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Dominion East Ohio Entering Second Phase of Market-Based Rate Plan

Dominion East Ohio has been cleared to begin the second phase of a plan to price residential gas supplies under a market-based methodology through an agreement with the Public Utilities Commission of Ohio (PUCO).

Following approval of the first phase of the plan, Dominion replaced its gas cost recovery (GCR) rate with a standard service offer (SSO) rate in October 2006 (see NGI, Nov. 13, 2006). Under the SSO structure, Dominion buys gas for its energy choice-eligible customers through an auction in which suppliers compete for the ability to provide portions of Dominion's supply. The SSO rate changes monthly based on the New York Mercantile Exchange month-end settlement price. This summer Dominion is to conduct an auction to secure a new SSO rate for the period Sept. 1 through March 31, 2009.

"Many Dominion East Ohio customers have already experienced savings on the gas cost portion of their bill as a result of the company's plan," said PUCO Commissioner Ronda Hartman Fergus. "Proceeding with phase two has the potential to increase these benefits while maintaining important safeguards to protect customers."

By Feb. 15, 2009 Dominion is to conduct two auctions to secure supplies for its customers for the period April 1, 2009 to March 31, 2010. One auction will establish a standard choice offer (SCO) rate for choice-eligible customers. The other will establish a new SSO for percentage of income payment plan customers and other choice-ineligible customers. Dominion must conduct another round of auctions for the period April 1, 2009 to March 31, 2010 in February 2009. The commission must approve all auction results.

Under SCO service, choice-eligible customers can enroll with an energy choice supplier, join a government aggregation buying group or elect to be assigned to a supplier at the SCO rate. Regardless, each customer's bill will indicate the certified retail supplier that is responsible for providing the customer's gas.

"We are pleased that residential consumers will be able to potentially benefit from the results of competitive auctions," said Ohio Consumers Counsel Janine Migden-Ostrander. "Under the standard service offer, customers have saved money since September 2006 over what they would have paid under the traditional gas cost recovery mechanism." The Consumers Counsel noted that the first bidding process in 2006 yielded savings of $100/year for the typical consumer.

Government aggregation group customers and those already enrolled with an energy choice supplier are not affected; their contracts remain the same. If a customer's aggregation or supplier contract expires and the customer does not choose a new choice supplier within two months, the customer will be assigned to a supplier at that supplier's monthly variable rate.

Dominion filed its phase two application with the PUCO on Dec. 28, 2007.

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