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Columbia Gas Hints at Ending Price Regulation in Ohio

Columbia Gas of Ohio outlined a possible exit scenario from its merchant function as part of its standard choice offer (SCO) auction process, recently filed with the Public Utilities Commission of Ohio (PUCO).

"It does include a framework for a potential exit from the merchant function if certain conditions are met," a Columbia spokesman told NGI. "If these conditions are met it, does provide a lot of safeguards to make sure that the process happens in an orderly fashion, and provides a lot of protection to customers."

Foremost among those conditions is a stipulation requiring that at least 70% of commercial customers must switch to unregulated pricing plans, followed at least a year later by at least 70% of residential customers also moving to unregulated plans, before Columbia could exit the merchant function.

"Even if those conditions are met, it still must go to the Public Utilities Commission, and we must establish why this is a good thing for the customers...This is by no means a certainty. There are several large, major things that have to happen before this would take place," the spokesman said.

The main focus of the filing, the spokesman said, is to extend by five years Columbia's SCO auction process. "It is an auction process where suppliers compete to provide service to customers, and customers have a choice of that plan or a plan offered by a marketer," the spokesman said. The current plan is set to expire next March.

In a joint motion filed Oct. 4 with the PUCO by Columbia, the Ohio Gas Marketers Group, Retail Energy Supply Association and Dominion Retail Inc. requested that previous orders be modified to allow a SCO auction for the next program year (April 1, 2013 through March 31, 2014) to be conducted on Jan. 29, 2013.

Columbia and the marketer groups asked the PUCO to issue a final order on the capacity, SCO and billing-related issues of the case by Nov. 30 to ensure that Columbia will have enough time to prepare for a proposed Dec. 4 supplier education meeting. Other issues, related to Columbia's potential exit from the merchant function and monthly variable rate program, would be decided later, according to the motion.

In late 2009 the PUCO gave Columbia the green light to obtain gas supplies through a market-based auction process (see NGI, Dec. 7, 2009). Under terms of the agreement, Columbia would no longer obtain gas through individually negotiated contracts with producers. Instead, the utility would hold annual auctions for suppliers to compete to provide Columbia with the gas needed to serve its non-Energy Choice customers.

Columbia agreed in early 2008 to eventually procure gas supplies through an auction as part of a settlement of a gas cost recovery case at the PUCO. The Office of the Ohio Consumers' Counsel (OCC) had called for Columbia to procure wholesale gas supplies through an auction back in 2006, but the utility resisted the idea (see NGI, Dec. 18, 2006).

The OCC is less than enthusiastic about the latest Columbia proposal which would effectively complete the process of deregulation which has progressed from wellhead prices, through interstate pipeline open access, to end users.

But, it's not for everyone. "Consumers should continue to be offered the benefit of competitive choices available in the market, including the option of purchasing natural gas at the standard rate through their local utility," said Amy Kurt, OCC director of public affairs. "In recent years, this option has saved consumers a lot of money."

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