Over the summer, a handful of states approved gas pilot programs that will introduce choice of supplier to residential, and small commercial customers in preparation for the heating season. The decisions welcome the expansion of customer choice to smaller users, but pay careful attention to operational details such as who controls storage and upstream pipeline capacity to performance balancing services.
New Jersey. Finding greater than expected public interest, the New Jersey Board of Public Utilities has authorized New Jersey Natural Gas Co. to allow additional customers to participate in a new residential transportation pilot, allowing consumers to choose among third-party gas suppliers, after the initial allotment of 30,000 residential customers was filled nearly three months before the enrollment period was set to close. The board agreed to allow an additional three months to sign up another 5,000 customers, starting in 1998. However, the BPU slowed future enrollment, citing uncertainty about claims of price savings by marketers. Several complaints of poor conduct by utility-affiliated marketing companies also had surfaced.
The BPU attributed the early success to advertisements of energy savings by marketers, ranging from 10 to 13 percent. It cautioned, however, that several developments might affect the size of customer savings: 1) customers might face an additional charge of 4 to 5 cents per therm to cover the allocation of any reconciled gas adjustment clause costs among customers converting to transportation service, and 2) newly adopted changes to the state's gross receipts tax law would likely remove any tax advantage currently given to third-party suppliers. Re New Jersey Natural Gas Co., Docket No. GT96070524, July 7, 1997 (N.J.B.P.U.).
Ohio. The Ohio Public Utilities Commission has authorized East Ohio Gas Co. to introduce two new transportation services. It also has approved a series of new tariff offerings developed by Cincinnati Gas and Electric Co. to give all customers a choice of gas supply providers.
East Ohio Gas will initiate a pilot program pooling agreement that assigns firm upstream pipeline capacity and contract storage at cost. It also would offer free on-system storage to marketers enrolled in the program. During the pilot, customers may return to traditional sales service anytime without penalty.
The pilot also contains a transportation migration rider to recover the cost of upstream pipeline capacity, including contract storage, retained by East Ohio for operational balancing. The company will collect any unrecovered gas cost associated with the migrating customer's prior receipt of sales service. Re East Ohio Gas Co., Case No. 96-1019-GA-ATA, July 2, 1997 (Ohio P.U.C.).
PUC approvals for Cincinnati Gas and Electric followed prior orders that had directed the utility to develop acceptable interruptible balancing service tariffs. The PUC also had asked the company to submit modified and residential firm transportation tariffs that addressed open sourcing for marketers, the commercial viability of transportation programs and potential stranded costs. Re Cincinnati Gas and Electric Co., Case No. 95-656-GA-AIR, July 2, 1997 (Ohio P.U.C.).
Pennsylvania. The Pennsylvania Public Utility Commission has authorized two natural gas distribution utilities to initiate or expand residential choice programs.
National Fuel Gas Distribution Corp. will set up a pilot residential unbundling program that will run through the upcoming heating season. The company plans to enroll approximately 19,000 small commercial and residential customers in a targeted service territory, allowing those customers to choose among competitive gas suppliers. The utility will deliver supplies under individual transportation-aggregation agreements reached with qualified suppliers. The utility will remain responsible for service issues, such as turning on service, end of service and gas service emergencies. Re Pa. PUC v. National Fuel Gas Distr. Corp., Docket No. R-00973974, June 12, 1997 (Pa.P.U.C.).
The commission also has authorized Columbia Gas of Pennsylvania to expand its existing small commercial and residential unbundling pilot program. The LDC had initiated the program in a single county in 1996 and had enrolled approximately 5,400 of the 37,000 eligible customers. The program expansion will permit an additional 100,000 residential customers and 10,000 small commercial customers to choose an alternate gas supplier.
Key elements of the original program had assigned firm transportation capacity to marketers, but had reserved storage for the gas utility to use to balance customer deliveries and requirements. The utility would also offer consumer protections and conduct education programs on consumer choice. The commission also authorized the company to test a "capacity assignment" service offering and to establish a special transportation rate for small customers with less than 600,000 cubic feet annual throughput. Re Pa. PUC v. Columbia Gas of Pa. Inc., Docket No. R-00973997, June 12, 1997 (Pa.P.U.C.). t
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