Marcellus Shale Watch

by Elizabeth U. Witmer, Esquire, Saul Ewing, LLP

The Pennsylvania PUC today issued an Order in response to two motions for reconsideration and one for clarification of its June 2011 order in Laser Northeast Gathering Company, LLC, Docket No. A-2010-2153371, which found that Laser, as a natural gas gathering/midstream pipeline, is a public utility, but remanded for further proceedings to determine whether a Certificate of public convenience and necessity should be issued. The PUC denied the reconsideration motions, but granted clarification. The clarification appears to be the articulation of a 4 part test used to determine Laser’s public utility status:
1. That Laser is a pipeline.
2. That Laser says it “will serve any and all potential customers needing to move gas through the pipeline system”
3. That Laser intends to use negotiated contracts with customers but that those contracts “are not meant to be exclusionary.”
4. That Laser “made a commitment to expand its capacity, as needed, to meet increased customer demand.”
The test is extremely broad, and appears to rely entirely on the stated intent of the applicant. The PUC noted, in a footnote, that “we wish to clarify that it is not the intent of the Commission to seek to exert jurisdiction over entities that provide services similar to Laser but do not fall under the definition of public utility service, which definition includes holding oneself out as being willing to serve the public” Nonetheless, the four factors identified by the PUC as being the test applied to Laser are so broad that they appear to include any pipeline which declares that it will serve any customers which will enter into a contract, so long as the pipeline indicates it is willing to expand the pipeline capacity to meet the customer’s demand. There was a strong dissent to the clarification Order by Commissioner James Cawley, who has published directed questions that he would like answered during the proceeding on remand on the question of whether Laser is entitled to a Certificate. There are now two other gathering/midstream pipeline cases currently before the PUC, and it appears that hearings will move forward in both.

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