• Abstract and Figures
• Public Full-text

COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES CONSUMER AFFAIRS COMMITTEE INFORMATIONAL MEETING STATE CAPITOL ROOM B-31 MAIN CAPITOL THURSDAY, MARCH 10, 2011 9:02 A.M. MEETING ON NATURAL GAS INDUSTRY BEFORE: HONORABLE ROBERT GODSHALL, MAJORITY CHAIRMAN HONORABLE JOSEPH PRESTON, MINORITY CHAIRMAN HONORABLE BRYAN BARBIN HONORABLE FRANK BURNS HONORABLE SHERYL M. DELOZIER HONORABLE BRIAN ELLIS HONORABLE JOHN R. EVANS HONORABLE JULIE HARHART HONORABLE WARREN KAMPF HONORABLE NICK KOTIK HONORABLE ROBERT MATZIE HONORABLE BRANDON NEUMAN HONORABLE JOHN PAYNE HONORABLE TINA PICKETT HONORABLE TODD STEPHENS ALSO PRESENT: COLIN FITZSIMMONS, EXECUTIVE DIRECTOR (R) AMANDA RUMSEY, COUNSEL (R) JANE HUGENDUBLER, LEGISLATIVE ADMINISTRATIVE ASSISTANT (R) GAIL DAVIS, EXECUTIVE DIRECTOR (D) TIMOTHY SCOTT, RESEARCH ANALYST (D) LISA KUBEIKA, LEGISLATIVE ASSISTANT (D) JERRY LIVINGSTON, RESEARCH ANALYST (D) INDEX TESTIFIERS WITNESS PAGE REP. ROBERT GODSHALL 6 CHAIRMAN TERESA RINGENBACH 7 DIRECT ENERGY, RETAIL ENERGY SUPPLY ASSOCIATION TERRY FITZPATRICK 10 PRESIDENT & CEO, ENERGY ASSOCIATION OF PENNSYLVANIA PETER G. TRUFAHNESTOCK 17 STATE LEGISLATIVE & REGULATORY AFFAIRS CONSULTANT, PHILADELPHIA GAS WORKS DAVID CALLAHAN 35 VICE PRESIDENT, MARCELLUS SHALE COALITION BARB SEXTON 37 MANAGER – STATE GOVERNMENT RELATIONS, CHESAPEAKE ENERGY CORPORATION ROLF HANSON 40 EXECUTIVE DIRECTOR, API-PA WILLIAM LUCAS 51 EXECUTIVE VICE PRESIDENT, EQUITABLE GAS MATT SOMMER 55 VICE PRESIDENT OF NATURAL GAS & ELECTRICITY, SHIPLEY ENERGY CERTIFICATE 66 WRITTEN TESTIMONY SUBMITTED: LOU D'AMICO PRESIDENT & EXECUTIVE DIRECTOR PENNSYLVANIA INDEPENDENT OIL & GAS ASSOCIATION CHAIRMAN GODSHALL: Good morning. The hour of nine o'clock having arrived and left us a few minutes ago, I would like to call the meeting to order. This is an informal meeting of the natural gas industry and is being recorded. I would like to get started with the members introducing themselves, the members and staff introducing themselves starting all the way over to my right. MS. DAVIS: Gail Davis, Representative Preston's office. MR. LIVINGSTON: Jerry Livingston, Representative Preston's office. REPRESENTATIVE BURNS: Representative Frank Burns, Cambria County. MR. SCOTT: Tim Scott, Representative Preston's office. CHAIRMAN PRESTON: Joe Preston, Representative Preston's office. For everybody that knows Beth Rosentel, the Executive Director, it was Jonah Allen, 7 pounds 2 ounces yesterday. CHAIRMAN GODSHALL: It was yesterday, she's not here today? CHAIRMAN PRESTON: I didn't mean to say it, the child was born. CHAIRMAN GODSHALL: Representative Godshall, Montgomery County. MR. FITZSIMMONS: Collin Fitzsimmons, Republican Executive Director, Consumer Affairs Committee. MS. RUMSEY: Amanda Rumsey, Republican Counsel, Consumer Affairs Committee. REPRESENTATIVE PICKETT: Tina Pickett, Bradford, Sullivan, and Susquehanna Counties. REPRESENTATIVE DELOZIER: Sheryl Delozier, Cumberland County, 88th District. REPRESENTATIVE PAYNE: John Payne, 106th District, south eastern Dauphin County. REPRESENTATIVE BARBIN: Bryan Barbin, Cambria County. REPRESENTATIVE KOTIK: Nick Kotik, 45th District, Allegheny County. REPRESENTATIVE MATZIE: Rob Matzie, 16th District, Beaver and Allegheny Counties. REPRESENTATIVE ELLIS: Brian Ellis, 11th District, Butler County. CHAIRMAN GODSHALL: Okay, thank you. The purpose of today's meeting is to provide an overview of the natural gas industry for the education and benefit of Committee members, staffs, and members of the public. The natural gas industry involves a coordinated process starting with the drilling and productions of natural gas and ending with the delivery of this clean, cost-efficient fuel source to homes and businesses across the Commonwealth. Today we will hear comments from presenters representing all areas of the industry: Gas drilling companies, competitive suppliers, and distribution companies. I'm certain that the information presented today will be informational and provide valuable insight into this complex industry. There will be an opportunity for questions following each presentation, and I ask that members please hold their questions until that time. I would like to get started with Chairman Preston; do you have any comments? CHAIRMAN PRESTON: Let's get this on. CHAIRMAN GODSHALL: Let's get going. Okay, I agree with you. The first panel we have today is Terry Fitzpatrick, President and CEO of the Energy Association of Pennsylvania; Peter Trufahnestock, State Legislative and Regulatory Affairs Consultant for Philadelphia Gas Works; Teresa Ringenbach, Director Energy, Retail Energy Supply Association. Gentlemen, it's all yours – and ladies. MS. RINGENBACH: I am going to start out today. I am Teresa Ringenbach, I represent the Retail Energy Supply Association. I am also the Manager of Government and Regulatory Affairs for Direct Energy. While I know many of you are familiar with RESA on the