BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION Petition of UGI Penn Natural Gas Inc. for a Finding that Structures to Shelter Pipeline Facilities in the Borough of West Wyoming, Luzerne County, To the Extent Considered To be Buildings under Local Zoning Rules, Are Reasonably Necessary for The Convenience or Welfare of the Public : : : : : : : P-2013-2347105 INITIAL DECISION Before Elizabeth H. Barnes Administrative Law Judge HISTORY OF THE PROCEEDING UGI Penn Natural Gas, Inc. (PNG or the Company) is a natural gas distribution company operating in central and northeastern Pennsylvania. PNG is affiliated with and controlled by UGI Corporation, a holding company that also owns and controls other energyrelated firms ("UGI Corp.").1 PNG meets the definition of a "public utility" and a "natural gas company" as defined in Sections 102 and 2202 of the Pennsylvania Public Utility Code, 66 Pa.C.S. ?? 102, 2202. PNG provides natural gas services to approximately 160,000 customers throughout its certificated service territory, which includes all or portions of the following Pennsylvania counties: Clinton, Columbia, Lackawanna, Luzerne, Lycoming, Montour, Northumberland, Pike, Snyder, Susquehanna, Union, Wayne, and Wyoming Counties. PNG's facilities are interconnected with the interstate pipeline systems of Tennessee Gas Pipeline Company ("Tennessee"), Transcontinental Gas Pipe Line Corporation ("Transco") and Columbia Gas Transmission Corporation ("Columbia"), the distribution system of UGI Central Penn Gas, Inc. and local gas gathering facilities. 1 UGI Corp. owns and controls: UGI LNG, Inc., UGI Central Penn Gas Company, UGI Utilities, Inc., and UGI Storage Company. On February 8, 2013, PNG filed a petition requesting a finding that the proposed structures to shelter certain pipeline equipment planned to be constructed in the Borough of West Wyoming, Luzerne County are reasonably necessary for the convenience or welfare of the public, and therefore, exempt from local zoning ordinances (Petition). On February 28, 2013, the Borough of West Wyoming filed an Answer and New Matter to the Petition requesting the Commission find that the proposed structures are buildings within the meaning of buildings defined in local Luzerne County Zoning Codes and Regulations; and that therefore, the proper venue to determine the location of the buildings is under the authority of the Luzerne County Zoning Authority. PNG filed an Answer to the Borough of West Wyoming's New Matter on March 21, 2013. Individual petitions to intervene were filed by: Nancy Dolan, Adrienne Panuski, Lynn Dolan, Judy Hardik, Maria Dubiel, Janice Metzo, Stephen Simko, Lawrence Dellegrotto, Ruth Likowski, Frances O'Shea, and Robert Kovitch (collectively "Intervenors"). The petitions to intervene were granted and the pro se individuals were given intervenor status. On March 22, 2013, PNG served written Direct Testimony of J.P. Ghio (PNG Statement No. 1). A prehearing conference was held on March 27, 2013. A Scheduling Order was issued on April 10, 2013, and a public input hearing was held on May 2, 2013, in the Borough of West Wyoming. Sixteen individuals testified at the public input hearing including: Barbara Reggie, Raymond Metzo, Anita Panuski, Audrey Simpson, Gerard Pancovsky, Fred Murray, Scott Cannon, Ray Gustave, Janet Wasson, Angie Fanelli, William Moore, Maureen Matiska, Jim Spak, Charles Umphred, Frank Moranski, and Beverly Moranski. The public input hearing resulted in a 126 page transcript with no exhibits. On May 17, 2013, written direct testimonies on behalf of the Intervenors were served. PNG served the written Rebuttal Testimony of J.P. Ghio (PNG Statement No. 1-R) on May 31, 2013. PNG filed a Motion in Limine on May 31, 2013, which was granted in part at the evidentiary hearing held on June 3 and 4, 2013. At the hearing, the parties conducted cross- 2 examination and submitted testimonies and exhibits that were admitted into the record. A 240 page transcript of the hearing with exhibits was made part of the record. Main Briefs were submitted on June 21, 2013 and Reply Briefs were submitted on or about June 28, 2013. The record closed on July 1, 2013. The issue of whether the proposed structures to shelter certain pipeline facilities are reasonably necessary for the convenience or welfare of the public is ripe for a decision. FINDINGS OF FACT 1. PNG is a "public utility" and a "natural gas company" as defined in Sections 102 and 2202 of the Pennsylvania Public Utility Code, 66 Pa.C.S. ?? 102, 2202. (PNG Exhibit No. 1) 1. 2. PNG distributes natural gas and provides services to approximately 160,000 customers throughout its certificated service territory, which includes all or portions of the following Pennsylvania counties: Clinton, Columbia, Lackawanna, Luzerne, Lycoming, Montour, Northumberland, Pike, Snyder, Susquehanna, Union, Wayne, and Wyoming Counties. (PNG Exhibit No. 1) 2. 3. PNG plans to construct a new gate station in West Wyoming Borough ("West Wyoming Gate Station"). (PNG Statement No. 1, pp. 4-5) 3. 4. The West Wyoming Gate Station will interconnect the future Auburn II gathering line (the "Auburn II Line") that will be owned and operated by UGI Energy Services, Inc. ("UGIES") with an existing pipeline owned and operated by Transcontinental Pipe Line Company, LLC ("Transco"). 4. 5. The West Wyoming Gate Station will provide an interconnection that will facilitate the delivery of lower-cost, locally-produced natural gas delivered by the Auburn II Line into the Transco system, a portion of which will subsequently be redelivered to PNG through the Transco system pursuant to two gas supply contracts between PNG and UGIES ("Auburn II 3 Contracts"), which were approved in PNG's 2012 purchased gas cost proceeding at Docket No. R-2012-230221 (Order entered November 8, 2012). (PNG Statement No. 1, p. 5) 5. 6. Through the Auburn II Contracts and the construction of the West Wyoming Gate Station, PNG is able to replace Transco pipeline capacity from December 1, 2013 through October 31, 2020, resulting in substantial savings of approximately $11 million in Transco demand charges that would otherwise be recovered from PNG customers. (PNG Statement No. 1, pp. 8-9) 6. 7. The West Wyoming Gate Station also will be able to receive deliveries of gas from Transco which will be available to serve existing Auburn I Line farm tap distribution customers and future end-use customers pursuant to the terms and conditions of PNG's Commission-approved gas service tariff. (PNG Statement No. 1-R, pp. 8-9) 7. 8. The deliveries of locally produced gas into the Transco system beyond those required to support the Auburn II Contracts facilitated by the proposed West Wyoming Gate Station also will provide PNG, other natural gas distribution companies ("NGDCs"), and other wholesale customers with the potential for greater purchases of lower-cost locallyproduced Pennsylvania gas. (PNG Statement No. 1-R, pp. 9, 11) 8. 9. The low cost, locally-produced natural gas delivered through the West Wyoming Gate Station also may be available to PNG's affiliates, UGI Utilities, Inc. - Gas Division and UGI Central Penn Gas, Inc., and their customers through their respective interconnects with the Transco pipeline system. (Tr. 277) 9. 10. Since all gas transported from the Auburn II Line through the PNG West Wyoming Gate Station to Transco will be transported under service contracts executed pursuant to the terms and conditions of PNG's Commission-approved tariff, all associated revenues will also be available to offset the need for future PNG base rate relief, and will help meet PNG's revenue requirements. (PNG Statement No. 1, p. 8; Tr. 214-15, 265, 288) 10. 4 11. PNG's ownership of the West Wyoming Gate Station also will provide its customers with a high level of service reliability because PNG will effectively become the confirming or scheduling party, which will allow it to prioritize the amount of gas that goes through the Gate Station. (Tr. 214-15, 265, 288) 11. 12. The West Wyoming Gate Station will be constructed on an approximately 3.2 acre property in a rural, forested area of West Wyoming Borough. (PNG Statement No. 1, p. 5) 12. 13. The location of the gate station was chosen because it is at the intersection of the Transco and Auburn II Lines, is approximately 1,500 feet from the nearest dwelling, and is in close proximity to an existing large electric utility corridor. (PNG Statement No. 1-R, pp. 1314) 13. 14. The West Wyoming Gate Station and the existing Transco pipeline will provide PNG with access to lower-cost, locally-produced natural gas without the expense and environmental impacts associated with the construction of a new pipeline. (PNG Statement No. 1-R, p. 11) 14. 