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Retail Gas Competition Shows Some Signs of Life in CA

Retail Gas Competition Shows Some Signs of Life in CA

Retail gas competition is starting to pick up speed in California despite continued consumer apathy, according to a survey of the state's three gas distribution utilities released last week.

Pacific Gas &amp Electric (PG&ampE) now has 16 marketers aggregating loads; two years ago, it had only four. Southern California Gas (SoCalGas) has 12 aggregators now, compared to about a half-dozen a year ago; and San Diego Gas and Electric (SDG&ampE) reports six current aggregators. On the Internet, SoCalGas reports that the joint Energy Marketplace website that it operates with PG&ampE currently has seven marketers involved in northern California and six in the southern half of the state.

Despite the growth in the number of marketers and aggregators, however, PG&ampE is experiencing the only meaningful expansion of actual aggregation, and the vast bulk of the growth is limited to small business customers, with little or no growth among residential customers.

PG&ampE reported growth of 17% and 11% for the total meters and gas volumes, respectively, covered by competing suppliers over the past year. And over the past two years those same categories have increased 44% and 37%, respectively.

Overall, the three investor-owned gas utilities currently have about 22,000 meters (accounts) participating in gas aggregation, representing a total annual load of about 33 to 34 Bcf. SDG&ampE has experienced a small increase in the total volume of gas, but a 1% drop in the number of meters (1,006) in the program. SoCalGas has remained about the same with more than 10,000 meters and 17 Bcf of core supplies involved in aggregation, representing about 5% of its total core throughput.

Jerry Miller, PG&ampE's director of gas industry restructuring, is optimistic the volumes will increase once aggregators and marketers make a concerted effort to ramp up volumes. Most participants are still getting their internal operating structures in place to compete in both electricity and natural gas aggregation longer term. Except for two firms, Miller said, for the most part the marketers are maintaining separate staffs for power and gas aggregation and going after separate customers.

"There is some crossover, but not a lot yet," Miller said. "Many players are just trying to get their feet wet with core markets to understand longer term what it is going to take to succeed in those markets. They don't have a lot of experience in the core markets yet. But down the line, they will do both [power and gas] to the core customers."

As a means of stimulating more customer and marketer interest, SoCalGas earlier this month started completing direct access requests electronically, switching customers from utility gas buying services to an aggregator through use of the Internet "Marketplace" website. The move makes it easier and less costly for aggregators to switch customers because all they need to do it is have Net access.

Richard Nemec, Los Angeles

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