Kansas Unbundling NOI Responses Vary
Eskridge, KS (Pop. 518), can live without unbundled gas service, thank
you very much. The city-owned Eskridge Gas System, which serves about 587
customers in Eskridge and four nearby communities, would rather not be
bothered with trying to educate customers about gas supplier choice.
"Educating [the] public on the unbundling in our rural areas would
be somewhat difficult when most don't understand how to read their gas
bills. I feel that this would be very counter productive and costly,"
Eskridge Gas Superintendent Melvin W. Craver Sr. told the Kansas Corporation
Commission (KCC) in response to a notice of inquiry on unbundling. In the
end, Craver said he doesn't believe savings would be realized through unbundling.
However, other Kansas gas players are not of the same mind. The KCC's
NOI gave the Kansas LDC Group -- made up of Kansas Gas Service, United
Cities Gas, Greeley Gas, and Peoples Natural Gas companies, and municipal
Midwest Energy -- the opportunity to tout a performance-based ratemaking
mechanism as a means to achieve customer savings. "A key consideration
for the LDC in determining whether it wishes to continue providing a merchant
service is whether it could realize a profit from gas commodity sales."
Performance-based ratemaking should apply to both the commodity and transportation,
the group said. But it wants it to be optional for LDCs. The group also
requested Midwest Energy, a customer-owned utility, be allowed to conduct
a pilot gas choice program.
While more optimistic than Eskridge's Craver, the LDC group said competition
wouldn't necessarily mean savings for all. "The possibility of lower
gas supply prices due to competition will also need to be balanced against
higher administrative costs and the possibility of price volatility."
Williams Gas Pipelines Central also responded to the commission NOI.
"Savings offered in one market for which the KCC has oversight may
be offset by increased costs to serve other markets where consumers are
left with increased responsibility to absorb the costs of systems with
KCC staff filed for an extension of the NOI comment period. Staff cited
ongoing work with the Western Resources-Kansas City Power &Light merger
as the reason for the request. The KCC filed the NOI in February (see NGI March 22, 1999).
While the majority of Kansas retail gas consumers do not qualify for
transportation-only service, the KCC has approved several LDC requests
to reduce the threshold at which customers can choose gas suppliers. Initially,
the KCC is looking at several alternatives to expand choice: allowing all
retail customers to choose suppliers, modifying the purchased gas adjustment
(PGA) mechanism to include performance-based rate-making and/or modifying
the KCC's purchase contract review process, and requiring LDCs to utilize
a competitive bidding process to determine both gas and pipeline capacity
purchases. Other alternatives also will be considered, the KCC said in
Joe Fisher, Houston
©Copyright 1999 Intelligence Press, Inc. All rights reserved.
The preceding news report may not be republished or redistributed in whole
or in part without prior written consent of Intelligence Press, Inc.