15. PNG proposes to construct four structures at the West Wyoming Gate Station to protect the equipment from the elements and to provide a more sheltered environment for personnel conducting maintenance or repair activities in poor weather conditions. (PNG Statement No. 1, pp. 5-6; PNG Exhibit JPG-2) 15. 16. The proposed structures at the West Wyoming Gate Station will have restricted access, which will help reduce the potential for vandalism and terrorism. (PNG Statement No. 1R, p. 15; Tr. 233) 16. 17. The proposed structures will provide the extra benefit to surrounding neighbors of additional sound dampening from the West Wyoming Gate Station. (Tr. 233, 302) 17. 5 18. To the extent that the Commission does not approve this Petition, PNG plans to construct the West Wyoming Gate Station without the proposed structures. (PNG Statement No. 1-R, p. 3) 18. 19. The four structures are buildings because they are housing chattels in the form of pipes, meters, valves and storage tanks and are constructed to protect individuals working on the equipment. Further, the description of the structures which includes concrete walls, metal roofs and locked metal doors indicates that the structures are buildings. 19. 20. PNG confirmed it will comply with all existing laws applicable to construction vehicles, and both during and after construction is complete there will be very little traffic to the site. (PNG Statement 1-R, p. 14; Tr. 315) 20. 21. Emergency responders will have access to the site in the same manner that emergency responders have access to the local residences, less the last leg on the final site access road. (PNG Statement No. 1-R, p. 14) 21. 22. PNG will meet with and educate local emergency responders prior to placing the West Wyoming Gate Station into service. (PNG Statement No. 1-R, p. 23, Tr. 313) 22. 23. The closest residence is located approximately 1,500 feet from the West Wyoming Gate Station; however, the Metzo property line is approximately 100 feet from the edge of the proposed site; therefore, PNG is willing to install a forested buffer between the fenced area and the edge of the adjacent properties for the West Wyoming Gate Station, which will help mitigate the impacts of the noise and odor from the West Wyoming Gate Station. (PNG Statement No. 1-R, pp. 18-19) 23. 24. The West Wyoming Gate Station will be subject to a comprehensive set of federal and state gas safety standards actively managed by the Commission. (PNG Statement No. 1-R, p. 19) 24. 6 25. Intervenor Ms. Dolan presented the testimony of Ms. Wilma Subra who testified to the possible health effects from pollutants that potentially could be released from the West Wyoming Gate Station. However, Ms. Subra failed to identify or explain any analysis or study of similar gate stations to support her contention that the West Wyoming Gate Station will emit harmful pollutants. (Subra Statement No. 1) 25. 26. PNG currently operates 12 similar gate stations; UGI Utilities, Inc. in total operates approximately 100 similar gate states and over 100 smaller distribution stations; and there are hundreds of other similar gate stations operated by other utilities throughout Pennsylvania. (PNG Statement No. 1-R, p. 19; Tr. 324) 26. 27. The West Wyoming Gate Station will be constructed to fully comply with all applicable environmental standards established by the state and federal agencies that have jurisdiction over such matters. PNG will apply for and obtain any and all state and federal permits necessary for the construction of the West Wyoming Gate Station, and will comply with all of the terms and conditions placed on those permits. (PNG Statement No. 1-R, pp. 17, 19; Tr. 324) 27. 28. Given that the site for the West Wyoming Gate Station is rural, is in close proximity to the existing Transco pipeline and other utility facilities, and it is a third of a mile away from the closest dwellings, it is unlikely that the West Wyoming Gate Station would have a material impact to the property values of nearby homes. (PNG Statement No. 1-R, pp. 13-14, 20) 28. 29. The location of safety and emergency valves is regulated by the U.S. Department of Transportation. PNG will fully comply will all applicable federal regulations and requirements. There are several valves within the station that could isolate the station from Auburn II and Transco. In addition, if the entire station needs to be isolated, both Transco and UGIES will have mainline valves that can be closed which will isolate the gate station. (PNG Statement No. 1-R, p. 22) 29. 7 30. A simple check valve as requested by the Borough of West Wyoming would prevent PNG from flowing gas in both directions and therefore is not consistent with the proposed operation of the gate station. (PNG Statement No. 1-R, p. 23) 30. 31. PNG will: (1) install a 6-foot high chain link metal fence with three-strand barb wire; (2) fence in 1.1 acres of the area surrounding the West Wyoming Gate Station; and (3) plant shrubs or trees outside the perimeter of the fence to give neighboring homeowners a more aesthetic view. (PNG Statement No. 1-R, pp. 18, 15) 31. 32. In keeping with many other facilities, PNG should have a 50 foot space between the fence and the pipeline facilities. (PNG Statement 1-R, p. 23) 32. 33. PNG will post warning signs indicating that the property in question is owned by PNG. (PNG Statement No. 1-R, p. 23) 33. 34. PNG will comply with all applicable federal and state codes governing the operation and maintenance of the proposed station. However, PNG cannot voluntarily agree to standards such as the American Society of Mechanical Engineers because they may not be relevant and may conflict with existing comprehensive gas safety regulations established by federal and state authorities having jurisdiction over gas safety. (PNG Statement No. 1-R, p. 23) 34. 35. PNG already is obligated to meet all applicable federal and state standards. (PNG Statement No. 1-R, p. 23) 35. 36. Monitoring all of PNG's facilities through visual inspection via camera is not practical. PNG already continuously monitors, via a centralized computer system, specific operating conditions at critical system locations such as the proposed West Wyoming Gate Station. (PNG Statement No. 1-R, p. 24) 36. 37. PNG agrees that for the immediate foreseeable future, it has neither plans to expand its project nor to build a gas compressor station at the proposed location. However, it 8 does not agree to not further develop the leased property in perpetuity. (PNG Statement No. 1-R, pp. 24-25) DISCUSSION Section 332(a) of the Public Utility Code ("Code"), 66 Pa.C.S. ? 332(a), provides that the party seeking a rule or order from the Commission has the burden of proof in that proceeding. It is axiomatic that "[a] litigant's burden of proof before administrative tribunals as well as before most civil proceedings is satisfied by establishing a preponderance of evidence which is substantial and legally credible." Samuel J. Lansberry, Inc. v. Pa. Pub. Utl. Commn., 578 A.2d 600, 602 (Pa. Cmwlth. 1990). The preponderance of evidence standard requires proof by a greater weight of the evidence. Commonwealth of Pennsylvania v. Williams, 557 Pa. 207, 732 A.2d 1167 (1999). This standard is satisfied by presenting evidence more convincing, by even the smallest amount, than that presented by another party. Brown v. Commonwealth of Pennsylvania, 940 A.2d 610, 614 n.14 (Pa. Cmwlth. 2008). Additionally, any finding of fact necessary to support an adjudication of the Commission must be based upon substantial evidence. Met-Ed Indus. Users Group v. Pennsylvania Public Utility Commission, 960 A.2d 189, 193 n.2 (Pa. Cmwlth. 2008) (citing 2 Pa.C.S. ? 704). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Borough of E. McKeesport v. Special/Temporary Civil Service Commission, 942 A.2d 274, 281 (Pa. Cmwlth. 2008). Although substantial evidence must be "more than a scintilla and must do more than create a suspicion of the existence of the fact to be established," Kyu Son Yi v. State Board of Veterinarian Medicine, 960 A.2d 864, 874 (Pa. Cmwlth. 2008) (citation omitted), the "presence of conflicting evidence in the record does not mean that substantial evidence is lacking." Allied Mechanical and Elec., Inc. v. Pennsylvania Prevailing Wage Appeals Board, 923 A.2d 1220, 1228 (Pa. Cmwlth. 2007) (citation omitted). If the applicant sets forth a prima facie case, then the burden shifts to the opponent. McDonald v. Pennsylvania Railroad Co., 348 Pa. 558, 36 A.2d 492 (1940). 