EXHIBIT D-6
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
HARRISBURG, PA 17105-32765
Public Meeting held July 13, 2000
Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
Nora Mead Brownell
Aaron Wilson, Jr.
Terrance J. Fitzpatrick
In the Matter of the Application of
Columbia Gas of Pennsylvania, Inc.
for a Certificate of Public Convenience
Evidencing Approval under Section Docket No.
1102(a)(3) of the Public Utility Code A-120700F0003
of the Transfer from Columbia Energy
Group to NiSource Inc. Or New NiSource
Inc., by Merger, of the Title to and
Possession and Use of All Property of
Columbia Gas of Pennsylvania, Inc.
ORDER
BY THE COMMISSION:
We adopt as our action the Recommended Decision of Administrative Law
Judge George M. Kashi dated June 28, 2000; THEREFORE,
IT IS ORDERED:
1. That Columbia shall not be permitted to increase base rates prior
to January 1, 2004, as defined in Section 2211(a) of the Public Utility Code and
subject to the exceptions set forth in Section 2211(d) of the Public Utility
Code. Each other Joint Petitioner agrees that it will not file a complaint
seeking a reduction in Columbia's base rates or otherwise seek or support any
reduction in Columbia's base rates prior to January 1, 2004. The Commission will
not institute, on its own motion, an investigation into the base rates of
Columbia prior to January 1, 2004. Nothing contained herein shall prohibit the
deferral or recovery of consumer education costs pursuant to Sections 2206(e)
and 2211(d) of the Public Utility Code to the extent such consumer education
costs are not recovered as the result of the Company's restructuring proceeding
at R-00994781.
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2. That Columbia shall not seek recovery, in any future rate
proceeding, of costs incurred to close the Merger whether incurred directly or
through a service corporation. Costs to close the Merger shall include filing
fees, accountants' fees, legal fees, shareholder communication and proxy
solicitation expenses, stock exchange listing fees, printing and engraving of
stock certificates, investment banking fees and expenses, underwriting fees and
expenses associated with issuances of securities to consummate the Merger, legal
and consulting fees associated with obtaining regulatory approvals and executive
severance costs. Columbia will employ normal accounting procedures to capitalize
or expense all other expenditures incurred prior to and after the closing. The
Joint Petitioners may challenge the recovery of charges from affiliates in
future rate proceedings, on the grounds that such charges result from the
affiliate's use of accounting practices or procedures which could not have been
properly employed by Columbia under this Settlement.
3. That Columbia shall be permitted to record on its books of
account a ratable portion of the acquisition premium resulting from the Merger;
provided, however, the recording of any amount for such acquisition premium on
Columbia's books of account shall have no effect on the ratemaking treatment of
such amount in future rate proceedings. Columbia foregoes any claim for recovery
of the acquisition premium in any future rate proceeding. Columbia agrees that
any effect on its capital structure or that of its parent Columbia Energy
resulting from recording the acquisition premium on either Company's books of
account will have no effect on, and will be removed from, the capital structure
used for ratemaking purposes.
4. That Columbia shall maintain books and records, continuing
property records and depreciation records an a basis separate from its parent
and affiliates. The books and records and personnel of Columbia shall be
accessible to the Commission and the Joint Petitioners to the extent provided by
law during reasonable business hours. If the books and records of its parent
company or of any other company within the system created by the merging
companies become relevant to the jurisdictional rates or tariffed services of
Columbia or relevant to material and specific code of conduct complaints brought
to the attention of the Commission, or upon a complaint filed at the Commission
necessitating their view, such relevant books and records as required by the
Commission shall also be made accessible to the Commission and the complaining
party through photocopying or electronically where practicable or for review at
the location where they are kept.
5. That Columbia shall present a class cost of service study in its
next base rate proceeding reflecting the separate records referenced in
Paragraph 13 of this Settlement.
