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

“Educating [the] public on the unbundling in our rural areaswould be somewhat difficult when most don’t understand how to readtheir gas bills. I feel that this would be very counter productiveand costly,” Eskridge Gas Superintendent Melvin W. Craver Sr. Wrotethe Kansas Corporation Commission (KCC) in response to a notice ofinquiry on unbundling. In the end, Craver said he doesn’t believesavings would be realized through unbundling.

However, other Kansas gas players are not of the same mind. TheKCC’s NOI gave the Kansas LDC Group – made up of Kansas GasService, United Cities Gas, Greeley Gas, and Peoples Natural Gascompanies, and municipal Midwest Energy – the opportunity to tout aperformance-based ratemaking mechanism as a means to achievecustomer savings. “A key consideration for the LDC in determiningwhether it wishes to continue providing a merchant service iswhether it could realize a profit from gas commodity sales.”Performance-based ratemaking should apply to both the commodity andtransportation, the group said. But it wants it to be optional forLDCs. The group also requested Midwest Energy, a customer-ownedutility, be allowed to conduct a pilot gas choice program.

While more optimistic than Eskridge’s Craver, the LDC group saidcompetition wouldn’t necessarily mean savings for all. “Thepossibility of lower gas supply prices due to competition will alsoneed to be balanced against higher administrative costs and thepossibility of price volatility.”

Williams Gas Pipelines Central also responded to the commissionNOI. “It is very likely that any decisions regarding access tonatural gas service by retail or residential consumers in Kansaswill impact the Williams system.

“Savings offered in one market for which the KCC has oversightmay be offset by increased costs to serve other markets whereconsumers are left with increased responsibility to absorb thecosts of systems with lower utilization.”

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

While the majority of Kansas retail gas consumers do not qualifyfor transportation-only service, the KCC has approved several LDCrequests to reduce the threshold at which customers can choose gassuppliers. Initially, the KCC is looking at several alternatives toexpand choice: allowing all retail customers to choose suppliers,modifying the purchased gas adjustment (PGA) mechanism to includeperformance-based rate-making and/or modifying the KCC’s purchasecontract review process, and requiring LDCs to utilize acompetitive bidding process to determine both gas and pipelinecapacity purchases. Other alternatives also will be considered, theKCC said in its NOI.

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