9 Establishing a prima facie case requires either evidence sufficient to make a finding of fact permissible or evidence to create a presumption against an opponent which, if not met, results in an obligatory decision for the proponent. Once a prima facie case on a point has been established, if contrary evidence is not presented, there is no requirement that the applicant produce additional evidence in order to sustain its burden of proof. District of Columbia's Appeal, 343 Pa. 65, 21 A.2d 883 (1941). See, e.g., Application of Pennsylvania Power & Light Co., Docket Nos. A-110500F0196, et al.; 1994 Pa. PUC LEXIS 65 (Oct. 21, 1994) (holding that the company met its burden to prove that there was an immediate need for the reinforcement of the power supply where the need for the project was uncontested and no party presented any evidence challenging the need for the project). The Pennsylvania Municipalities Planning Code ("MPC") provides, in relevant part, as follows: This article shall not apply to any existing or proposed building, or extension thereof, used or to be used by a public utility corporation, if, upon petition of the corporation, the Pennsylvania Public Utility Commission shall, after public hearing, decide that the present or proposed situation of the building in question is reasonably necessary for the convenience or welfare of the public. Section 619 of the Municipalities Planning Code (MPC) Act of July 31, 1968. P.L. 805 as, amended, 53 P.S. ? 10619. The Commission adopted a policy statement to further the Commonwealth's goal of making agency actions consistent with sound land use planning by considering the impact of its decision upon local comprehensive plans and zoning ordinances. See 31 Pa. Bull. 951 (Feb. 17, 2001). Section 69.1101 of the Commission's Regulations provides: [T]he Commission will consider the impact of its decisions upon local comprehensive plans and zoning ordinances. This will include reviewing applications for: (1) Certificates of public convenience. (2) Siting electric transmission lines. 10 (3) Siting a public utility "building" under section 619 of the Municipalities Planning Code (53 P.S. ?10619). (4) Other Commission decisions. 52 Pa. Code ? 69.1101 Thus, a municipality may exercise its zoning powers over a public utility building unless the Commission determines that the "site is reasonably necessary for the public convenience or welfare." Del-AWARE Unlimited, Inc. v. Pa. Pub. Util. Cmmn. 513 A.2d 593, 596 (Pa. Cmwlth. 1986), appeal denied, 515 Pa. 587, 527 A.2d 547 (1987). If the Commission finds that the location is reasonably necessary for the convenience or welfare of the public, the building is exempt from local zoning ordinances under the MPC. Id. Whether the proposed buildings are reasonably necessary for the convenience or welfare of the public does not require the utility to prove that the site it has selected is absolutely necessary or that it is the best possible site. Rather, the Commission's finding that the site chosen is reasonably necessary will not be disturbed if supported by "substantial evidence," which is that quantum of evidence that a reasonable mind might accept as sufficient to support that conclusion. O'Connor v. Pa. Pub. Util. Cmmn., 582 A.2d 427, 136 Pa. Cmwlth. 119 (Cmwlth 1990). Duties of natural gas distribution companies are described under 66 Pa. C.S. ?2205 which provides in pertinent part: (b) Installation and improvement of facilities - (2) Nothing in this chapter shall prevent the natural gas distribution company from maintaining and upgrading its system to meet retail gas customer requirements consistent with the requirement of section 1501 . . . or compliance with other statutory and regulatory requirements. (3) Disputes concerning facilities shall be subject to the jurisdiction of the Commission and may be initiated by the filing of a complaint under section 701 (relating to complaints) by the commission or any interested party. 11 66 Pa.C.S. ? 2205(b)(2)(3). PNG's Proposal PNG plans to construct a new gate station in West Wyoming Borough ("West Wyoming Gate Station" or "Gate Station"). (PNG Statement No. 1, pp. 4-5) The Company is not seeking the Commission's approval of the project before construction of the gate station; rather, it is petitioning this Commission for a determination as to whether the four "structures" it intends to build around the pipes, valves, gas storage tanks, and meters, would constitute "buildings" within the meaning of the Municipal Planning Code. PNG first argues that the "structures" as described in the Petition, are not buildings because they would not be housing chattel, persons, or animals. In the alternative, should the Commission decide the four structures are "buildings" then PNG requests the Commission also determine that the proposed situation of the buildings is "reasonably necessary for the convenience or welfare of the public." 53 P.S. ?10619. PNG is seeking this finding because it wishes to avoid compliance with Luzerne County zoning ordinances pertaining to the property. PNG contends that the West Wyoming Gate Station will interconnect the future Auburn II Line that will be owned and operated by UGIES with an existing pipeline owned and operated by Transco. The West Wyoming Gate Station will provide an interconnection that will facilitate the delivery of locally-produced natural gas delivered by the Auburn II Line into the Transco system, a portion of which will subsequently be redelivered to PNG through the Transco system pursuant to two gas supply contracts between PNG and UGIES ("Auburn II Contracts"), which were approved in PNG's 2012 purchased gas cost proceeding at Docket No. R-2012230221 (Order entered November 8, 2012). Through the Auburn II Contracts and the construction of the West Wyoming Gate Station, PNG avers it plans to replace Transco pipeline capacity from December 1, 2013 through October 31, 2020, resulting in a total savings of approximately $11 million in Transco demand charges that would otherwise be recovered from PNG customers. PNG Statement No. 1, pp. 8-9. According to PNG, both the locally-produced natural gas delivered by UGIES to support the Auburn II Contracts and other locally-produced natural gas delivered by the Auburn II Line will be transported by PNG into Transco pursuant to 12 the terms and conditions of PNG's Commission-approved gas service tariff. PNG Statement No. 1, p. 8. In addition to delivering gas into the Transco system, the West Wyoming Gate Station also will be able to receive deliveries of gas from Transco, which will be available to serve existing Auburn I Line farm tap distribution customers and future end-use customers pursuant to the terms and conditions of PNG's Commission-approved gas service tariff. PNG Statement No. 1-R, pp. 8-9. PNG's expert witness, Mr. Ghio testified that the deliveries of locally-produced gas into the Transco system beyond those required to support the Auburn II Contracts facilitated by the proposed West Wyoming Gate Station will also provide PNG, other natural gas distribution companies ("NGDCs"), and other wholesale customers with the potential for greater purchases of lower-cost locally-produced Pennsylvania gas. PNG claims this should benefit the public by providing additional commodity savings and opportunities to forego the renewal of more expensive interstate pipeline contracts extending to traditional production or market areas. (PNG Statement No. 1-R, pp. 9, 11) PNG claims that this low-cost, locally-produced natural gas may also be available to PNG's affiliates, UGI Utilities, Inc. - Gas Division and UGI Central Penn Gas, Inc., and their customers through their respective interconnects with the Transco pipeline system. (Tr. 277) Since all gas transported from the Auburn II Line through the PNG West Wyoming Gate Station to Transco will be transported under service contracts executed pursuant to the terms and conditions of PNG's Commission-approved tariff, all associated revenues will offset the need for future PNG base rate relief, and will help meet PNG's revenue requirements. (Tr. 214-15, 265, 288) It is proposed that the West Wyoming Gate Station will be constructed on an approximately 3.2 acre property in a rural, forested area of West Wyoming Borough. (PNG Statement No. 1, p. 5.) The location of the gate station was chosen because it is at the intersection of the Transco and Auburn II Lines, is approximately 1,500 feet from the nearest dwelling, and is in close proximity to an electric utility corridor. (PNG Statement No. 1-R, pp. 13-14) The West Wyoming Gate Station and the existing Transco pipeline will provide PNG 13 with access to lower-cost locally-produced natural gas without the expense and environmental impacts associated with the construction of a new pipeline. (PNG Statement No. 1-R, p. 11) As part of the West Wyoming Gate Station, PNG proposes to construct four structures to shelter certain permanent equipment at the gate station. The proposed structures at the West Wyoming Gate Station will help protect the equipment from the elements and provide a more sheltered environment for personnel conducting maintenance or repair activities in poor weather conditions. (PNG Statement No. 1, pp. 5-6; PNG Exhibit JPG-2) In addition to protecting the pipeline equipment from the elements, these structures also will provide sound attenuation and added security for the facilities at the West Wyoming Gate Station. (Tr. 302) Although the proposed structures are desirable, useful, and would provide the foregoing additional benefits, they are not absolutely necessary. PNG stated that to the extent that the Commission does not approve this Petition, PNG will construct the West Wyoming Gate Station without the proposed structures and their added benefits. (PNG Statement No. 1-R, p. 3) West Wyoming Borough West Wyoming Borough requests the Commission find that the proposed structures are buildings within the meaning of 53 P.S. ? 