Customer choice in the United States is picking up steam, asevidenced in the American Gas Association’s (AGA) Energy Analysis2000 update released yesterday. The study follows natural gaspurchasing trends for the industrial, electric utility, commercialand residential sectors.

In 1998 “more than 80% of the natural gas consumed in the UnitedStates could be purchased from sources other than the localdistribution utility,” i.e. customer choice. For that year, themost recent for which complete data is available, “61% of all gasconsumed in the United States was bought under a customer choiceoption,” the study said.

The paper states that, “the customer choice option is, or soonwill be, available for about 69% of all commercial gas volumes, and45% of all residential volumes.” Customer choice is available for99% of electric utility gas volumes, and 96% of industrial gasvolumes.

Based on statistics received from the Department of Energy’sEnergy Information Administration, the AGA study shows that 87% ofelectric utilities and 91% of industrial customers purchased theirgas from non-gas utility sources. Among smaller customers, 35% ofcommercial customers and 3% of residential customers bought gaselsewhere.

Residential choice programs began operation in 1996, and by 1998there were only a limited number in operation. A report by theNational Regulatory Research Institute shows that low participationrates during these programs’ initial years are typical forindustries undergoing restructuring.

The wide range of volume percentage results among sectors can beexplained as a trend. Large customers such as industrial andelectric utilities are more likely to take advantage of customerchoice. Savings per unit of gas can be very small, and residentialcustomers often disregard choice due to the hassle and lack ofperceived return. Industrial and electric utility customers canexperience a greater savings through the purchasing of largerquantities, where the small savings per unit add up.

The AGA study supports such a claim. Even among residentialcustomers with different volume needs. The average residentialcustomer who purchased gas conventionally was found to use 78 Mcf ayear, an average residential customer that bought gas through achoice program tended to use about 108 Mcf a year. Likewise, anaverage industrial customer purchasing conventionally was found touse about 4,427 Mcf, but under choice, an average industrialcustomer would purchase 153,429 Mcf.

The study’s 1998 regional analysis found that the West SouthCentral Region which includes Arkansas, Louisiana, Oklahoma andTexas, had the highest percentage of choice customers, with 89% ofits gas volume being bought through choice. Followed by the PacificRegion 60% (Alaska, California, Hawaii, Oregon and Washington), TheEast South Central Region 58% (Alabama, Kentucky, Mississippi andTennessee) and the South Atlantic Region 56% (Delaware, District ofColumbia, Florida, Georgia, Maryland, North Carolina, SouthCarolina, Virginia and West Virginia).

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