Competitive natural gas supplies are widely available and widely used by large customers, including electric generators, industrials and commercial companies, according to two studies issued last Wednesday by the American Gas Association (AGA).

Virtually all of the natural gas consumed by electricity generators, 99%, and industrials, 94%, could be purchased from multiple suppliers in 2001, and this option has proved popular, as generators actually purchased 94% or 5 Bcf from non-utility sources, while industrials purchased 90% or 6.6 Bcf, the AGA reports showed.

More than 72% of all natural gas used in commercial facilities, such as retail stores, schools, hospitals and office buildings, in 2001 was available for purchase from multiple suppliers and about 35% was actually bought from a non-utility supplier.

But, while residential purchases from outside suppliers increased, the volumes represented only 8% or 387 MMcf of residential gas use which overall totaled 4.8 Bcf. In 2001, an additional 700,000 residential natural gas customers participated in customer choice programs — up 21% from the previous year. AGA claims that nearly 30 million of the nation’s 60 million households with natural gas service had, or will soon have, the opportunity shop around for their natural gas supplies.

It all added up to 83% of the natural gas consumed in the United States which could be purchased under a customer choice option. In actuality, 64% of all natural gas consumed that year was purchased competitively, up 1% from the previous year.

“The actual volume of natural gas being purchased from a supplier other than the local natural gas utility has more than doubled during the last 15 years, from 25% in 1985 to more than 64% of all natural gas consumed in 2001,” said Bruce McDowell, AGA director of policy analysis. The total number of customers choosing alternate suppliers increased 16% between 2000 and 2001, with most of the increase in the residential sector.

AGA pointed out that while a few cents difference in price would be a significant incentive for an industrial customer, using large volumes of gas, it would be less significant for a residential customer.

The report listed several reasons for the low level of participation in residential choice programs:

AGA noted that some residential customer choice programs are still in the proposal stage or have not been fully implemented. Six states, Iowa, Massachusetts, New York, New Jersey, Pennsylvania and West Virginia, have enacted regulations to extend customer choice to all customers of major gas utilities. Certain utilities in seven other states, Georgia, Maryland, Michigan, Montana, New Mexico, Ohio and Wyoming, have programs or proposals for extending customer choice to residentials.

Only Georgia’s Atlanta Gas Light, which serves most of the state has 100% participation by virtue of a law passed in the state ordering all AGL customers to get gas from a third party supplier. Customers were given an opportunity to choose a supplier other than the utility, and those who didn’t were assigned to other suppliers. Choice succeeded in Georgia, in effect, because customers had no choice. They were forced off-system.

Nearly four years after Georgia’s retail gas market deregulation complaints have slowed to a trickle and the state legislature and staff of the Georgia Public Service Commission (GPSC) have been able to turn to fine-tuning the system.

“When we were getting a thousand calls a month during the early days, it was all we could do just to respond to the calls,” said Bill Edge, GPSC’s spokesman. Now, with complaints down to about 200 a month recently and under 400 in January, commission “staff has been able to concentrate on enforcement. Now we can be proactive.” The PSC has developed cases and penalized four marketers in the past year and collected $1 million in fines.

The most recent was a $413,800 fine levied on Centrica subsidiary Energy America earlier this month for slamming (see NGI, Sept. 8). In the meantime, the commission also issued a policy statement in July against automatic renewal of fixed price contracts without an affirmative response from the customer. Today, AGL’s deregulated retail market subsidiary, Georgia Natural Gas, still has the largest number of customers in the state, followed by Scana Energy, Shell Energy Service and Southern Company Gas.

Edge said the transition might have been smoother if there had been a pilot program first, but the AGA report shows that most states and utilities that took a slower route have done little more than dabble in competitive choice for residentials.

Next to AGL’s 100% residential choice participation rate, which covers 1.4 million households, Kinder Morgan’s retail program in Nebraska shows a 98% participation rate with 74,000 participants. Next on the list are Dominion East Ohio Gas at 49% or 551,000 customers participating and Columbia Gas of Ohio with 47% or 582,000 customers participating. Columbia of Kentucky had 33% participation or 41,500 customers. All others were below 30% right on down to “negligible” or not even on the list.

In its report, “Summary of Residential Customer Choice Pilot Programs and Initiatives,” AGA said it took no position as to the value of residential unbundling, nor how a program should be constructed.

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.