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Retail Gas Choice a Hard Sell in Colorado

Retail Gas Choice a Hard Sell in Colorado

There are still no takers in a plan to unbundle Colorado's gas utilities, but at least two utilities may be warming to the idea. A meeting in mid-July of the Colorado Public Utilities Commission (PUC) to discuss natural gas local distribution company unbundling, gas utility plans and consumer issues concluded with only two companies --- the largest ones serving the state --- reporting that they might provide unbundling programs. Just not now.

Why the hesitation? Most point to low gas prices in the state already, but the dozen or so energy companies also appear to not see any clear advantage to them or to consumers in offering the program. It was more than a year ago when Gov. Bill Owens signed legislation setting the stage for retail deregulation (see NGI, June 7, 1999). Despite the smooth passage of the restructuring bill through the state's legislature, all has not gone as smoothly with reluctant energy companies and reluctant consumers.

However, Public Service of Colorado (PSCo) and Kinder Morgan, which markets through KN Energy, reported that they may soon present plans to the PUC to offer unbundling services for prospective Colorado customers.

PSCo is the state's largest gas utility, but officials there say they still don't have a plan ready to submit. KN Energy, which serves 50,000 customers in Northeast Colorado and the western slope, said last year it was stepping up plans to open its service areas to competition, mirroring successful efforts through its Choice Gas program in Nebraska and Wyoming. However, last week, KN Energy officials said they were backing away from quickly implementing such a program for at least a year.

PUC's Barbara Fernandez said that without companies submitting unbundling plans, and without consumers and industry requesting them, it may be months before the PUC has enough information to set rules for unbundling, as required under the approved legislation. Until then, the PUC will continue to hold hearings on the issue, but there are no plans to begin writing the regulatory framework, with the exception of licensing rules. More public education efforts also are planned to gauge consumer interest.

The state has never embraced unbundling programs as its neighbors have. In November 1999, members of the Colorado Electricity Advisory Panel capped a 15-month study ordered by the Colorado Legislature with a vote of 17-12 that restructuring "is not in the best interests of all Colorado electricity consumers and the state as a whole."

At the recent PUC hearing, some of the panel's negative findings were echoed by energy company officials: Colorado is a low-price gas state and, therefore, it makes unbundling less attractive because of the cost to implement it; unbundling might require more consumer protections, and thus more rulemakings; and it could dampen recovery of costs for investments that utilities have made already.

Another problem, said the panel, was that many of Colorado's consumers favor renewable energy sources, and feel that offering choice will lower the state's and the energy companies' expenditures in that area.

Carolyn Davis, Houston

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