10619; however, it argues the proposed buildings are not reasonably necessary for the convenience or welfare of the public. Therefore, West Wyoming Borough contends the utility should be subject to the zoning ordinances of Luzerne County which govern zoning requirements in West Wyoming Borough. West Wyoming Borough objects to the petition because its residents will not financially benefit from lower natural gas costs while at the same time the burden on the volunteer fire and police resources would be stretched to the limit in responding to an emergency at the proposed unsecured Gate Station. West Wyoming requested as a condition for building the structures that the Company at least maintain video surveillance cameras on the property to discourage vandalism and add a safety feature to the proposed construction. Further, it contends there is no financial benefit to the West Wyoming residents because those living closest to the Gate Station are not eligible to tap off of the line. West Wyoming claims the site will be subject 14 to potential expansion projects without proper local zoning authority approval and that the buildings are there for the convenience of UGIES, and not the welfare of the local surrounding residents. West Wyoming submitted nine conditions to be placed on the Gate Station if built including a video surveillance system added to the structures and a written assurance from PNG that the plan would encompass the entire gate station and that no further additions would be added by PNG. Although PNG's witness Mr. Ghio initially did not know the company's future plans to expand on the property, he later stated there are no current additional plans for interconnection beyond what was explained as the site plan. (West Wyoming Council Exhibit 1, Answers to Intervenor Questions) West Wyoming is concerned that the site will potentially expand without the property checks and balances that can occur only if PNG is regulated by Luzerne County Zoning Board and its ordinances. West Wyoming contends there is insufficient evidence to show the enclosures are not buildings, because Mr. Ghio testified that PNG personnel would be entering and departing from the structures, periodically checking on the equipment and the condition of the property. In the direct testimony of Ms. Eileen Cipriani submitted on behalf of the Borough of West Wyoming, the Borough recommends that the Commission should adopt certain conditions if it approves PNG's Petition. (West Wyoming Borough - Statement 1, Cipriani Direct), Tr. 296 - 297. First, the Borough recommends that PNG be required to install a fast-acting emergency shutoff valve upstream for all surface equipment in the measurement facility that will shut down and isolate the metering station from the pipeline and reduce the maximum potential impact of a large leak. Second, the Borough recommends that PNG be required to install a check valve on the downstream side of the metering station that will prevent the back flow of gas from the Transco pipeline in to the metering station that could feed a large leak. 15 Third, the Borough recommends that PNG install and maintain a fence at least six feet tall with barbed wire across the top located around the entire metering station, in compliance with all applicable federal requirements and ensure that the fence will be at a minimum of 50 feet from any surface equipment located within the metering station. Fourth, the Borough recommends that PNG post warning signs indicating the property in question is owned by UGI. This recommendation is already part of PNG's plan. (PNG Statement No. 1-R, p. 23) Fifth, the Borough recommends that PNG meet with responders from Borough of West Wyoming and other affected municipalities to address traffic needs and develop and implement an appropriate and effective emergency preparedness response plan for the metering station prior to its operation. The Borough also recommends that PNG implement a system integrity plan at the metering station that complies with applicable federal and state regulations, as well as the joint standards established by the American Society of Mechanical Engineers and the American National Standards Institute of Gas Pipelines and /or ASME B31.8S Managing System Integrity of Gas Pipelines. PNG explained that it generally meets with local emergency responders on facilities and will do so with respect to the West Wyoming Gate Station. PNG also will comply with all applicable federal and state codes governing the operation and maintenance of the proposed station. However, PNG does not agree to standards such as the American Society of Mechanical Engineers or others listed because they may not be relevant and may conflict with existing comprehensive gas safety regulations established by federal and state authorities having jurisdiction over gas safety. (PNG Statement No. 1-R, p. 23) Sixth, the Borough recommends that PNG construct, inspect and maintain the metering station under the most stringent applicable federal and state standards for pipelines approved and installed in the Borough of West Wyoming. PNG responded to this request that it already is obligated to and will meet all applicable federal and state standards. (PNG Statement No. 1-R, p. 23) 16 Seventh, the Borough recommends that PNG be prohibited from preparing, maintaining or storing hazardous materials as defined by 49 CFR Section 105.5 at the metering station. PNG argues this recommendation is overly broad and incorporates other sections of federal codes that would effectively prohibit the use of the proposed station in its entirety. Although PNG does not anticipate any significant collection of liquids containing hazardous substances, PNG will store and dispose of any hazardous materials in accordance with all applicable statutes and regulations. However, the Borough's recommendation would prohibit the removal of liquids and potentially render the station inoperable. (PNG Statement No. 1-R, p. 24) Eighth, the Borough recommends that PNG install and maintain a video surveillance system for remote monitoring of the metering station. This recommendation is not feasible because PNG and its affiliates have approximately 100 gate stations and hundreds of smaller district stations. PNG responds that monitoring all of the locations through visual inspection via camera is not practical and would be cost prohibitive. Further, PNG already continuously monitors, via a centralized computer system, specific operating conditions at critical system locations such as the proposed gate station. If conditions fall outside of normal operating parameters, an alarm is generated at the Gas Control Center, which is staffed 24 hours a day, and appropriate personnel are dispatched to respond according to Company protocols. (PNG Statement No. 1-R, p. 24) Finally, the Borough recommends that PNG be required to file a certificate and/or an executed proffer of assurance with the Borough of West Wyoming and Luzerne County confirming the proposed use of the property for the metering station, if approved, shall be confined to the metering station and there shall be no other expansion of gas structures or anything other on the said property. PNG does not agree to limit the scope of work at the proposed station in perpetuity because PNG cannot contemplate its business needs decades into the future. Further, as explained above, PNG may extend natural gas lines from the proposed station to serve new customers or reinforce sections of the existing distribution system. (PNG Statement No. 1-R, pp. 24-25) Intervenors and Public Input Hearing Witnesses 