electric side, what is not so familiar to a lot of people about RESA is that we actually represent gas suppliers, too, so residential, small commercial, and big industrial customers on the gas side. CHAIRMAN PRESTON: Not to interrupt to, but I know you may assume that a lot of us are because you have been to us before, but 50% of our members are new, so a lot of them are hearing the nomenclature and the acronyms you are using, it's kind of new to them, and I would appreciate if sometimes you would elaborate on that. MS. RINGENBACH: So the Retail Energy Supply Association is actually a group of suppliers who represent everything from Fortune 500 and Global 500 companies all the way down to Liberty Power, which is a small mom and pop Hispanic shop. So, our purpose is to promote competitive markets for customers to be able to have choice in energy and commodities. In Pennsylvania, RESA has been most active for electric competition, in Pennsylvania you can choose who your electricity supplier is and the utility will deliver it on their wires, on the gas side it's the same thing. The supplier will actually deliver the molecules, but we use the utilities pipes. So, we work together with the utilities. The first slide that I brought up was just some common terms that you are going to hear in the gas industry. Wellhead, where it comes out of the ground; pipeline, which is the really big pipes that bring it to the utility; and then burnertip, which is when you hit where the utilities pipes bring everything down into those little pipes that bring it to your house, that is called the "city gate". So we bring it to that city gate where it enters the utility and then it goes down into the little pipes and then goes to your house, and that is where the utility takes over. Customers can bring their molecules in with a supplier in two different ways. You have the transport customers. These are your big steel mills, the big manufacturing companies, they actually don't always need a supplier. They can bring it right from that big pipe all the way into the utility. A lot of times they just use the suppliers to negotiate with the market. And then you have choice. When you get down to choice, you are talking about residential and small commercial customers. So, the little guys who would go out, look for an offer from a supplier, and negotiate that price either based on what is already available or they might aggregate a group of customers to negotiate a price. Gas choice, when you talk about residential shopping in some form, there are 22 States that allow residential shopping. The most active program in Pennsylvania to date is behind Columbia Gas of Pennsylvania, but over the past year the Retail Energy Supply Association, RESA, Direct Energy and other have actually been working with the Public Utility Commission to make changes that will allow gas competition to take off like it has on the electric side in the State. A lot of changes won't actually take effect until 2012, but the cases are done. So, in terms of looking at, why are we seeing so much switching on the electric side versus the gas side, I say wait until 2012 when these changes really kick in. A customer who purchases the molecules from a supplier, as I said, they still get their gas on the pipes from the distribution utilities. When you talk about safety, pipeline leaks, all of that still flows through the utility. No matter what, the customer always pays what is called the distribution side of their bill, the pipes. The thing that distributes it to your house all remains within the realm of the utility and that is regulated by the Commission. The last point on this slide that I want to make clear is often times people get a little confused about how does a supplier fit into this system? Just like the utility has those big, big pipelines, they have contracts, they are regulated by the Federal Energy Regulatory Commission, suppliers have contracts like that, too. Remember we talked about the city gate? Where it hits the utility system? Everything before it gets to the city gate the utilities and the suppliers are on level playing fields. We have to have contracts in place to bring it from the big pipes, we have to go buy it in the market, all of that takes place. We actually buy, we have contracts with local producers so when you think about Marcellus Shale and the local production within the State that doesn't necessarily come from the Gulf Coast or come from the west coast on those big pipes. We can buy local production, too. This is the old model, this is how it used to be. You had your producer, the wellhead where it comes out of the ground; you had the big interstate pipeline; you had the local utility that bought and sold the gas from the upper stream people; and then you had the distribution side that brought it to your house. Today, it works like this. You have your producer and your pipeline, like I just talked about.

Load more

  66

Copy Link