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Consumers' Pilot Program Exceeds Expectations

Consumers' Pilot Program Exceeds Expectations

Surprising even itself, Consumers Energy announced last week that in only eight months of the Gas Customer Choice program, 100,000 of its customers switched to an alternate supplier, reaching the limit for the first year of the plan. Out of the 10 suppliers vying for Consumers' market, Sempra Energy affiliate Energy America-Michigan topped the list by signing 90% of the enrollments, a Michigan Public Service Commission (MPSC) spokesperson said.

At $2.84 per Mcf, the rate offering is the same from both Energy America and Consumers, but Energy America is adding a rebate of 5-7% after three years of service. One supplier, who declined to be named, said that Energy America's success stemmed from its aggressive marketing tactics, and not its offer. "We offered a lower rate than Consumers and Energy America but did not put in a major promotional effort. They [Energy America] hired a massive salesforce that beat the streets and signed the customers. I guess you've got to take your hat off to them." CMS Marketing, Services, &amp Trading was second on the list with 5,000 enrollments.

Consumers viewed the announcement as a sign that deregulation works. "This tells us that a competitive marketplace can develop very quickly," said Paul Elbert, Consumers' CEO, "and it also tells us that customers want the power of choice and when they get it, they're going to use it."

Jeff Holyfield, a Consumers spokesman said, "We didn't know what to expect. But it is safe to say that nobody thought we'd reach 100,000 before a year passed."

Consumers' three-year Gas Customer Choice Program began on April 1. It allows 100,000 customers each year of the plan to explore offers from the 10 companies Consumers has approved. Overall, the utility is Michigan's largest, serving six million of the state's 9.5 million residents in all 68 lower peninsula counties. Companies in the program include Energy America, CMS Marketing, Services &amp Trading, DTE-CoEnergy, EMC Gas Transmission, Eastcoast Gas, Howard/Avista, MichCon Fuels, Michigan Gas Exchange, Unicom Energy Services, and WPS Energy Services.

In related news, two other Michigan utilities have three-year pilot deregulation programs that allow alternate suppliers to start service April 1. Semco Gas, which serves 210,000 customers in southeastern Michigan, received MPSC permission to start its program on Sept. 11. It allows 8,000 customers each year to switch to one of seven alternate suppliers. Sign-ups for the plan are taken on a first-come, first-served basis. Alternate suppliers vying for Semco's customers include WPS Energy, Columbia Energy, Semco Energy Service, OGE Energy Resources, Energy America, Michigan Schools Energy Cooperative, and Consumers. Semco has not released the number of customers that have signed with another company.

Sign-ups for Michigan Consolidated Gas Co.'s pilot program will start Jan. 1. This is a voluntary program open to all of its 1.2 million residential customers on a first-come, first-served basis. Up to 75,000 customers per year can switch to a new supplier over a three-year period beginning on April 1, 1999 for a total of 225,000 customers. Seven suppliers, including Columbia Energy, Consumers, and Energy America, will take part in this program.

John Norris

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