17 Most of the Intervenors and witnesses at the public input hearing oppose the development of Marcellus Shale or other natural gas resources, the construction of any natural gas facilities by any entity in the Borough of West Wyoming, or are dissatisfied with the centralized regulation of public utilities under Pennsylvania law. The parties have attempted to block the building of a gate station by objecting to PNG's limited Petition. The Intervenors and most of the persons testifying at the public input hearing have raised broad public policy concerns against the development of natural gas production and distribution. Many mistrust big business and view this Petition as a means of getting a gas compressor station in through the back door once PNG is exempt from following zoning rules regarding the proposed structures. The Intervenors argue that the structures are buildings that should be subject to local zoning authority. Intervenors also have raised concerns about the proposed West Wyoming Gate Station's (a) impact on property values, (b) emissions, (c) noise levels, (d) safety, (e) security, (f) impact on traffic, and (g) utility status. Traffic concerns Certain Intervenors and witnesses at the public input hearing raised concerns regarding traffic and access to the West Wyoming Gate Station site in the event of an emergency. PNG explained that it will comply with all existing laws applicable to construction vehicles, and that both during and after construction is complete there will be very little traffic to the site. (PNG Statement 1-R, p. 14; Tr. 315) PNG also explained that emergency responders will have access to the site in the same manner that emergency responders have access to the local residences, less the last leg on the final site access road. (PNG Statement No. 1-R, p. 14) In addition, PNG explained that it will meet with local emergency responders prior to placing the West Wyoming Gate Station into service. (PNG Statement No. 1-R, p. 23, Tr. 313) Vandalism/Terrorism Concerns 18 Intervenor Likowski argued that the remote location of the West Wyoming Gate Station will make it susceptible to terrorism and vandalism. (Likowski-Statement 1, Likowski Direct, Tr. 367, 253). PNG explained that it will fully comply with all applicable federal and state requirements to ensure that security of its facilities is not compromised. PNG will install a six-foot high chain link fence with barb wire around the perimeter of the West Wyoming Gate Station. The access road also will have a metal gate that will be locked when crews are not on site. PNG will fully cooperate with local, state, and federal authorities to ensure that any unauthorized individuals that access the station are apprehended and prosecuted to the fullest extent possible under the law. The proposed structures will have restricted access, which will further deter acts of vandalism or terrorism. (PNG Statement No. 1-R, p. 15) West Wyoming also is concerned with vandalism, and requests a video surveillance system be installed and maintained by PNG. As PNG already continuously monitors via a centralized computer system the operations at its gate stations and has plans to also monitor the proposed station, I am not persuaded to add an additional video surveillance requirement to the approval of PNG's petition. (PNG Statement No. 1-R, p. 24) Marcellus Shale Gas Production/Exportation Concerns Certain witnesses at the public input hearing opposed the West Wyoming Gate Station because it would facilitate the development of Marcellus Shale natural gas and the potential export of gas. The issue of whether Marcellus Shale should be developed is a matter to be determined by state and federal elected officials. (PNG Statement No. 1-R, pp. 15-16) Such concerns are beyond the limited scope of this proceeding and should be directed to elected state and federal officials. Environmental/Health Concerns Certain Intervenors and witnesses at the public input hearing raised concerns regarding the environmental impacts of emissions from the West Wyoming Gate Station. (SubraStatement 1, Direct, Tr. 299; O-Shea-Statement 1, Direct, Tr. 363, 243; Likowski -Statement 1, Direct, Tr. 367; Tillman-Statement 1, Direct, Tr. 300). The West Wyoming Gate Station must be 19 constructed to fully comply with all applicable environmental standards established by the state and federal agencies that have jurisdiction over such matters. PNG will apply for and obtain any and all state and federal permits necessary for the construction of the West Wyoming Gate Station, and will comply with all of the terms and conditions placed on those permits. (PNG Statement No. 1-R, p. 17) The Commonwealth Court has explained that the Commission is not empowered under Section 619 of the MPC to evaluate the various aspects of the environmental impact of a project and, instead, is obliged to defer to the determinations of those agencies with jurisdiction over such impacts. See O'Connor, 582 A.2d 427 at 430-31 (discussing the impact of the holding in Del-AWARE, 513 A.2d 593). The Intervenors raised concerns regarding natural gas leaks from the West Wyoming Gate State. The West Wyoming Gate Station will be subject to a comprehensive set of federal and state gas safety standards actively managed by the Commission. These standards will be applicable whether the West Wyoming Gate Station is constructed with the enclosures or not, and are not directly relevant to this Petition. (PNG Statement No. 1-R, p. 19) Several of the Intervenors and witnesses at the public input hearing raised concerns regarding the health effects of the emissions from the West Wyoming Gate Station. Intervenor Ms. Dolan presented the testimony of Ms. Wilma Subra who testified to the possible health effects from pollutants that potentially could be released from the West Wyoming Gate Station. However, the Intervenors have not identified any particular reason why the West Wyoming Gate Station would have any special health effects. Ms. Subra failed to identify or explain any analysis or study of similar gate stations to support her contention that the West Wyoming Gate Station will emit harmful pollutants. (Subra Statement 1, Subra Direct, Tr. 299). PNG currently operates 12 similar gate stations and UGI Utilities in total operates approximately 100 similar gate stations and over 100 smaller distribution stations, and there are hundreds of other similar gate stations operated by other utilities throughout Pennsylvania. Similar to these other gate stations, PNG must construct the West Wyoming Gate Station in compliance with all applicable environmental and health requirements established by the elected officials and regulatory agencies with jurisdiction over such matters. (PNG Statement No. 1-R, p. 19; Tr. 324) Noise/Odor Concerns 20 The Intervenors and witnesses at the public input hearing raised concerns regarding the noise and odors from the West Wyoming Gate Station. (Subra-Statement 1, Direct, Tr. 299; O-Shea-Statement 1, Direct, Tr. 363, 243; Likowski -Statement 1, Direct, Tr. 367; Tillman-Statement 1, Direct, Tr. 300). PNG explained that, although it is possible that some noise or odorant may be detectable at the West Wyoming Gate Station, it would be negligible and not likely to affect any nearby residents. The site for the West Wyoming Gate Station is approximately 3.2 acres of forested property. The fenced area surrounding the West Wyoming Gate Station will be approximately 1.1 acres. The closest residence is located approximately 1,500 feet from the West Wyoming Gate Station. In addition, PNG will install a forested buffer between the fenced area and the edge of the property for the West Wyoming Gate Station. This buffer should help mitigate the impacts of the noise and odor from the West Wyoming Gate Station. (PNG Statement No. 1-R, pp. 18-19) Moreover, these concerns disregard that the proposed structures will actually help to minimize noise and errant odorant. (Tr. 302) Property Values Several of the Intervenors assert that the West Wyoming Gate Station will have a negative impact on the property values of nearby properties. (Dellegrotto-Exhibits LD-A and LD-B, Tr. 222, 228; 256). These generalized concerns would apply whether the West Wyoming Gate Station is constructed with the enclosures or not, and are not directly relevant to this Petition. The site for the West Wyoming Gate Station was selected due to the rural nature of the area and the close proximity to the existing Transco pipeline and an existing electric utility corridor, which is approximately 360 feet wide and contains three sets of high voltage transmission lines. The closest dwellings are approximately 1,500 feet and 1,700 feet from the