NGI The Weekly Gas Market Report
The Massachusetts Department of Telecommunications and Energy(DTE) sent an order (File # 98-32-B) last Wednesday to all 10 stategas utilities, requiring them to deregulate service to residentialcustomers by 2004. The order directed gas utilities to work withmarketers on planning for a competitive market during the five-yeartransition. After the first three years of the program, the DTEsaid it will review the situation to determine if additionalefforts are needed to help spur competition. Massachusettscommercial and industrial consumers have had gas customer choicesince 1993.
“Consumers can already choose their long-distance telephonecompany and their electric supplier. Today’s order begins to pavethe way to the same choice for gas customers,” said Janet Besser,chairperson of the DTE. “Informed choice leads to effectivecompetition, lower prices and better service, the goal of all ourregulatory efforts.”
In addition to setting a five year schedule for gasderegulation, 98-32-B settled the controversial issues of capacityassignment and cost responsibility. A collaborative of allinterested parties, who had worked together since July 1997 to helpform a plan, was unable to find a solution regarding these twoissues. “The marketers wanted one thing and the utilities wantedanother,” said George Yianco, a DTE spokesman. “They couldn’tresolve the issues so they asked the DTE to decide.”
The order calls for a mandatory, slice of the system approach tocapacity assignment, which the DTE said will “enable convertingcustomers to gain access to capacity, while maintaining reliabilityand avoiding improper transfer of cost responsibility.” Thisapproach, supported by utilities, requires customers to assume ashare (determined by usage) of the LDC’s existing contacts when thetime comes to deregulate. Customers will also receive a “slice” ofeach contract to fill their gas needs. Marketers were lobbying fora voluntary system where customers only took what they need andleft the rest to the utility.
“The order, although pleasing to utilities, is causing somegrumbling by marketers. After the three-year trial, however, theDTE will re-evaluate to see if a switch to a voluntary method ismore plausible,” Yianco said. This order requires LDCs to procureupstream capacity for the first three years of the transitionfurther protecting reliability, he added.
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