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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