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 &
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 & Electric's territory and for 160,000 customers of East
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
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.