Given the “slim to non-existent gross margins” for marketers,retail gas unbundling at the state level has been a “minimalsuccess” at best so far, according to the results of a study ofmore than 100 LDCs released recently.

The report, which was conducted by Bentek Energy Research ofLakewood, CO, found that the transportation rate structures of mostutilities do not provide an opportunity for residential, commercialand even industrial customers to capture significant savings frommarketers or other non-utility suppliers. Among the commercial andresidential classes especially, it said several LDCs includedadministrative charges in their rates that were as high as 87 timesthe similar charge for the corresponding sales service.

Of the 100 LDCs surveyed, Bentek said that only 5% offeredsavings of at least 10% to residential customers, only 25% provided10% savings to commercials, and 50% offered similar savings toindustrial customers.

“High charges [by LDCs] obviously discourage all but the largerconsumers from economically utilizing transportation services,”said Porter Bennett, president of Bentek. “Moreover, these chargesimpinge upon the marketer’s ability to profit from selling toend-use customers.”

The study, “Retail Gas Markets – How Open Are They?,” raises asignificant question. “If customers cannot save money, and thushave no incentive to switch away from the utility, and marketerscannot make money and thus sustain their investments in the retailbusiness, how will unbundling succeed?” Bennett asked. Statecommissions need to take a close look at how these small-volumetransportation rates are affecting unbundling, he said.

The top ten ranking utilities offering the highest savings tocustomers include National Fuel Gas Distribution, Columbia Gas ofOhio, Colonial Gas of Massachusetts, and Bay State Gas, accordingto the report. The study also included Equitable Gas Co. on thislist when it ranked the companies last January, but it noted thatsince then Equitable has made changes to its rate structure thatlead it now to believe that the LDC’s savings were “significantlyoverstated.”

Susan Parker

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