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Ohio Regulators Accept Results of DEO's NatGas Supply Auction

The Public Utilities Commission of Ohio (PUCO) said it accepted the results of Dominion East Ohio's (DEO) auction for its standard service offer (SSO) and standard choice offer (SCO) rates, with gas supplies locked in for applicable customers through March 2017.

PUCO said Wednesday the auction resulted in a discount of 5 cents/Mcf off the New York Mercantile Exchange (Nymex) month-end settlement price. The agency said the auction [No. 07-1224-GA-EXM] secured natural gas supplies for DEO's SSO and SCO customers for a 12-month period, beginning on April 1 and expiring on March 31, 2017.

A descending clock auction for the SSO and SCO rates was held Tuesday. According to PUCO, seven natural gas suppliers submitted bids based on fixed adjustments to the Nymex settlement price. The agency said it would not disclose the names of the four winning bidders for the next 15 days in order "to protect the suppliers' positions in contract negotiations with pipeline companies."

DEO Vice President Jeff Murphy called the auction result “incredible” and cited several factors for its success.

“First and foremost is the abundant production from the Utica and Marcellus shale formations that has totally reshaped the nation's natural gas marketplace and this region's in particular,” Murphy told NGI’s Shale Daily on Wednesday. “Secondly, the suppliers vying for the right to serve that portion of our market bring a tremendous amount of expertise to reliably delivering competitively-priced natural gas to our system.

“Lastly, the other stakeholders in our auction, most notably PUCO staff, have helped us structure a very competitive approach to the process.”

According to PUCO, DEO's SSO and SCO rates change monthly and in the future will be calculated at the Nymex month-end settlement price, minus 5 cents/Mcf. "The price adjustment reflects the winning bidders' estimate of their cost to deliver natural gas from the production area to DEO's service area," the agency said.

The SCO rate applies to DEO customers that have not yet selected an alternative gas supplier; DEO customers that have already picked an alternative supplier would not be affected by the change in the SCO rate. PUCO said eligible customers "will continue to have the option to enroll with an energy choice supplier of their choosing, join a government aggregation group or choose the SCO."

DEO operates more than 19,000 miles of natural gas transmission, distribution and gathering lines in a service territory that covers more than 4,700 square miles. Its parent company, Richmond, VA-based Dominion, is one of the largest energy producers in the United States, producing about 24,400 MW of electric power annually. Dominion's gas transmission subsidiary, Dominion Transmission Inc., maintains 7,800 miles of pipeline in six states.

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