gate station. A station that is a third of a mile away from a residence has a substantial and adequate buffer. For these reasons, it is unlikely that the West Wyoming Gate Station would have a material impact on the property values of nearby homes. (PNG Statement No. 1-R, pp. 13-14, 20) Shut Off Valve and Check Valve 21 I am persuaded by PNG that a shut off valve as proposed by West Wyoming Borough is an unreasonable condition in that the federal U.S. Department of Transportation regulates the location of safety and emergency valves and PNG has stated it will comply with all applicable federal regulations and requirements. Additionally, PNG's witness Mr. Ghio testified there are several valves within the station that could isolate the station from the Auburn II and Transco in addition to mainline valves on Transco and UGIES that can be closed; thus, isolating the gate station in the event of an emergency. (PNG Statement No. 1-R, p. 22) I am persuaded that a check valve on the downstream side of the metering station preventing back flow of gas from the Transco pipeline into the metering station is not feasible because the proposed station is being designed for bi-directional flow of gas. (PNG Statement No. 1-R) Disposition Most of the individual Intervenors argued against approval of a gate station. The intervenors' concerns about gas pressure, gas emissions, noise levels and other health and safety issues are valid concerns; however, approval of the construction of a gate station is beyond the scope of this proceeding. As a certificated gas utility within the meaning of the Public Utility Code, the Company has the authority to build a metering gate station along the pipeline to monitor, manage and account for the natural gas in its pipes as long as the utility is running its facilities in compliance with state and federal regulations. The narrower issue before this Commission is whether the "structures" as proposed are "buildings" and if so, whether the proposed situation of the buildings in question is reasonably necessary for the convenience or welfare of the public. PNG's petition describes the four structures as follows. The first building is 10 feet tall, 14 feet wide and 24 feet in length. The second building is 10 feet tall, 20 feet wide and 24 feet long. The third building is 10 feet tall, 20 feet wide and 46 feet long, and the fourth building is 10 feet tall, 12 feet wide and 24 feet long. I am persuaded by West Wyoming's argument that the four proposed structures qualify as buildings in that the structures will likely have concrete or brick walls, a roof and they would 22 contain a gas storage tank, numerous pipes, valves and metering equipment which constitute chattels because they could be removed once the lease expires. Mr. Ghio testified there will be no transferable or moveable property contained within the structures; only pipelines and metering equipment. However, Mr. Ghio did admit on cross-examination that employees of PNG would be making on site inspections inside the structures and equipment would be brought into the structures for inspection, maintenance and repairs. I find there is substantial evidence to support a finding that the items contained within the structure constitute chattels in that the equipment, valves, storage tanks, pipeline and metering devices could be removed from the property after the lease with the property owners expires. Further, it is uncertain how often there would be workers in the building, but presumably at least annually for inspection, maintenance and repair. Therefore, the buildings will have persons in them to inspect, maintain and repair the gate station. I find the evidence supports a finding that the location of the proposed structures, which is the subject of this proceeding, would mitigate already low noise levels and enhance security, while also providing additional protection of gate station equipment from the elements. Having a building surrounding the pipes, valves, tanks and other equipment would muffle any sounds and help protect the surrounding environment from gas emissions. It may be more aesthetic to view a line of trees or shrubs along a fence and buildings than it would be to view the open pipes and other equipment unsheltered from the weather elements. Regarding security, I find that the buildings with locked metal doors and a locked and gated perimeter fence with barbed wiring add security to the proposed site. I find the evidence supports a finding that the West Wyoming Gate Station is appropriately located at the intersection of the Auburn II Line and the existing Transco interstate pipeline, and in a rural area that is adjacent to an electric utility corridor. The location of the proposed structures is reasonably necessary for the convenience or welfare of the public because the structures will shield the gate station equipment. The term "public" is broadly defined as including those residential or business customers or potential customers of PNG who receive or could receive a tariffed service, beyond those persons residing in closest proximity to the proposed site location. 23 The evidence also shows that the West Wyoming Gate Station will facilitate the delivery of locally-produced natural gas into the Transco system under the terms and conditions of PNG's Commission-approved gas service tariff, and that a portion of these supplies will then be transported through Transco to PNG gate stations to support the Commission-approved Auburn II Contracts commencing December 1, 2013. The Commonwealth Court has explained that "Section 619 only empowers the [Commission], upon petition, to decide if there is reasonable necessity for the site." Del-AWARE Unlimited, Inc. v. Pennsylvania Public Utility Commission, 513 A.2d 593, 596 fn.4 (Pa. Cmwlth. 1986).2 It is well settled that a public utility must decide in the first instance what facilities are needed and where to locate those facilities. Unless the public utility acted in an arbitrary or capricious manner, its decision should remain undisturbed. See e.g., Lower Chichester Township v. Pennsylvania Public Utility Commission, 119 A.2d 674 (Pa. Super 1956); Abbington Electric Co. v. Pennsylvania Public Utility Commission, 198 A. 901 (Pa. Super 1938). Further, the company must only show that it has made a reasonable decision, not the best possible decision. O'Connor v. Pennsylvania Public Utility Commission, 582 A.2d 427, 433 (Pa. Cmwlth. 1990) (citing Re Philadelphia Suburban Water Co., 54 Pa. PUC 127, 132 (1980)). Although evidence of an alternative location may be the basis for questioning the reasonableness of the company's decision, the mere existence of an alternative site does not invalidate the company's judgment. Re Philadelphia Suburban Water Company, Docket No. 99126, 54 Pa. PUC 127, 1980 Pa. PUC LEXIS 81 at *16 (April 3, 1980) (citing Lower Chichester Township; Byers v. Pennsylvania Public Utility Commission, 109 A.2d 232 (Pa. Super. 1954)). In the instant case, the proposed site for PNG's West Wyoming Gate Station appears to be reasonable, given its primary initial purpose of receiving locally-produced gas 2 As a general principle, subject matter jurisdiction is a prerequisite to the exercise of the power to decide a controversy. Hughes v. Pa. State Police, 619 A.2d 390 (Pa. Cmwlth. 1992). The Commonwealth Court recently reaffirmed this principle when it held that, "[a]s a creature of legislation, the Commission possesses only the authority the state legislature has specifically granted to it...." Pickford v. Pennsylvania Public Utility Commission, 4 A.3d 707, 713 (Pa. Cmwlth. 2010). Therefore, the Commission's jurisdiction must arise from the express language of the pertinent enabling legislation or by necessary implication. Feingold v. Bell, 477 Pa. 1, 383 A.2d 791 (1977). 