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Michigan Adopts Permanent Gas Choice Program Terms

Michigan Adopts Permanent Gas Choice Program Terms

Despite trouble in the retail market in several states this year, gas customer choice appears to be making a little progress. The Michigan Public Service Commission has adopted terms and conditions to make gas choice programs for residential and commercial customers a permanent fixture in the state.

This "action reinforces the Commission's belief that flexible regulatory mechanisms are appropriate in the dynamic natural gas industry," said Commission Chairman John Strand. It follows a commission-ordered collaborative process conducted by the commission staff involving Michigan Consolidated Gas (MichCon), Consumers Energy Co., SEMCO Energy Gas Co. and other interested parties to develop uniform terms for Michigan's natural gas choice program. On Sept. 22, staff submitted its report to the commission and interested parties filed comments on it.

In the order, the commission recognized among other things, that a customer choice program established for larger local distribution companies (LDCs) would not the right model for smaller LDCs. The commission encouraged smaller regulated LDCs to develop tailored customer choice programs according to their own time frame. The gas division of the commission plans to work with smaller LDCs such as WPS Corp., Xcel Energy and Peninsular Gas to help them implement their own programs.

The comments the commission received were mixed, with some utilities agreeing with the majority of staff's recommendations but others requesting more time. The one common factor was that all the companies offered changes to proposed rules.

After the order was issued, Consumers Energy filed to expand its program and make it permanent. Using a phased-in approach, Consumers will expand to 600,000 customers beginning April 1, 2001, then to 900,000 on April 1, 2002, and to all customers by April 1, 2003.

Semco told the commission there was not enough time for it to make a decision on the proposal. "The time constraint that was imposed upon the participants, as well as the process as a whole, did not provide adequate time to explore and evaluate what Semco believes to be other viable options," Semco said in its comments. "Additional time is still available before the expiration of Semco's choice program, during which Semco would like the opportunity to explore and discuss its options with the staff and commission."

Michigan Gas Utilities (MGU), an LDC serving about 150,000 Michigan customers, said it supported the concept of voluntary customer choice programs. "MGU will be working with Semco to develop a draft plan of permanent customer choice program that will be submitted to staff by Jan. 1, 2001," MGU said. "This proposed draft will be designed to meet the operational needs of the mid-sized utilities and will contain as much detail as is practical in the time frame given to the final plan." MGU hopes to implement a customer choice program for its customers around spring 2002.

The commission also ordered that unbundling should be considered for other services provided by Michigan's major utilities within one year of this order and that the commission staff should develop a customer education program with the help of major stakeholders.

The MichCon and Semco pilots run until March 31, 2002. The Consumers Energy pilot expires next April. The three companies provide natural gas for 94% of retail gas customers in the state.

Alex Steis

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