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A Round Robin of Residential Unbundling

Fortnightly Magazine - October 15 1996

unbundling, planned this year in the state's four utility service territories.

"Some of the issues that have come up in the C/I program are going to require even closer attention on the residential side," Chilton adds.

One is a technical issue that will require adopting more level balancing penalties.

"There was some gaming going on in some of the real hairy days, like in January, when prices were going crazy," Chilton says. "A marketer would purposely not deliver the gas to the city gate in New Jersey, but would move it somewhere else where the imbalance penalty was greater, or where the commodity costs were going through the roof. . . . They could incur the balance penalty in New Jersey and still make money by sending it elsewhere."

Another issue is a higher degree of certifying criteria to protect less-sophisticated consumers. The BPU also learned it will have to protect consumers from "negative" telemarketing practices; some small commercial customers were switched from supplier to supplier without proper authorization.

The BPU could decide to factor such abuses into revoking a marketer's certification.

"We've had pretty good experience," Chilton says of the C/I

program. "We're in the middle of review modifications ... but we're not looking at overhauls."

Better distribution of market share will be another goal for the residential program. Although

40 gas marketers are certified in New Jersey, only 4.5 percent of eligible C/I customers have switched to transportation service.

"We have seen there is certainly substantial market share for the native affiliate marketer," Chilton says. "And without exception, in all four territories, the affiliate has the largest market share." The average share ranges from 20 to

50 percent.

Chilton has an interesting take on a pilot's role, however, as well as on its indication of a true market: "When you compare a pilot to a full-blown thing, you want to make sure you realize that even if you opened up the whole market, you're not going to have the whole market switching. So the pilot may not be, in reality, that much different than the market penetration you'd get from opening up your whole market."

The pilots pending include those within the territories of South Jersey Gas Co. (a few thousand customers), New Jersey Natural Gas Corp. (30,000 customers over three years), Elizabethtown Gas Co., and Public Service Electric & Gas Co. The BPU hopes to launch a public education program this fall.


Commission Leads, Choice Follows

Unlike New Jersey, Georgia's core and noncore gas unbundling will come at once. Residential and commercial/industrial markets will open together. And deregulation will come once the legislature stamps the solution all parties (em marketers, utilities, regulators, and consumers (em agree upon.

A meeting of the House and Senate Gas Conference Committee was set for September 18 so that participants could begin debating overall deregulation; "flex" pricing for large, "interruptible" customers; and other issues.

"We don't know if a bill will pass next year, but if I were a betting man, I would expect something to come out of the legislature," says Stancil