Small Marketers Exiting Retail
The current natural gas market is proving a minefield for small
retail marketers, as evidenced by the drop-out rate. Western
Natural Gas, a Dallas-based marketing company, announced last week
it was phasing out its retail marketing business in the face of
increasing natural gas prices and the capital requirements
necessary to obtain supplies.
At the same time, Columbia Gas of Ohio has lost two marketers
from its retail choice program in the last two weeks. The current
market "is accelerating the evolution of the marketplace," said
Columbia spokesman Steve Jablonski. "We're seeing a shake-out in
one winter that otherwise might have taken years."
Western Natural Gas, which had a number of commercial and small
industrial customers in the Denver area, explained the situation
in a press release. "Escalating prices "have placed constraints on
the ability of private companies to obtain operating capital needed
to provide quality natural gas service." The statement was issued
Wednesday after an article appeared in the Rocky Mountain News. "We
have determined that continuing to service the retail market is not
feasible and are in the process of phasing out of that arena.
During this transition period, Western continues to explore options
that will satisfy our existing retail customer base. We would like
to stress that Western Natural Gas is still flowing gas to all of
our customers --- and will continue to do so."
Lori Vining, Western's president, said the company is looking
for a new supplier for its customers as a group. "We are not
leaving them high and dry." Vining said the problems her company
are facing are "no different than those facing others at these high
price levels." She declined to say how many customers or how much
gas, but confirmed they include some Denver school districts.
An industry source said he had been told there were about 100
customers and the volumes totaled between 15 and 20 MMcf/d.
Vining confirmed that the customers had the option of returning
to service from Xcel Energy's distribution subsidiary, Public
Service of Colorado. A spokesman there confirmed the distribution
rates for commercial customers currently are $5.85 per MMBtu, but
are expected to go up to $8.60 an MMBtu when the latest rate hike
is approved by the state public utility commission.
John Talley, president of Proliance Energy in Indianapolis,
denied a published report that it would buy out the retail business
of Western Natural. Proliance "had some brief discussions in
mid-December, but they were not successful. There was no
In the future, Western Natural said its focus will be on
production and producer services, gathering, upstream technology
and wholesale marketing.
The Ohio marketers, Summit Natural Gas and Power Solutions and
Nicole Energy Services, were dropped because they failed to deliver
gas to the Columbia of Ohio system to serve their customers.
Columbia has continued to deliver to the customers, who will now go
back on tariff rates. One other marketer has defaulted since the
program started. Energy Max was terminated last Aug. 30.
"We tried to work with all three," Jablonski said, but were
unsuccessful. Columbia's Ohio choice program currently has about
500,000 customers, out of 1.3 million Columbia customers. Nicole
had about 300 mostly small commercial customers and Summit had
3,800. Columbia of Ohio's current tariff rates are $7.30 an Mcf.
The company has made a gas cost recovery filing to raise the rate
to $8.60 in February.