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Kansas Unbundling NOI Responses Vary

Kansas Unbundling NOI Responses Vary

Eskridge, KS (Pop. 518), can live without unbundled gas service, thank you very much. The city-owned Eskridge Gas System, which serves about 587 customers in Eskridge and four nearby communities, would rather not be bothered with trying to educate customers about gas supplier choice.

"Educating [the] public on the unbundling in our rural areas would be somewhat difficult when most don't understand how to read their gas bills. I feel that this would be very counter productive and costly," Eskridge Gas Superintendent Melvin W. Craver Sr. Wrote the Kansas Corporation Commission (KCC) in response to a notice of inquiry on unbundling. In the end, Craver said he doesn't believe savings would be realized through unbundling.

However, other Kansas gas players are not of the same mind. The KCC's NOI gave the Kansas LDC Group - made up of Kansas Gas Service, United Cities Gas, Greeley Gas, and Peoples Natural Gas companies, and municipal Midwest Energy - the opportunity to tout a performance-based ratemaking mechanism as a means to achieve customer savings. "A key consideration for the LDC in determining whether it wishes to continue providing a merchant service is whether it could realize a profit from gas commodity sales." Performance-based ratemaking should apply to both the commodity and transportation, the group said. But it wants it to be optional for LDCs. The group also requested Midwest Energy, a customer-owned utility, be allowed to conduct a pilot gas choice program.

While more optimistic than Eskridge's Craver, the LDC group said competition wouldn't necessarily mean savings for all. "The possibility of lower gas supply prices due to competition will also need to be balanced against higher administrative costs and the possibility of price volatility."

Williams Gas Pipelines Central also responded to the commission NOI. "It is very likely that any decisions regarding access to natural gas service by retail or residential consumers in Kansas will impact the Williams system.

"Savings offered in one market for which the KCC has oversight may be offset by increased costs to serve other markets where consumers are left with increased responsibility to absorb the costs of systems with lower utilization."

KCC staff filed for an extension of the NOI comment period. Staff cited ongoing work with the Western Resources-Kansas City Power & Light merger as the reason for the request. The KCC filed the NOI in February (see Daily GPI March 19, 1999).

While the majority of Kansas retail gas consumers do not qualify for transportation-only service, the KCC has approved several LDC requests to reduce the threshold at which customers can choose gas suppliers. Initially, the KCC is looking at several alternatives to expand choice: allowing all retail customers to choose suppliers, modifying the purchased gas adjustment (PGA) mechanism to include performance-based rate-making and/or modifying the KCC's purchase contract review process, and requiring LDCs to utilize a competitive bidding process to determine both gas and pipeline capacity purchases. Other alternatives also will be considered, the KCC said in its NOI.

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