NGI The Weekly Gas Market Report
Columbia Gas of Ohio said it had no other choice but toterminate Energy Max of Northeast Ohio from participation in itsCustomer Choice program after the gas supplier failed to delivergas to Columbia for transportation to Energy Max’s 8,000 OhioChoice customers for the majority of August. As supplier of lastresort, Columbia picked up the slack using its own natural gassupply.
“We regret taking this action, but we were obligated to do so inorder to protect the integrity of the program and ensure thereliable delivery of gas to the customers,” said Carol Fox,Columbia’s director of marketer services. “We attemptedunsuccessfully to work through this issue with Energy Max, and tookaction as soon as we became aware that this was going to be acontinuing situation.”
Columbia Gas of Ohio spokesman Stephen Jablonski added, “in thegrand scheme of the whole program, I think it is going to turn outto be a relatively minor event. It certainly is unusual, and it isgoing to cause unfortunately some inconvenience for some customers,but I think what we are seeing is, the market is just shaking out.”
Energy Max said it bought gas on the spot market while it triedto negotiate long term contracts and better pricing, but pricingnever panned out. “We got caught in a tailspin,” said Thomas Cox,head of Energy Max.
“We got caught up in the rising spiraling costs of the summer,”said Cox. “We were looking to negotiate some long term contracts asnormal operations in the summertime do, but prices kept exceedingthe barriers that we had on long term contracts out with thecustomers. Basically we ran out of cash.”
Columbia said Energy Max “violated a code of conduct” of thechoice program by failing to deliver gas and forcing Columbia toact as the supplier of last resort. “While this is unfortunate, andan inconvenience for Energy Max customers, it also shows the Choiceprogram works as intended,” Fox said. Companies going in and out ofbusiness is all part of the evolution taking place with competitionin the natural gas market, she added.
“You’re now talking about natural gas in the retail market thesame way you are other commodities. There are going to be thesechanges and evolution in the market. I would hope in a year or twofrom now this kind of thing is not even an issue,” Jablonski said.
Columbia has mailed out letters notifying Energy Max’s customersof the company’s termination from the choice program. The displacedcustomers may immediately enroll with another supplier, or staywith Columbia as their supplier at the utility’s gas cost. EnergyMax will continue to serve its traditional large volume commercialcustomers on the Columbia transmission system, but the smallcommercial customers that were enrolled in the Choice program willbe able to choose another supplier or return to Columbia’s rate.
Columbia Gas of Ohio’s Choice program boasts a half millioncustomers spread among 29 different suppliers. Since the program’sinception in 1997, customers have saved approximately $73 millionover the utility’s gas cost, about 10% on the average monthlyresidential bill.
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