State Regulators Tinker with Dominion East Ohio's Retail Program

Sorting out a dispute between Dominion East Ohio and an ad hoc group of retail gas marketers in the state, the Public Utilities Commission of Ohio (PUCO) clarified its stance on a number of provisions in Dominion's proposed tariffs in the state. PUCO sided with marketers on Dominion's proposed operational flow order penalties, credit issues and upstream transportation requirements for retail service, but kept the bulk of Dominion's tariff in tact.

The commission put off a decision on the tariffs of the state's two other large gas utilities, Columbia Gas of Ohio and Cincinnati Gas & Electric Co. (CG&E), so that it could focus on the dispute between the group of marketers and Dominion.

Concerned that some of the utilities' tariffs could harm marketers in the state, Energy America LLC, The Energy Cooperative of Ohio, Interstate Gas Supply Inc., Shell Energy, Vectren Energy Services, Vectren Retail Energy Services Inc., and WPS Energy Services Inc. joined together to form an ad hoc coalition, which filed a report last November that sought uniform statewide requirements for marketers, including standards for financial security and defaults. However, the PUCO was not convinced that consolidation was necessary to "effectuate consistent or coordinated tariff provisions."

Instead, PUCO chose to address the utilities' proposals separately, with an initial focus on the concerns the marketers had about several provisions in Dominion's proposed tariff.

Among its complaints, the ad hoc coalition objected to Dominion making potential operational flow order (OFO) penalties part of the financial security that every supplier must post. The PUCO said it agreed that OFO penalties are not costs that should be associated with participation in the retail choice program. "We agree with the coalition that OFO penalties are not costs to Dominion of actually delivering back-up gas and, thus, should not be part of the equation establishing supplier financial security amounts."

The commission also was sympathetic with the coalition's request that Dominion have a timeline for securing additional credit once a supplier shows customer growth. PUCO decided that five business days notice was acceptable for notification of additional security by Dominion.

The coalition disputed Dominion's request that suppliers be obligated to deliver gas to a particular city gate when needed by the utility in order to avoid delivery problems. The group noted that suppliers may not hold primary firm rights to an isolated city gate or have capacity available at a time of constraint and, therefore, should not be subject to expulsion for not complying with the tariff.

Dominion subsequently backed off, saying it would first ask the holders of primary firm rights on the city gate in question for additional supplies. As a result of this concession, the commission said it believes "the issue is appropriately resolved," and looks for Dominion to revise its proposal.

The marketers also sought to have the new tariff provide a reasonable mechanism to address what happens when a customer terminates a contract with the incumbent supplier in order to sign up with another supplier, including timely notice to the incumbent supplier, an explanation to the customer regarding financial risk, and a means to promote the integrity of the first contract if the customer chooses to remain. Dominion said it believes that it should not be placed in the position of helping suppliers enforce their customer contracts. The Ohio Consumers Counsel and the commission agreed.

In addition, the commission said it believes Dominion's tariff provides suppliers with "adequate knowledge of what will be considered a default." PUCO added, however, that it is "not comfortable" incorporating into Dominion's tariff the concept of "anticipatory default" or "anticipatory repudiation" as set forth in the Uniform Commercial Code. Nor does it believe that it is necessary.

Dominion is now expected to file compliance tariffs with the fine-tuning requested by the Commission and will proceed with its customer choice plan.

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