24 supplies delivered by third parties through the Auburn II pipeline and transporting those supplies, pursuant to the terms and conditions of its Commission-approved gas service tariff, to Transco, and by extension that PNG also acted reasonably in selecting the proposed location of its proposed structures to shelter certain equipment at the gate station. The location of the gate station was chosen because it is at the intersection of the Transco line and the Auburn II Line. This is significant because it permits PNG to access lower-cost locally-produced natural gas without the expense and environmental impacts associated with the construction of a new pipeline. (PNG Statement No. 1-R, pp. 11, 13) In addition, the location for the West Wyoming Gate Station was chosen because it is in a very rural area, with the closest dwellings approximately 1,500 feet and 1,700 feet from the gate station. Although Ms. Janice Metzo's property line was closer to the site than her residence, a buffer of trees/shrubs and buildings covering the gate station should reasonably muffle noise and contain odors from the station. Further, the proposed station is adjacent to an electric utility corridor that is approximately 360 feet wide, as well as the Transco pipeline. (PNG Statement No. 1-R, pp. 1314) Given the rural nature and proximity to the existing Transco pipeline and other utility facilities, the location of the West Wyoming Gate Station is reasonable. Consequently, the location of the proposed structures is appropriate because their sole purpose is to shelter certain equipment at the West Wyoming Gate Station. The record shows that the primary initial purpose of the West Wyoming Gate Station will be to receive locally produced gas delivered by the Auburn II Line, which will then be delivered under service agreements entered into pursuant to PNG's Commission-approved tariff through PNG's facilities to Transco, with the resulting revenues received being available to meet PNG's revenue requirements. (PNG Statement No. 1-R, p. 8) A portion of gas so transported will then be delivered through the Transco system to PNG city gates to support a Commission-approved gas supply agreement, beginning December 1, 2013, which will provide guaranteed interstate pipeline demand charge savings of approximately $11 million through October 31, 2020. (PNG Statement No. 1, p. 5) Other locally produced gas transported through the West Wyoming Gate Station pursuant to PNG's Commission-approved tariff will also add to the availability of local supplies and offer the prospect of additional savings in both commodity 25 purchases and through future opportunities to procure lower-cost local supplies in lieu of renewing higher-cost interstate pipeline contracts to more distant sources of production or market centers. (PNG Statement No. 1-R, p. 9) These cost savings and access to lower cost locally produced natural gas are substantial benefits to PNG's customers. PNG's ownership of the West Wyoming Gate Station also will provide its customers with service reliability. By owning the West Wyoming Gate Station, PNG will effectively become the confirming or scheduling party, which will allow it to prioritize the amount of gas that goes through the Gate Station. Further, PNG will be able to charge transportation customers under PNG's Commission-approved tariff for transportation services, which will provide utility revenue and be part of PNG's revenue requirement. (Tr. 21415, 265, 288) No party presented any evidence regarding feasible alternatives for the location for the proposed structures. Certain Intervenors and witnesses at the public input hearing contend that the West Wyoming Gate Station is not reasonably necessary for the convenience or welfare of the public because these parties do not receive natural gas service from PNG. However, the simple fact that the proposed gate station will not benefit everyone does not mean that the project does not benefit the public. See, e.g., Popowsky v. Pennsylvania Public Utility Commission, 594 Pa. 583, 617-18, 937 A.2d, 1040, 1061 (2007) (holding that substantial public benefits do not require that every customer receive a benefit from the proposed action). The Commission recognizes that the need for utility projects must be evaluated on a regional basis, even if Pennsylvania is not directly or primarily served by the project. See e.g., Application of PPL Electric Utilities Corporation Filed Pursuant to 52 Pa. Code Chapter 57, Subchapter G, for Approval of the Siting and Construction of the Pennsylvania Portion of The Proposed Susquehanna-Roseland 500 kV Transmission Line, et al., Docket Nos. A-2009-2082652, et al., 2010 Pa. PUC LEXIS 434 (February 12, 2010). Further, PNG explained that the West Wyoming Gate Station also will be able to receive deliveries of gas from Transco which will be available to serve existing and future end use customers pursuant to the terms and conditions of PNG's Commission-approved tariff. The 26 Auburn II line also will be connected to an existing Auburn I line, and deliveries from Transco through the West Wyoming Gate Station could help serve a number of existing PNG customers currently served off of the Auburn I line. In addition, farm taps will be permitted along the Auburn II gathering line at the request of customers to provide natural gas distribution service from PNG. PNG also explained that the availability of the West Wyoming Gate Station will almost certainly lead to other opportunities for PNG to expand the availability of natural gas distribution service, either through deliveries off of the Auburn II line or through the expansion of its distribution facilities from the gate station. (PNG Statement No. 1-R, pp. 8-9) Finally, this low cost locally-produced natural gas may also be available to PNG's affiliates, UGI Utilities, Inc. - Gas Division and UGI Central Penn Gas, Inc., and their customers through their respective interconnects with the Transco pipeline system. (Tr. 277) Based on the foregoing, the West Wyoming Gate Station will provide substantial benefits to PNG's customers and others. The proposed structures at the West Wyoming Gate Station also are reasonably necessary to protect equipment from the elements and to shelter personnel conducting maintenance or repair activities in inclement weather conditions. (PNG Statement No. 1, pp. 5-6) In addition, the proposed structures at the West Wyoming Gate Station will have restricted access, which will help reduce the potential for vandalism and terrorism. (PNG Statement No. 1-R, p. 15; Tr. 233) Further, the proposed structures will provide the extra benefit of additional sound dampening from the West Wyoming Gate Station. (Tr. 233, 302) The Intervenors argue that the West Wyoming Gate Station should not be approved because it does not serve a public utility purpose. Section 102 of the Public Utility Code defines a public utility as follows: (1) Any person or corporation now or hereafter owning or operating in this Commonwealth equipment or facilities for: (i) Producing, generating, transmitting, distributing or furnishing natural or artificial gas . . . for the production of light, heat, to or for the public for compensation. **** 27 (v) Transporting or conveying natural or artificial gas, crude oil, gasoline, or petroleum products, materials for refrigeration, or oxygen or nitrogen, or other fluid substance, by pipeline or conduit, for the public for compensation. 66 Pa.C.S. ? 102 (emphasis added).3 The crux of the interpretation of public utility is the phrase "to or for the public." The phrase "to or for the public" was explained by the Pennsylvania Supreme Court in Drexelbrook Associates v. Pennsylvania Public Utility Commission, 418 Pa. 430, 212 A.2d 237 (1965). The Court concluded that the public or private character of the enterprise does not depend upon the numbers of persons by whom it is used, but upon whether or not it is open to the use and service of the public. Id. at 435, 212 A.2d at 239 (citations omitted). Similarly, in C.E. Dunmire Gas Co. v. Pennsylvania Public Utility Commission, 413 A.2d 473 (Pa. Cmwlth. 1980), the Commonwealth Court stated the applicable test for rendering public utility service as follows: The private or public character of a business does not depend upon the number of persons by whom it is used, but upon whether or not it is open to the use and service of all members of the public who may require it.... In the present case, the only restriction the company puts on whom it serves is based on the availability of the company's supply. Thus, the company did not limit its service to a specific privileged class... We cannot be influenced by the fact that the company did not solicit residential customers. The fact is that the company provides gas service, to the extent of its capacity, to an indefinitely open class of customers. Id. at 474 (citation omitted and emphasis added). 3 The Public Utility Code also defines activities that do not constitute public utility service as follows: (i) Any person or corporation, not otherwise a public utility, who or which furnishes service only to himself or itself. (ii) Any bona fide cooperative association which furnishes service only to its stockholders or members on a nonprofit basis. (iii) A producer of natural gas not engaged in distributing such gas directly to the public for compensation. 66 Pa.C.S. ? 102. 