6. That Columbia shall file a tariff supplement, designed to
encourage distributed generation for residential customers, commercial
customers, and industrial customers who do not qualify for service under Rate
CDS - Cogeneration Distribution Service, by November 1, 2000. Columbia agrees to
meet with the parties for discussion of such a tariff supplement prior to making
that filing. All Joint Petitioners reserve the right to file complaints and/or
comments with regard to such tariff supplement. NiSource and Columbia agree to
conduct, with the cooperation of OCA, OTS and OSBA, a distributed generation
demonstration project at one residential and one small commercial location in
Columbia's service territory. The project shall commence approximately three
months after the later of the Commission's approval of the revisions to the
tariff or the availability of necessary technology. It is expected that a fuel
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cell or other gas consuming equipment used to generate electricity shall be
installed at one residential and one small commercial location. The project
shall run for a period of one year. NiSource and Columbia shall file a report on
the project results within three months of the end of the one year period.
7. That the record in this proceeding includes Columbia's
Application, Columbia's Direct Testimony and accompanying exhibits, Columbia's
Supplemental Direct Testimony and Dr. Hieronymous's study of the effects of the
Merger on competition as filed with FERC. The Joint Petitioners agree that the
Application, testimony, and exhibits as listed in Appendix "A" of the Joint
Petition be and are hereby stipulated into the record in this proceeding.
8. That Columbia's headquarters shall remain in Pittsburgh,
Pennsylvania and its principal corporate officers shall continue to be stationed
in Pennsylvania for a period of at least five (5) years; provided however, that
nothing in the Settlement will be construed to prohibit such officers from
holding positions as officers or directors of affiliated corporations. Columbia
shall maintain an organization and staffing plan which provides for adequate,
efficient staffing of the utility business and is designed to protect against
the loss of talent from the regulated operations. Before laying off or
terminating more than one percent (1%) of its non-management workforce in one
year during the three-year period following completion of the Merger, Columbia
shall file a report with the Commission containing sufficient information to
show that with the reduction of employees, Columbia will still be able to ensure
the safety and reliability of natural gas distribution service to all retail gas
customers, as provided in standards adopted by the Commission pursuant to its
statutory authority.
9. That Columbia reiterates its commitment to expansion of its
Customer Assistance Program in accordance with the Joint Petition for Settlement
of Winter Heating Season Rates and of Universal Service Program Extension, as
approved by Order of the Commission dated October 15, 1999, and the Joint
Petition for Settlement of Restructuring Filing, as approved by Order of the
Commission dated December 17, 1999, both at Docket No, R-00994781.
10. That NiSource considers Columbia a core business asset; that it
intends to retain Columbia; and that it has no plans to dispose of Columbia to a
third party following the Merger.
11. That following the Merger, the combined company will be part of a
registered holding company pursuant to the 1935 Act and the regulations of the
Securities and Exchange Commission ("SEC") adopted thereunder. There shall
therefore be no change in the procedures governing accounting for affiliate
transactions which procedures currently must comply with the regulations of the
SEC concerning accounting and pricing protocols. To the extent that Columbia
enters into any new Joint Petition for Settlements with any affiliated
interests, it will seek the necessary approvals from the Commission under
Chapter 21 of the Public Utility Code.
12. That Columbia shall not guarantee the debt or credit instruments
of NiSource or Columbia Energy or any subsidiary of NiSource or Columbia Energy
not regulated by a state public utility commission or FERC ("unregulated
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subsidiaries") nor shall Columbia permit its property to be used to secure loans
or credit instruments of NiSource, Columbia Energy or any of their unregulated
subsidiaries without the approval of the Commission.
13. That Columbia shall not lend or provide credit to NiSource or
Columbia Energy or any other unregulated subsidiaries without approval of the
Commission. Columbia may participate in a credit facility (such as a money fund
for short term debt) with NiSource and/or Columbia Energy and their regulated
subsidiaries that complies with the rules of the SEC.
14. That Columbia and NiSource agree that all affiliated companies,
including direct and indirect subsidiaries of NiSource, shall be subject to the
Commission's Code of Conduct to the extent they engage in activities within the
scope of such rules.
