Press Release

PUC to Investigate Reliability of Scranton Area Steam Heat Provider

Published on 2/9/2006

Filed under: Gas

HARRISBURG – After a loss of contracted natural gas service affected the company’s ability to ensure reliable service, the Pennsylvania Public Utility Commission today launched an investigation into the viability of Community Central Energy Corp.

          “The Commission has serious concerns about the safety of the consumers who rely on Community Central Energy for heat this winter,” said Commission Vice Chairman James Cawley in a motion. “The inability of this company to maintain a natural gas supplier and its ongoing financial difficulties has prompted the Commission to take a serious look at the company’s operations and consumers’ options.”

          The Commission voted unanimously to investigate the operations of the company and the options for consumers. Commissioner Terrance Fitzpatrick also made a statement on the issue. In ratifying the order today, the Commission is not requiring the company to initiate abandonment of service proceedings. Rather, the commission is initiating an investigation to determine how best to provide reliable heating service to the affected customers in the Scranton area.

          The investigation will include the following:

• The alleged failure of Community Central Energy to pay its contracted natural gas supplier, Amerada Hess, as well as the impact of any customer’s failure to pay and any failure by the company to raise rates to recover costs;
• The ability of Community Central Energy to pay its natural gas bills from existing revenues;
• The ability and cost to consumers to switch to another utility service for heat and the ability to complete any switch prior to the next heating season;
• The status of any current plans for conversion by any existing customers; and
• Whether, given its existing operational constraints, customer base and cost structure, Community Central Energy can continue to meet its financial obligations.

          On Feb. 6, 2005, the Commission issued an Emergency Order directing PG Energy to provide continuous natural gas service to Community Central Energy so the Scranton company could continue to supply heat to its customers. The order directed PG Energy to provide natural gas to Community Central Energy so the company could maintain steam heat service to its customers.

          PG Energy stepped in as a natural gas supplier for Community Central Energy on Feb. 1, 2005, after Amerada Hess discontinued service for alleged lack of payment. The company’s back-up oil facility is not operable. Through its Emergency Order, the commission provided important assurances to PG Energy that it will be allowed to file for cost recovery for the natural gas supplied to Community Central Energy.

           “PG Energy acted in the best interest of the community by providing back-up natural gas supply service while at the same time acting to protect its retail customers’ service,” Vice Chairman Cawley said. “I appreciate the efforts of PG Energy to quickly acquire back-up supplies, thus enabling Community Central Energy to provide continuous steam-heating service for its customers this winter period.”

           Community Central Energy provides heat for about 30 industrial, commercial, institutional and residential entities. The company uses natural gas to generate steam for its heating customers. On Jan. 27, 2006, the Commission approved an increase for the company’s steam cost rates from $39.63 to $56.01 per thousand pounds of steam or 41.3 percent. By law, Community Central Energy is permitted to pass on to customers natural gas costs related to powering the steam generation plan on to customers.

           The PUC regulates four steam heat companies in the state. Generally, steam heat is produced in main generation plans by heating water to its boiling point, and then distributing the steam heat to users through a series of underground pipes.

           The Pennsylvania Public Utility Commission ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as responsible stewards of competition. For more information about the PUC and additional press releases, visit our website at www.puc.state.pa.us.

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Docket No.      M-00069136

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