Michigan Adopts Terms of Permanent Gas Choice

Gas customer choice appears to be taking hold in yet another state, as the Michigan Public Service Commission last week adopted terms and conditions to make gas choice programs for residential and commercial customers a permanent fixture in the state.

Commission Chairman John Strand said "Today's action reinforces the Commission's belief that flexible regulatory mechanisms are appropriate in the dynamic natural gas industry."

The action follows a commission-ordered collaborative process conducted by the commission staff involving Michigan Consolidated Gas (MichCon), Consumers Energy Co., SEMCO Energy Gas Co. and other interested parties to develop uniform terms for Michigan's natural gas choice program (see Daily GPI, Aug. 7). On Sept. 22, staff submitted its report to the commission and interested parties filed comments on it.

In the order, the commission recognized among other things, that a customer choice program established for larger local distribution companies (LDCs), would not be adequate to impose on smaller LDCs. The commission stated that it would allow smaller regulated LDCs to develop tailored customer choice programs on their own time frame.

The comments the commission received were mixed, with some utilities agreeing with the majority of staff's recommendations, while others requested more time. The one common factor was that all the companies offered minor amendments.

Consumers Energy agreed with the majority of the staff's report. "In general, Consumers Energy Co. believes the report and related documents reflect a reasonable balancing of the various interests that were represented at the collaborative meetings," the company said. Consumers thought a program based on the report could be "implemented in a fairly expeditious manner." It only had a few recommendations and changes.

SEMCO on the other hand, found that there was not enough time to arrive at a decision. "Additional time is still available before the expiration of SEMCO's choice program, during which SEMCO would like the opportunity to explore and discuss its options with the staff and commission," said the company.

Michigan Gas Utilities (MGU), an LDC serving about 150,000 Michigan customers supports the concept of voluntary customer choice programs. "MGU will be working with SEMCO to develop a draft plan of permanent customer choice program that will be submitted to staff by Jan. 1, 2001," MGU said. "This proposed draft will be designed to meet the operational needs of the mid-sized utilities and will contain as much detail as is practical in the timeframe given to the final plan." MGU hopes to implement a customer choice program for its customers around spring 2002.

The commission also ordered that unbundling should be considered for other services provided by Michigan's major utilities within one year of this order, and that the commission staff should develop a customer education program with the help of major stakeholders.

While the three-year terms of the MichCon and SEMCO pilots run until March 31, 2002, that of Consumers Energy, which was initiated a year earlier, expires next April 1. The three companies provide natural gas for approximately 94% of retail gas customers in the state.

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