15. That Columbia and NiSource shall not seek to overturn, reverse,
set aside, change or enjoin, whether through appeal or the initiation or
maintenance of any action in any forum, a decision or order of the Commission
that pertains to recovery, disallowance, allowance, deferral or ratemaking
treatment of any expense, charge, cost, or allocation incurred or accrued by
Columbia as a result of a contract, Joint Petition for Settlement, arrangement,
or transaction with any affiliate, associate, holding, mutual service or
subsidiary company on the basis that such expense, charge, cost, or allocation
has itself been filed with or approved by the SEC, or was incurred pursuant to a
contract, arrangement, Joint Petition for Settlement or allocation which was
filed with or approved by the SEC.
16. That Columbia shall work with the OCA in the development of an
OCA Customer Choice Shopping Guide which compares prices and terms of service
offered to residential customers with Columbia's price to compare. Columbia
agrees to provide information that it is authorized to release and necessary
assistance to the OCA on at least a quarterly basis. Any Shopping Guide that is
developed will state that it is prepared by the OCA. The use and dissemination
of any Shopping Guide developed will be through the OCA. Columbia may distribute
any Shopping Guide developed to its customers after consultation with the OCA
but is not required to distribute the Shopping Guide as part of this Settlement.
17. That Columbia and NiSource shall continue Columbia's historic
levels of charitable contributions and support for civic efforts for at least
five years following the closing of the Merger. Such contributions shall be of
the same nature and be made to organizations serving the general geographical
locations as have been made in the past.
18. That Columbia and NiSource agree that they will not seek recovery
of any increase in the cost of capital to Columbia that results from the Merger.
19. That Columbia shall strive to improve customer service following
completion of the Merger. Columbia shall track the level of its performance for
a period of three years following the Merger and to compare such performance to
Columbia's historic performance in the following areas: (1) percent of calls
answered within thirty seconds, (2) average busy-out rate, (3) percent of meters
read within the parameters of Chapter 56 of the Pennsylvania Code, and (4)
percent of emergency calls responded to in less than one hour (or less if
required by the Commission). Columbia shall file annual reports with the
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Commission for that three-year period providing the comparison of actual to
historic performance. Columbia shall identify in the reports any service
innovations or best practices implemented following closing of the Merger. Such
reports shall be filed three months after the end of each one-year period and
will be provided to any Joint Petitioner or Joint Petitioners upon request. In
the event that Columbia's performance in any of the above-mentioned areas
declines by 10% or more following the completion of the Merger, falls below any
standard prescribed by the Commission or falls below the average as reported by
the Commission for Pennsylvania natural gas distribution companies subject to
Section 1307(f) of the Public Utility Code, Columbia will meet with any one or
more of the Joint Petitioners, upon the request of such joint Petitioner or
Joint Petitioners, to discuss whether a remedy is needed, and if so, what remedy
is appropriate and how it should be implemented. The Joint Petitioners retain
their right to file a complaint in accordance with Commission regulations for
any alleged violation of a tariff, regulation, Commission order, or provision of
the Public Utility Code. Nothing herein is intended to limit any authority of
the Commission, or any of its bureaus, to perform their duties or make
recommendations concerning Columbia's performance in any of the areas enumerated
above.
20. That in addition to items in subparagraphs (1) through (4)
enumerated in paragraph 19 above, Columbia shall keep the following statistics
for three years following Merger and will also compare those statistics to its
historic experience:
(5) Number of accidental interruptions of service involving more then
one thousand (1,000) customers for a duration of more than twelve (12) hours.
(6) Number of fines for violations of environmental, employee health
and safety, pipeline safety, or employment laws and regulations.
(7) Number of preventable vehicle accidents.
(8) Number of lost time injuries.
(9) Ratio of meters actually read to those scheduled to be read
during a cycle.
(10) Number of overtime hours worked.
(11) Number of incidents of facilities damage due to mismarking of
facilities.
(12) Ratio of footage of plastic pipe to total footage of pipe.
(13) Number of service orders worked per service person.
