Ohio Facilitates LDC’s Exit from Supply Market
Ruling permits Columbia Gas to switch auction protocols.
Update courtesy of Utility Regulatory News #4037: In authorizing a natural gas local distribution company (LDC), Columbia Gas of Ohio, to begin following a standard choice offer (SCO) bidding structure rather than continue adhering to its longtime standard service offer (SSO) process, the Ohio Public Utilities Commission has in essence paved the way for the LDC to depart from the natural gas supply market.
Ohio has traditionally deemed an LDC that switches from the SSO auction method to the SCO format to be “exiting” from the natural gas merchant business. Under the SCO approach, every customer eligible to participate in the state’s choice program is assigned to a supplier based on competitive bidding outcomes, but with all SCO customers actually paying the same monthly rate as other SCO customers, regardless of who their individual supplier may be. With an SSO auction, on the other hand, the LDC solicits bids for gas supplies on behalf of its customers, such that the LDC itself remains the customer’s listed supplier. The commission stated that its previous experience in switching to SCO-based auctions had produced favorable pricing results for consumers, and it rejected contentions from the Office of Consumers’ Counsel that residential customers generally receive no quantifiable cost savings or other benefits from SCO procedures.
The commission explained that there was no direct evidence that SCO protocols inhibit market entry by competitive suppliers or depress participation by smaller-volume customers. The commission said that education and awareness are always key to successful solicitations, whether auctions are conducted according to SCO or SSO principles. For the full story, subscribe to URN.
Posted: October 18th, 2011 under natural gas, retail competition.
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