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Colorado Sets Voluntary Retail Unbundling

Colorado Sets Voluntary Retail Unbundling

Gov. Bill Owens recently signed Colorado's gas deregulation bill, SB99-153, opening the door for voluntary unbundling by the state's gas utilities. The question now is how many utilities will walk through the opening?

The bill allows Colorado's nine utilities to volunteer unbundling plans for their respective service areas to the Colorado Public Utilities Commission (CPUC). The commission decides controversial issues such as capacity assignment, provider of last resort and whether LDCs should be forced to exit the merchant function. Once the plan is approved, the utility can then open up its service area.

The Commission also is required to conduct a study on the entire deregulation bill and present it to the state legislature by Dec. 1, 2000. The report will serve as an update on the unbundling process and, more importantly, determine whether the state should require an unbundling mandate for all utilities. It also will determine if the state should install statewide customer protection rules.

"If the state government is not happy with the number of utilities that are participating in this new forum, then they can decide to make all of them do so. That is this report's major function," said Terry Bote, a CPUC spokesman.

Bote added that none of the utilities are expected to submit programs for at least six months. Once submitted, the unbundling process is expected to take between six months to a year to complete.

The Public Service Co. of Colorado, the state's largest gas utility, said it was in favor of the legislation but would not act hastily. "We're not going to submit a plan for a while. Right now, we're aiming to have one put together sometime near Jan. 1, 2000," said Mark Salley, a Public Service Co. spokesman. He added that although the company will not start deregulating right away, it will start itemizing customers' bills so they can start comparing prices.

KN Energy, the LDC for 50,000 customers in northeast Colorado and the western slope of the state, has already decided to open its service areas to competition. With its ongoing unbundling programs in Nebraska and Wyoming, KN Energy's affiliate, KN Energy Gas Service has an advantage in deregulating Midwest markets and plans to be extremely active in Colorado, said KN Energy spokesperson Sara Hansen.

One concern that was dealt with in the legislature was a provision that would allow some municipal utilities to keep from public eyes information deemed to be sensitive from a competitive standpoint. The bill was amended to require a public hearing to determine which municipal utility records could be closed.

For some utilities, however, the measure did not go far enough. Phil Tollefson, a director at Colorado Springs Utilities, argued that these hearings would tip off rates to competitors. He said if the public hearing determines that the records should be open, it would "be like getting into the ring with one hand tied behind our back. And that would be kind of stupid on our part." Tollefson said he is unsure whether to recommend unbundling for the utility or not.

John Norris

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