One down, two to go could be Eatontown, NJ-based Metromedia Energy’s (MME) slogan after the natural gas marketer sought and received a temporary injunction from the Virginia State Corporation Commission (VSCC) that prohibits Washington Gas Light Co. (WGL) from returning Metromedia’s 128 commercial and industrial Virginia customers back to utility gas sales service on Feb. 1.

The injunction also prevents WGL from restricting customers that want to switch to MME for their gas delivery. MME petitions against WGL for the same practice are still pending at the Maryland Public Service Commission (MPSC) and the District of Columbia Public Service Commission (DCPSC).

In a petition filed on Jan. 24, MME said WGL had informed them that the above listed actions would be taken unless the marketer provided additional financial security to WGL in the amount of $371,546. Metromedia said it offered to WGL, among other things, a security interest and netting agreement regarding some 70,000 Dth of natural gas that it has predelivered to WGL, and a shortening of the default period for failure to deliver so that customers could be returned to WGL’s sales service after five days’ nondelivery, instead of the current 15. MME claims that WGL refused the offers and demanded a bond or other cash equivalent security.

In response, MME said “changes in the bond industry have made such bonds available only with the provision of 100% cash collateral, and that providing cash collateral to support a bond of $371,546 is uneconomic.” In addition, MME claims that forcing its customers to take sales service from WGL would result in “significant rate increases.”

The VSCC said the temporary injunction will expire Feb. 21, 2003, at 11:59 p.m. The commission said it will establish an expedited procedural schedule to resolve the issues raised in the petition.

Despite the temporary win in Virginia, MME still faced a Wednesday (Jan. 29) deadline in Washington, DC, and Maryland. Without commission action or MME providing additional financial security, the marketer’s 35 commercial, industrial and group metered apartment customers in Washington and its 182 commercial and industrial customers in Maryland will be transferred back to WGL’s sales service.

In response to MME’s complaint and petition for relief, WGL filed answers with the various commissions stating its case. WGL noted that a gas supplier desiring to participate in the its retail access program must demonstrate that it “has met and continues to meet” the credit worthiness criteria that is set forth in the Gas Supplier Application Agreement.

WGL noted that it currently has no security from MME because a surety bond in the amount of $515,751, which was previously provided to WGL by MME, expired on Nov. 1, 2002. WGL added that the $371,564 amount of security currently requested from MME represents a decrease resulting from a reduction in the total load served by MME.

Of the $371,564, WGL said $194,207 relates to customers served by MME in Maryland, $130,230 relates to customers served by MME in Virginia, and $47,108 relates to customers served in the District of Columbia. WGL also told the commission that it has informed MME that it does not believe the alternative forms of security that the marketer has offered would “adequately protect” WGL and its firm sales customers from the applicable risks.

Responding to MME’s claim that securing a bond would require 100% cash collateral, WGL said based on information it gathered from a bonding agent, it believes that bonds are still available to credit worthy entities, although at higher rates than in the past. Noting that the requirement of 100% cash collateral for a bond implies that the issuer of the bond lacks confidence in the financial stability of the applicant, WGL said the marketer’s claim reflects on MME’s financial condition.

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