28 In the instant case, I find that the West Wyoming Gate Station will provide natural gas service that is open "to or for the public." Natural gas delivered by the Auburn II Line will be delivered through the West Wyoming Gate Station under service contracts fully subject to and governed by the terms and conditions of PNG's Commission-approved gas service tariff, and the resulting revenues will be Commission-jurisdictional natural gas distribution revenues that will be available to meet PNG's revenue requirements. Moreover, a portion of the gas delivered through PNG's West Wyoming Gate Station jurisdictional distribution facilities will be redelivered through the Transco system for subsequent redelivery to PNG, thereby avoiding PNG's need to construct an extension of its distribution system to receive such supplies directly. (PNG Statement No. 1, pp. 8-9) The West Wyoming Gate Station also will be able to receive deliveries of gas from Transco which will be available to serve existing and future PNG distribution service customers. Finally, the proposed West Wyoming Gate Station will provide PNG, and other NGDCs, such as PNG's affiliates, with the potential for greater purchases of Pennsylvania gas, including Marcellus Shale gas, to serve customers. (PNG Statement No. 1-R, pp. 9, 11) Based on these facts, West Wyoming Gate Station serves a public utility purpose. CONCLUSIONS OF LAW 38. As the party seeking approval from the Commission, PNG has the burden of proof. 66 Pa.C.S. ? 332(a). 37. 39. PNG's burden of proof is satisfied by establishing a preponderance of evidence which is substantial and legally credible. This standard is satisfied by presenting evidence more convincing, by even the smallest amount, than that presented by another party. Samuel J. Lansberry, Inc. v. Pa. Pub.Util.Commn., 578 A.2d 600, 602 (Pa. Cmwlth. 1990); Brown v. Commonwealth of Pennsylvania, 940 A.2d 610, 614 n.14 (Pa. Cmwlth. 2008). 38. 29 40. Any finding of fact necessary to support an adjudication of the Commission must be based upon substantial evidence. Met-Ed Indus. Users Group v. Pennsylvania Public Utility Commission, 960 A.2d 189, 193 n.2 (Pa. Cmwlth. 2008) (citing 2 Pa.C.S. ? 704). 39. 41. The presence of conflicting evidence in the record does not mean that substantial evidence is lacking. Allied Mechanical and Elec., Inc. v. Pennsylvania Prevailing Wage Appeals Board, 923 A.2d 1220, 1228 (Pa. Cmwlth. 2007). 40. 42. Public utility facilities are exempt from local regulation. See Duquesne Light Company v. Monroeville Borough, 449 Pa. 573, 580, 298 A.2d 252, 256 (1972) ("This Court has consistently held, however, that the Public Utility Commission has exclusive regulatory jurisdiction over the implementation of public utility facilities") (citations omitted). See, e.g., Newtown Township v. Philadelphia Elec. Co., 594 A.2d 834, 837 (Pa. Cmwlth. 1991) (noting that "it is clear that no 'implied' power exists in the MPC which would allow the Township to regulate [the Philadelphia Electric Company] through its subdivision and land development ordinance"); Heintzel v. Zoning Hearing Board of Millcreek Township, 533 A.2d 832 (Pa. Cmwlth. 1987) (holding that township had no power to regulate, under its zoning ordinance, city's erection of water tower because that power was under the exclusive jurisdiction of the PUC); South Coventry Township v. Philadelphia Elec. Co., 504 A.2d 368 (Pa. Cmwlth. 1986) (noting that to possibly subject [the Philadelphia Electric Company] to a miscellaneous collection of regulations upon its system would clearly burden and indeed disable it from successfully functioning as a utility); Commonwealth v. Delaware and Hudson Railway Co., 339 A.2d 155 (Pa. Cmwlth. 1975) (holding that the MPC did not authorize local governments to regulate public utilities in any manner which infringes upon the power of the Commission to so regulate). 41. 43. If public utility companies had to comply with different conditions and standards imposed by each municipality, it would become untenable to manage the distribution facilities and the growth of these systems. See County of Chester v. Philadelphia Elec. Co., 30 420 Pa. 422, 218 A.2d 331 (1966) (holding that regulation by a multitude of jurisdictions would result in "twisted and knotted" public utilities with consequent harm to the general welfare). 42. 44. Under Section 619 of the Pennsylvania Municipalities Planning Code ("MPC"), Act of July 31, 1968, P.L. 805, as amended, 53 P.S. ? 10619, a municipality may exercise its zoning powers over a public utility building unless the Commission determines that the site is reasonably necessary for the public convenience or welfare. If the Commission finds that the location is reasonably necessary for the convenience or welfare of the public, the building is exempt from local zoning ordinances under the MPC. 53 P.S. ? 10619; Del-AWARE Unlimited, Inc. v. Pennsylvania Public Utility Commission, 513 A.2d 593, 596 (Pa. Cmwlth. 1986), appeal denied, 515 Pa. 587, 527 A.2d 547 (1987). 43. 45. Section 619 only empowers the Commission, upon petition, to decide if there is reasonable necessity for the site. Del-AWARE Unlimited, Inc. v. Pennsylvania Public Utility Commission, 513 A.2d 593, 596 fn.4 (Pa. Cmwlth. 1986). 44. 46. Section 619 of the MPC does not require a utility to prove that the site it has selected is absolutely necessary or that it is the best possible site; rather, the utility must only demonstrate "reasonable necessity" for a particular location, not absolute need. O'Connor v. Pennsylvania Public Utility Commission, 582 A.2d 427, 433 (Pa. Cmwlth. 1990) (citing Re Philadelphia Suburban Water Co., 54 Pa. PUC 127, 132 (1980)). 47. PNG must decide in the first instance what facilities are needed and where to locate those facilities. Unless PNG acted in an arbitrary or capricious manner, its decision should remain undisturbed. See e.g., Lower Chichester Township v. Pennsylvania Public Utility Commission, 119 A.2d 674 (Pa. Super 1956); Abbington Electric Co. v. Pennsylvania Public Utility Commission, 198 A. 901 (Pa. Super 1938). 45. 48. PNG acted reasonably in selecting the proposed site for its West Wyoming Gate Station and, by extension, PNG also acted reasonably in selecting the location of its proposed structures to shelter certain equipment at the gate station. 46. 31 49. There will be substantial public benefits resulting from the construction of the West Wyoming Gate Station and, by extension, through the location of the structures at the site to shelter the equipment. 47. 50. The fact that the proposed gate station will not benefit everyone does not mean that the project does not benefit the public. See, e.g., Popowsky v. Pennsylvania Public Utility Commission, 594 Pa. 583, 617-18, 937 A.2d, 1040, 1061 (2007) (holding that substantial public benefits do not require that every customer receive a benefit from the proposed action). 48. 51. The Commission recognizes that the need for utility projects must be evaluated on a regional basis, even if Pennsylvania is not directly or primarily served by the project. See e.g., Application of PPL Electric Utilities Corporation Filed Pursuant to 52 Pa. Code Chapter 57, Subchapter G, for Approval of the Siting and Construction of the Pennsylvania Portion of The Proposed Susquehanna-Roseland 500 kV Transmission Line, et al., Docket Nos. A-2009-2082652, et al., 2010 Pa. PUC LEXIS 434 (February 12, 2010). 49. 52. The Commission is not empowered under Section 619 of the MPC to evaluate the various aspects of the environmental impact of a project and, instead, is obliged to defer to the determinations of those agencies with jurisdiction over such impacts. O'Connor v. Pennsylvania Public Utility Commission, 582 A.2d 427, 430-31 (Pa. Cmwlth. 1990). 50. 53. PNG has met its burden of proof in this proceeding. 51. 54. Many of the issues and concerns raised by the Intervenors and witnesses at the public input hearing are beyond the Commission's jurisdiction in this matter. Del-AWARE Unlimited, Inc. v. Pennsylvania Public Utility Commission, 513 A.2d 593, 596 fn.4 (Pa. Cmwlth. 1986). ORDER THEREFORE, 32 IT IS ORDERED: 1. That the Petition of UGI Penn Natural Gas, Inc. for a finding that structures to shelter pipeline facilities in the Borough of West Wyoming, Luzerne County are reasonably necessary for the convenience or welfare of the public and therefore exempt from any local zoning ordinance, at Docket No. P-2013-2347105, is hereby granted in that the proposed four "structures" constitute "buildings" and their proposed situation in question is reasonably necessary for the convenience or welfare of the public within the meaning of Section 619 of the Municipalities Planning Code (MPC) Act of July 31, 1968. P.L. 805 as, amended, 53 P.S. ?10619. 2. That this proceeding at Docket No. P-2013-2347105 be closed. Dated: August 16, 2013 \s\ Elizabeth Barnes Administrative Law Judge 33