Retail Gas Choice a Hard Sell in Colorado
There are still no takers in a plan to unbundle Colorado's gas utilities,
but at least two utilities may be warming to the idea. A meeting in mid-July
of the Colorado Public Utilities Commission (PUC) to discuss natural gas
local distribution company unbundling, gas utility plans and consumer issues
concluded with only two companies --- the largest ones serving the state
--- reporting that they might provide unbundling programs. Just not now.
Why the hesitation? Most point to low gas prices in the state already,
but the dozen or so energy companies also appear to not see any clear advantage
to them or to consumers in offering the program. It was more than a year
ago when Gov. Bill Owens signed legislation setting the stage for retail
deregulation (see NGI, June 7, 1999). Despite
the smooth passage of the restructuring bill through the state's legislature,
all has not gone as smoothly with reluctant energy companies and reluctant
However, Public Service of Colorado (PSCo) and Kinder Morgan, which
markets through KN Energy, reported that they may soon present plans to
the PUC to offer unbundling services for prospective Colorado customers.
PSCo is the state's largest gas utility, but officials there say they
still don't have a plan ready to submit. KN Energy, which serves 50,000
customers in Northeast Colorado and the western slope, said last year it
was stepping up plans to open its service areas to competition, mirroring
successful efforts through its Choice Gas program in Nebraska and Wyoming.
However, last week, KN Energy officials said they were backing away from
quickly implementing such a program for at least a year.
PUC's Barbara Fernandez said that without companies submitting unbundling
plans, and without consumers and industry requesting them, it may be months
before the PUC has enough information to set rules for unbundling, as required
under the approved legislation. Until then, the PUC will continue to hold
hearings on the issue, but there are no plans to begin writing the regulatory
framework, with the exception of licensing rules. More public education
efforts also are planned to gauge consumer interest.
The state has never embraced unbundling programs as its neighbors have.
In November 1999, members of the Colorado Electricity Advisory Panel capped
a 15-month study ordered by the Colorado Legislature with a vote of 17-12
that restructuring "is not in the best interests of all Colorado electricity
consumers and the state as a whole."
At the recent PUC hearing, some of the panel's negative findings were
echoed by energy company officials: Colorado is a low-price gas state and,
therefore, it makes unbundling less attractive because of the cost to implement
it; unbundling might require more consumer protections, and thus more rulemakings;
and it could dampen recovery of costs for investments that utilities have
Another problem, said the panel, was that many of Colorado's consumers
favor renewable energy sources, and feel that offering choice will lower
the state's and the energy companies' expenditures in that area.
Carolyn Davis, Houston