Study Calls Gas Unbundling a 'Minimal Success'
Given the "slim to non-existent gross margins" for marketers,
retail gas unbundling at the state level has been a "minimal
success" at best so far, according to the results of a study of
more than 100 LDCs released recently.
The report, which was conducted by Bentek Energy Research of
Lakewood, CO, found that the transportation rate structures of most
utilities do not provide an opportunity for residential, commercial
and even industrial customers to capture significant savings from
marketers or other non-utility suppliers. Among the commercial and
residential classes especially, it said several LDCs included
administrative charges in their rates that were as high as 87 times
the similar charge for the corresponding sales service.
Of the 100 LDCs surveyed, Bentek said that only 5% offered
savings of at least 10% to residential customers, only 25% provided
10% savings to commercials, and 50% offered similar savings to
"High charges [by LDCs] obviously discourage all but the larger
consumers from economically utilizing transportation services,"
said Porter Bennett, president of Bentek. "Moreover, these charges
impinge upon the marketer's ability to profit from selling to
The study, "Retail Gas Markets - How Open Are They?," raises a
significant question. "If customers cannot save money, and thus
have no incentive to switch away from the utility, and marketers
cannot make money and thus sustain their investments in the retail
business, how will unbundling succeed?" Bennett asked. State
commissions need to take a close look at how these small-volume
transportation rates are affecting unbundling, he said.
The top ten ranking utilities offering the highest savings to
customers include National Fuel Gas Distribution, Columbia Gas of
Ohio, Colonial Gas of Massachusetts, and Bay State Gas, according
to the report. The study also included Equitable Gas Co. on this
list when it ranked the companies last January, but it noted that
since then Equitable has made changes to its rate structure that
lead it now to believe that the LDC's savings were "significantly
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