The Public Utilities Commission of Ohio (PUCO) moved the state further toward retail deregulation last week, approving settlements with Dominion East Ohio Gas and Columbia Gas of Ohio that would allow the local distribution companies (LDC) to gradually move out of the merchant function starting with nonresidential customers.
“The transition in Ohio into a more competitive and robust market provides the incentive for suppliers to provide consumers the best options available to them in terms of making a selection for their natural gas needs,” said PUCO Chairman Todd A. Snitchler. “It is important to distinguish that in order for Columbia to implement the actions of today’s order, a majority of its customers, both residential and nonresidential, will have demonstrated their willingness to shop for their natural gas.”
The amended stipulation for Columbia will run for a five-year term commencing on April 1, 2013 through March 31, 2018. Terms of the approved agreement provide that Columbia’s exit from the merchant function for nonresidential customers is contingent on a participation level in Columbia’s choice program to meet or exceed 70% of choice-eligible customers for three consecutive months.
Columbia’s choice-eligible nonresidential customers would be provided commodity service by a competitive retail natural gas service provider through the company’s choice program or monthly variable rate (MVR) program. In addition to the stipulated level of choice participation being met, Columbia may not file an application to exit the merchant function for residential customers until at least 22 months after its potential exit for nonresidential customers.
“Our approval of the switching threshold is by no means an automatic approval if we find a 70% level of choice participation by residential customers sufficient to warrant an exit of this type,” said Snitchler. “When appropriate, if an application is filed by Columbia, the commission will ensure that all interested parties will be provided due process before making a decision. Nothing precludes us from reestablishing the [standard choice option] or other pricing mechanisms, if we determine that Columbia’s exit from the merchant function is unjust or unreasonable.”
The plan received the support of the Office of the Ohio Consumers’ Counsel (OCC). “The settlement protects the ability of consumers to purchase their gas through their local utility at the standard rate for at least the next few years,” said OCC spokesperson Amy Kurt. The OCC pushed for the inclusion of the consumer protections in the agreement (see NGI, Oct. 15, 2012).
The standard rate or standard choice option (SCO) is a regulated price that is indexed to the natural gas prices set on the New York Mercantile Exchange. During the proceedings, Columbia released documents showing that customers who chose the standard option saved $885 million over the unregulated price since 1997.
The PUCO settlement with Dominion East Ohio, which already has close to 95% of its nonresidential customers shopping for their own natural gas supply, allows the LDC to eliminate its standard choice offer (SCO) for choice-eligible nonresidential customers beginning on April 1. At that time a choice-eligible nonresidential customer who has not selected a natural gas supplier will be served by the next available supplier on a rotating list of providers registered to provide default service maintained by Dominion to be served at that supplier’s MVR. Dominion’s SCO rate for January-February will be $3.95/Mcf.
The SCO will be available to residential customers of Dominion until at least April 2016, Columbia’s until at least April 2017. “There would still have to be a legal hearing until any elimination of the standard rate could occur,” Kurt said. In addition, there must be six local public hearings on the topic before Columbia’s SCO is eliminated, Kurt said. In Ohio, Dominion has about 1.1 million residential customers; Columbia about 1.2 million.
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