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Ohio PUC Gives Choice To 1.8 Million Gas Customers

Ohio PUC Gives Choice To 1.8 Million Gas Customers

The Public Utility Commission of Ohio (PUCO) made it possible last week for 1.8 million retail gas customers in more than 64 Ohio counties to begin choosing gas suppliers this winter. The commission approved a huge expansion of Columbia Gas of Ohio's pilot program and extended the pilots of Cincinnati Gas &amp Electric and East Ohio Gas. Commissioners also indicated they are willing to proceed with additional modifications to improve retail gas competition in the state.

"This program was successful last winter when it was tested, and the benefits of the program now will be spread to about two-thirds of Ohio," said Ohio Gov. George V. Voinovich.

Customer savings have totaled $8 million in Columbia's Toledo, OH, pilot, the utility said. The 60,000 customers (30% of the residential customers eligible and 46% of the eligible small commercial customers) who participated reduced their monthly gas bills by an average of 15% and as much as 18%. And enrollment additions have remained steady at 3,000 to 5,000 per month. Currently 15 suppliers are serving or actively seeking customers. In addition, surveys have shown customer awareness of the program is 90%, with few customer complaints.

Columbia's program now will be expanded to cover its entire 1.3 million customers in the state. The order also approves the continuation of customer choice for 365,000 customers in Cincinnati Gas &amp Electric's territory and for 160,000 customers of East Ohio Gas.

PUCO staff had requested East Ohio expand its program to 500,000 customers this winter and to more than 1 million next year, but East Ohio said computer problems related to billing and year 2000 glitches made the expansion infeasible.

".I agree, albeit reluctantly, that due to the billing and computer problems on the East Ohio system we cannot responsibly, at this time, extend the program," said Commission Chairman Craig A. Glazer. "However, we will continue to oversee East Ohio's efforts to seek alternative billing arrangements so the program can go forward."

On a 2-1 vote, the commission rejected a plan to allow customer sign-ups over the phone, favoring the current system of written confirmation. ".I believe permitting, even encouraging, additional telemarketing will only create a negative backlash by the consumer towards marketers," said Commissioner Judith A. Jones. "Furthermore, explaining ramifications of complicated contracts, which may span a number of months, requires close customer scrutiny." Jones said she's "not convinced" that telephonic enrollment would provide customers with enough protection against undesired changes in their gas bill through "slamming," which is signing up customers over the phone without their consent or complete understanding of terms of the service being offered.

In his remarks, Glazer said it's now time for the commission to examine additional modifications to increase competition, such as reforming the gas cost recovery mechanism because it is an ineffective market indicator. ".[W]hen various refunds flow through the GCR, it can have the effect of wiping out a marketer's margins not because the LDC bought gas any better but rather solely because of the unique workings and time lags associated with the GCR." He said the GCR is "skewing the competitive market. We need to fix this quickly if the program is to truly lead to effective competition." He suggested not showing the GCR on customer bills or just showing the expected gas cost.

"Ultimately, we should 'think outside the box' by looking at such innovative mechanisms as getting the LDCs out of the merchant function entirely and putting that function out to bid with the price flowed through the GCR," Glazer added. "Unless we do this, the LDC will continue to operate with one foot in the regulated world and one foot in the competitive world and regulation will continue to be needed to avoid the mixing of the two." The chairman challenged Ohio's LDCs to come up with some innovative solutions to these problems and present them to the commission to be implemented on an experimental basis.

Rocco Canonica

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