Background:
Based on this year's annual review and past interaction and monitoring by Department staff, the Public Service Commission took action to address concerns about Corning Natural Gas' preparedness to provide adequate service to approximately 14,500 gas customers this winter. Staff's concerns stem from the combination of significantly higher gas costs, the company's cash-flow situation, its failure to procure fixed-price commodity hedges, and its failure to adequately fill storage on a timely basis. As a result of these factors, staff is also concerned about the reliability of service, and estimates that Corning customers will see winter bills that are approximately 55% higher than last year, compared to statewide average bill impacts of approximately 30-45%.  

Steps to Ensure Consumers are Protected: In response to staff's concerns, the PSC made the following findings and took the following actions to ensure customers are protected: · To address the primary and immediate concern regarding adequate gas supply, the Commission initiated a proceeding to determine if one or more New York State gas corporations can provide gas supply to Corning on a mutual-aid assistance basis. The Commission prefers that Corning enter into a voluntary mutual aid agreement as soon as possible to avoid the need for a Commission proceeding. · Concerns about Corning's access to adequate supplies stem from a number of factors, including the company's apparent failure to adhere to its own plan for securing natural gas supplies, as well as the procurement practices encouraged by the Commission's 1998 Statement of Policy on Gas Procurement. The guidelines in the Commission's policy statement were developed to shield customers from price volatility and, had they been followed by Corning, the cost of natural gas reflected in customers' bills this winter would likely be lower than current projections. · Staff of the Department of Public Service is investigating the management of Corning Natural Gas to identify steps that must be taken to better manage the company's fiscal operations and practices for securing natural gas supplies. The Commission ordered Corning to show cause why a temporary operator should not be appointed.