandated that the NIMS be utilized by all state agencies foremergency response and the NIMS guidelines call for certain traininglevels to be achieved by the end of fiscal year 2008.

PUC Staff Training in EmergencyPreparedness

70th AnniversaryCelebration

Current PUC Commissioners posed for aphoto with past Commissioners whoattended the PUC’s 70th Anniversarycelebration. From left, the Commissioners areLisa Crutchfield; Joseph Rhodes Jr.; Commis-sioner Tyrone J. Christy; David Rolka; ViceChairman James H. Cawley; Chairman WendellF. Holland; Glen R. Thomas; John Quain;Terrance J. Fitzpatrick; and Commissioner KimPizzingrilli.

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PUC Holds First Open House

Senate HearingContinued from Page 3.

The PUC held its first Open House on Nov. 7 at its offices inthe Commonwealth Keystone Building, Harrisburg. The PUCinvited all interested parties and stakeholders (utilities,consumer groups, other organizations and legislative staffthat interact with the PUC) to attend the special inauguralPUC Open House.

Highlights included:

• A special unveiling of a new PUC display in the building’satrium. The new display is an interactive entry point forthe public, particularly school students, learning aboutthe PUC, and anyone new to dealing with the agency;

• Overview presentations of the Commission, its missionand its structure;

• Tours of Commission Offices and Bureaus; and

• Q&A sessions with bureau directors and staff.

Chairman Wendell F. Holland (left), along with Vice ChaimanJames Cawley and Commissioner Kim Pizzingrilli welcomed over100 people to the Commission’s First Open House.

Attendees to the Open House were given tours of the PUC’soffices. They also had an opportunity to meet with bureaudirectors and attend an overview presentation of the PUC.

New Atrium DisplayUnveiled at Open House

Commissioners Tyrone J. Christy and Kim Pizzingrillitest the PUC’s new display in the atrium of the Common-wealth Keystone Building in Harrisburg.

On Wednesday, Nov. 7, the PUC commissionersofficially unveiled the Commission’s new display inthe Atrium of the Commonwealth Keystone Building.The unveiling was part of the Commission’s OpenHouse activities. The Commission’s Office ofCommunications worked with the PennsylvaniaHistoric Museum Commission and the Department ofGeneral Services to redesign and produce thedisplay. The new display is interactive and providesvisitors with information regarding the Commission’srole in the five industries it regulates.

Attendees and PUC staff gather around to view the newatrium display. The display is interactive and shows thePUC’s role in regulating utilities.