The current natural gas market is proving a minefield for smallretail marketers, as evidenced by the drop-out rate. WesternNatural Gas, a Dallas-based marketing company, announced last weekit was phasing out its retail marketing business in the face ofincreasing natural gas prices and the capital requirementsnecessary to obtain supplies.
At the same time, Columbia Gas of Ohio has lost two marketersfrom its retail choice program in the last two weeks. The currentmarket “is accelerating the evolution of the marketplace,” saidColumbia spokesman Steve Jablonski. “We’re seeing a shake-out inone winter that otherwise might have taken years.”
Western Natural Gas, which had a number of commercial and smallindustrial customers in the Denver area, explained the situationin a press release. “Escalating prices “have placed constraints onthe ability of private companies to obtain operating capital neededto provide quality natural gas service.” The statement was issuedWednesday after an article appeared in the Rocky Mountain News. “Wehave determined that continuing to service the retail market is notfeasible and are in the process of phasing out of that arena.During this transition period, Western continues to explore optionsthat will satisfy our existing retail customer base. We would liketo stress that Western Natural Gas is still flowing gas to all ofour customers — and will continue to do so.”
Lori Vining, Western’s president, said the company is lookingfor a new supplier for its customers as a group. “We are notleaving them high and dry.” Vining said the problems her companyare facing are “no different than those facing others at these highprice levels.” She declined to say how many customers or how muchgas, but confirmed they include some Denver school districts.
An industry source said he had been told there were about 100customers and the volumes totaled between 15 and 20 MMcf/d.
Vining confirmed that the customers had the option of returningto service from Xcel Energy’s distribution subsidiary, PublicService of Colorado. A spokesman there confirmed the distributionrates for commercial customers currently are $5.85 per MMBtu, butare expected to go up to $8.60 an MMBtu when the latest rate hikeis 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 businessof Western Natural. Proliance “had some brief discussions inmid-December, but they were not successful. There was noagreement.”
In the future, Western Natural said its focus will be onproduction and producer services, gathering, upstream technologyand wholesale marketing.
The Ohio marketers, Summit Natural Gas and Power Solutions andNicole Energy Services, were dropped because they failed to delivergas to the Columbia of Ohio system to serve their customers.Columbia has continued to deliver to the customers, who will now goback on tariff rates. One other marketer has defaulted since theprogram started. Energy Max was terminated last Aug. 30.
“We tried to work with all three,” Jablonski said, but wereunsuccessful. Columbia’s Ohio choice program currently has about500,000 customers, out of 1.3 million Columbia customers. Nicolehad about 300 mostly small commercial customers and Summit had3,800. Columbia of Ohio’s current tariff rates are $7.30 an Mcf.The company has made a gas cost recovery filing to raise the rateto $8.60 in February.
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