The Public Utility Commission of Ohio (PUCO) made it possiblelast week for 1.8 million retail gas customers in more than 64 Ohiocounties to begin choosing gas suppliers this winter. Thecommission approved a huge expansion of Columbia Gas of Ohio’spilot program and extended the pilots of Cincinnati Gas &ampElectric and East Ohio Gas. Commissioners also indicated they arewilling to proceed with additional modifications to improve retailgas competition in the state.

“This program was successful last winter when it was tested, andthe benefits of the program now will be spread to about two-thirdsof 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 theresidential customers eligible and 46% of the eligible smallcommercial customers) who participated reduced their monthly gasbills by an average of 15% and as much as 18%. And enrollmentadditions 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 programis 90%, with few customer complaints.

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

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

“.I agree, albeit reluctantly, that due to the billing andcomputer problems on the East Ohio system we cannot responsibly, atthis time, extend the program,” said Commission Chairman Craig A.Glazer. “However, we will continue to oversee East Ohio’s effortsto seek alternative billing arrangements so the program can goforward.”

On a 2-1 vote, the commission rejected a plan to allow customersign-ups over the phone, favoring the current system of writtenconfirmation. “.I believe permitting, even encouraging, additionaltelemarketing will only create a negative backlash by the consumertowards marketers,” said Commissioner Judith A. Jones.”Furthermore, explaining ramifications of complicated contracts,which may span a number of months, requires close customerscrutiny.” Jones said she’s “not convinced” that telephonicenrollment would provide customers with enough protection againstundesired changes in their gas bill through “slamming,” which issigning up customers over the phone without their consent orcomplete understanding of terms of the service being offered.

In his remarks, Glazer said it’s now time for the commission toexamine additional modifications to increase competition, such asreforming the gas cost recovery mechanism because it is anineffective market indicator. “.[W]hen various refunds flow throughthe GCR, it can have the effect of wiping out a marketer’s marginsnot because the LDC bought gas any better but rather solely becauseof the unique workings and time lags associated with the GCR.” Hesaid the GCR is “skewing the competitive market. We need to fixthis quickly if the program is to truly lead to effectivecompetition.” He suggested not showing the GCR on customer bills orjust showing the expected gas cost.

“Ultimately, we should ‘think outside the box’ by looking atsuch innovative mechanisms as getting the LDCs out of the merchantfunction entirely and putting that function out to bid with theprice flowed through the GCR,” Glazer added. “Unless we do this,the LDC will continue to operate with one foot in the regulatedworld and one foot in the competitive world and regulation willcontinue to be needed to avoid the mixing of the two.” The chairmanchallenged Ohio’s LDCs to come up with some innovative solutions tothese problems and present them to the commission to be implementedon an experimental basis.

Rocco Canonica

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