These statistics shall be included in the above-referenced annual reports to the
Commission. In the event that (a) the statistics described in subparagraphs (5)
or (6) increase by more than two (2) for any given year, (b) the statistics
described in subparagraphs (7) or (8) increase by more than twenty-five percent
(25%), (c) the statistics described in subparagraphs (9) or (12) decrease by
more than ten percent (10%), or (d) the statistics described in subparagraph
(11) increase by more than ten percent (10%), Columbia will meet with any one or
more of the Joint Petitioners, upon the request of such Joint Petitioner or
Joint Petitioners, to discuss whether a remedy is needed, and if so, what remedy
is appropriate and how it should be implemented. Although Columbia has agreed to
report the statistics described in subparagraphs (10) and (13) above, it makes
no commitment to hold discussions with respect to those items. The Joint
Petitioners retain their right to file a complaint in accordance with Commission
regulations for any alleged violation of a tariff, regulation, Commission order,
or provision of the Public Utility Code. Nothing herein is intended to limit any
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authority of the Commission, or any of its bureaus, to perform their duties or
make recommendations concerning Columbia's performance in any of the areas
enumerated above.
21. That Columbia shall pass through all gas costs savings achieved
as a result of the Merger to customers through the Purchased Gas Cost Rider.
22. That the consummation and closing of the Merger shall constitute
conditions precedent to the Settlement and all obligations of the Joint
Petitioners hereunder, and Columbia and the other Joint Petitioners shall not be
bound by the terms hereof until such time as the Merger is closed.
23. That following completion of the Merger, the combined company
will maintain a presence in PECO Energy Company's electric choice program and
Columbia's natural gas choice program, either through an affiliated company or a
contractual arrangement with a third party, far a period of at least one year.
24. That should the Commission modify the Settlement, then any Joint
Petitioner may elect to withdraw from this Settlement and may proceed with
litigation and, in such event, this Settlement shall be void and of no effect.
Such election to withdraw must be made in writing, filed with the Secretary of
the Commission and served upon all Joint Petitioners within five (5) business
days after the entry of an order modifying the Settlement. This Settlement is
proposed by the Joint Petitioners to settle all issues in the instant
proceeding. The Settlement is made without any admission against, or prejudice
to, any position which any Joint Petitioner to this Settlement may adopt in the
event of any subsequent litigation of this proceeding or any other proceeding
unless that proceeding involves Columbia to the extent matters resolved by this
Settlement are an issue in that Columbia proceeding. If the Commission does not
approve the Settlement and the proceedings continue to further hearings, the
Joint Petitioners reserve their respective rights to conduct full
cross-examination and briefing.
25. That this Settlement shall not constitute or be cited as
controlling precedent in any other proceeding, including any other proceeding
involving a merger or acquisition involving another Pennsylvania public utility,
with the exception that the Settlement, if adopted, will bind the Joint
Petitioners in any future proceeding involving Columbia to the extent matters
resolved by this Settlement are an issue in such proceeding.
26. That the Joint Petitioners waive their rights to file briefs or
exceptions.
BY THE COMMISSION,
/s/ James J. McNulty
James J. McNulty
Secretary
(SEAL)
ORDER ADOPTED: July 13, 2000
ORDER ENTERED: JUL 14 2000
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PENNSYLVANIA
PUBLIC UTILITY COMMISSION
IN THE MATTER OF THE APPLICATION OF: A-120700 F0003
Application of Columbia Gas of Pennsylvania, Inc. for Approval of the Transfer
from Columbia Energy Group to NiSource Inc. or New NiSource Inc., by Merger,
of the Title to and Possession and Use of All Property of Columbia Gas
of Pennsylvania, Inc.
The Pennsylvania Public Utility Commission hereby certifies that after
an investigation and/or hearing, it has, by its report and order made and
entered, found and determined that the granting of the application is necessary
or proper for the service, accommodation, convenience and safety of the public
and hereby issues to the applicant this CERTIFICATE OF PUBLIC CONVENIENCE
evidencing the Commission's approval.
In Witness Whereof, The PENNSYLVANIA PUBLIC UTILITY
COMMISSION has caused these presents to be signed and
sealed, and duly attested by its Secretary at its office in
the city of Harrisburg this 13th day of July, 2000.
SECRETARY
[SEAL]
