Steptoe & Johnson: Pennsylvania PUC Clarifies Public Utility Criteria

Steptoe & Johnson: Pennsylvania PUC Clarifies Public Utility Criteria

Continuing developments in the Laser Northeast gathering proceeding impact the regulation of gathering and midstream companies operating in Pennsylvania.  

By Kurt L. Krieger


Laser Northeast proposes to construct a gathering system in Pennsylvania extending into New York where it is to interconnect with an interstate natural gas pipeline.  Its purpose is to provide gathering service to producers. The Federal Energy Regulatory Commission ("FERC") previously agreed that the system performs a gathering function under FERC's applicable test.  In Pennsylvania, Laser is seeking "public utility" status under Pennsylvania law, which, if granted, would also provide Laser with the power of eminent domain. 


  • August 25, 2011, the Pennsylvania Public Utility Commission ("PaPUC") provided additional clarification in the Laser Northeast Gathering Company, LLC ("Laser") proceeding regarding the criteria used to determine when a natural gas gathering and midstream company's activities constitute service "for the public" potentially causing that company to be subject to "public utility" regulation by the PaPUC.  
  • In the August 25, 2011 Commission order, the Commission denied a request for reconsideration of its earlier June 2011 decision holding that Laser's activities met the definition of "public utility."  
  • The Commission reiterated that not all gathering and transportation service providers will be considered public utilities subject to the Commission's jurisdiction.  
  • Commission has no intention of seeking to impose economic regulation on gathering and transportation service providers as a general matter.

Key Point of the Clarification: 

[T]he absence of a finding of an intent to serve all producers that request service would be dispositive in determining that an entity is not a public utility.  Similarly, a gatherer that uses contracts to determine which producers are privileged to demand service would likewise not be a public utility.  A seminal tenet of public utility status is holding oneself out as offering service to "the public," and both of the circumstances set forth . . . remove an entity from providing service to "the public."

Read the full analysis

Should you have any questions about this alert, please contact Kurt Krieger.  For general questions involving energy law, please contact the Energy Team at Steptoe & Johnson PLLC.

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