Evansville, IN-based utility holding company Vectren Corp. secured a year’s supply of natural gas for its standard choice offer (SCO) load at a price indexed to the Henry Hub, plus $1.05/Mcf.
The retail price adjustment (RPA) of $1.05/Mcf, added to the monthly Henry Hub futures settlement price on Nymex was unchanged from last year. The contract will run from April 1, 2013 to March 31, 2014.
Out of seven bidders in the Jan. 16 auction the winning suppliers were Hess Corp., DTE Energy Supply and Direct Energy Services. Bidders competed to offer the lowest RPA.
The auction was monitored by the Public Utilities Commission of Ohio (PUCO) and the Office of the Ohio Consumers’ Counsel (OCC). “The auction result again confirms the consumer benefit of a competitive standard offer for natural gas,” said the OCC’s Bruce Weston. “Customers who purchase natural gas through Vectren’s standard offer are benefiting from low natural gas market prices.”
However, Chase Kelley, spokeswoman for Vectren, said customers increasingly prefer to choose their own supplier rather than accept Vectren’s SCO rate. Out of about 300,000 Ohio customers who are eligible to choose their own provider, slightly more than half have opted out of the SCO. Three years ago, 30% of customers were in a choice program, Kelley said.
Vectren’s overall rate of 49 cents per 100 cubic feet is among the lowest available, according to the PUCO’s “apples to apples” price comparison chart. It lists nine other suppliers that offer contracts ranging from one to 12 months. Kelley said consumers are choosing competing offers to lock in a rate rather than be exposed to the monthly changes in the SCO rate, which is indexed to the Nymex price of natural gas.
The PUCO recently set a schedule for Dominion East Ohio Gas and Columbia Gas of Ohio to completely exit the merchant function (see Daily GPI, Jan. 11). So far, Vectren has not gone that route. “There is no deadline or target for us to do that,” Kelley said.
Regardless of the type of plan, consumers are enjoying the benefits of increased natural gas supplies. “Ohio Gas bills have dropped 40% in the last three years since the market started to plummet in 2009,” Kelley said.
The RPA has declined or stayed the same every year since Vectren’s first auction in 2010, which established it at $1.55/Mcf. Kelley said the auction is an effective way of obtaining supplies at low cost. “It’s just indicative of more suppliers coming into the market to compete.”
Interstate Gas Supply, MxEnergy (now Constellation Energy) and DTE Energy Trading Inc. won last year’s auction.
Vectren Corp. delivers natural gas to 314,000 customers in west central Ohio through its subsidiary, Vectren Energy Delivery of Ohio.
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