(a) Supplier of last resort.--

(1) After the effective date of this chapter, the natural gas distribution company shall serve as the supplier of last resort for residential, small commercial, small industrial and essential human needs customers and any other customer classes determined by the commission in the natural gas distribution company's restructuring proceeding until such time as the commission, pursuant to this section, approves an alternative supplier or suppliers to provide such services to any or all of the natural gas distribution company's customers.

(2) For purposes of this section, a supplier of last resort is a natural gas distribution company or natural gas supplier which is designated by the commission to provide natural gas supply service with respect to one or more of the following services:

(i) natural gas supply services to those customers who have not chosen an alternative natural gas supplier or who choose to be served by their supplier of last resort;

(ii) natural gas supply services to those customers who are refused supply service from a natural gas supplier; or

(iii) natural gas supply services to those customers whose natural gas supplier has failed to deliver its requirements.

No customer shall have more than one supplier of last resort designated for any of the services set forth in this paragraph.

(b) Consumer protection.--Service by the supplier of last resort shall be subject to all consumer protection standards, including those contained in 52 Pa. Code Ch. 56 (relating to standards and billing practices for residential utility service) and to all universal service obligations.

(c) Natural gas distribution company.--The natural gas distribution company shall deliver natural gas to the extent that it is provided by all natural gas suppliers, or suppliers of last resort, as the case may be, in accordance with the natural gas distribution company's tariff.

(d) Standards of service.--Consistent with the standards set forth in section 1501 (relating to character of service and facilities) and applicable orders of the commission, a supplier of last resort under subsection (a)(2)(iii) shall provide sufficient supplies as to quantity, quality, pressure and location to meet the operational reliability requirements of the natural gas distribution company's system, including, but not limited to, a failure of one or more natural gas suppliers to:

(1) supply natural gas to their retail gas customers in conformance with their contractual obligations to such customers; or

(2) satisfy applicable reliability standards and obligations.

(e) Discontinuation of service.--The natural gas distribution company shall continue providing services as the supplier of last resort to all of its customers for all of the natural gas supply services described in subsection (a)(2) unless, at its discretion, it requests and receives commission approval to discontinue providing one or more such supplier of last resort obligation. In approving such a petition, the commission shall also approve another party as the alternative supplier of last resort for each customer or customer group for which the natural gas distribution company no longer provides such natural gas supply services.

(f) Regulations.--The commission shall promulgate regulations setting forth the standards for approving an alternative supplier of last resort consistent with the provisions of this title, including a mechanism to ensure that the rates charged by any alternate supplier of last resort are just and reasonable.

(g) Organized labor.--During the five-year period following the effective date of this chapter, approval of an alternative supplier of last resort pursuant to subsection (e) shall not be granted unless the entity designated by the commission to succeed the natural gas distribution company in the provision of service to these customers agrees to recognize relevant union and collective bargaining agreements of the natural gas distribution company then in place.

(h) Petition to become supplier of last resort.--After the five-year period following the effective date of this chapter, any party may petition the commission to become the supplier of last resort to some or all customers except for those customers identified in subsection (a)(2)(i).

(i) Notice required prior to market exit.--

(1) A natural gas supplier may not exit the market without providing notice as determined by the commission in the restructuring proceeding of the natural gas distribution company to its customers, the supplier of last resort and the natural gas distribution company.

(2) If firm gas supply contracts with Pennsylvania natural gas producers or storage or transportation capacity contracts used by the natural gas supplier to serve such retail gas customers were either assigned or released to the natural gas supplier or constitute capacity which was acquired by the natural gas supplier as the result of nonrenewal of a storage or transportation capacity contract previously held by the natural gas distribution company, the natural gas supplier shall offer the supplier of last resort or successor natural gas supplier a right of first refusal to utilize such Pennsylvania supply contracts or storage or transportation capacity contracts at its contract cost as long as needed to serve those customers.

(3) If the storage or transportation capacity contracts held by the natural gas supplier were acquired in another manner, and there was not sufficient notice given to the supplier of last resort and the natural gas distribution company, or if there is not alternative storage or transportation capacity available which is operationally sufficient to serve the market the natural gas supplier was serving, then the supplier of last resort shall be provided with a right to use such storage or transportation capacity as designated by the natural gas supplier, at the contract cost, until the supplier of last resort is able to acquire replacement capacity sufficient to serve its customers using reasonable and diligent efforts to do so.

(4) If a dispute arises under this subsection, the aggrieved party may file a complaint with the commission for resolution within 45 days.

(j) Duty involving lost customers.--To the extent that a natural gas supplier loses retail gas customers such that its capacity requirements to a natural gas distribution company are reduced below the level established by the commission for such purpose in the natural gas distribution company's restructuring proceeding, the natural gas supplier shall have the same obligations set forth in subsection (i).

(k) Rate after service discontinued.--In the event the natural gas supplier discontinues service or defaults before its contract with the customer expires, the retail gas customer shall be served by the supplier of last resort at the commission-approved supplier of last resort rate commencing with the next billing cycle. However, the retail gas customer shall continue to be charged the rate the customer negotiated with the discontinuing or defaulting natural gas supplier for the remainder of the billing cycle. Any difference between the cost incurred by the supplier of last resort and the amount payable by the retail gas customer shall be recovered from the natural gas supplier or from the bond or other security provided by the natural gas supplier without recourse to any retail gas customer not otherwise contractually committed for the difference.

Cross References. Section 2207 is referred to in section 2208 of this title.