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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Commission says its job is to regulate, not micromanage.

Update courtesy of Utility Regulatory News #4037: Although acknowledging that a corporate outsourcing arrangement between a natural gas local distribution company (LDC) and an independent consultant was of a significant magnitude, the Maryland Public Service Commission nevertheless has determined that negotiation of the contract was within the LDC’s managerial prerogative and that it did not require formal preapproval by the commission.

The LDC, Washington Gas Light Co., had entered into the agreement with Accenture for Accenture to perform a number of administrative tasks, ranging from customer service to human resources to information technology to supply procurement to finance and accounting. The Office of People’s Counsel (OPC) had protested the arrangement, arguing that the breadth of services included rendered it tantamount to turning over the reins of a public utility to an unregulated entity. The OPC expressed special concern about diminutions in service, particularly with respect to residential customers. The OPC further worried about the economic risks that would be borne by ratepayers should Accenture default. The commission, however, observed that Accenture employees would be bound by the same tariffed service requirements as the LDC’s own personnel, and thus Accenture’s assumption of responsibility for the listed functions should not impede the delivery or reliability of service.

The commission also related that its own job is to regulate, not manage, let alone micromanage, utilities within its jurisdiction. According to the commission, the roles assigned to Accenture under the contract are of just the nature that fall solely to utility management, thus making prior approval of the agreement by the commission unnecessary. For the full story, subscribe to URN.

Posted: October 18th, 2011 under management, natural gas.
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Finding nuclear case less compelling, commission caps allowable costs through 2013.

Update courtesy of Utility Regulatory News #4037: Citing last spring’s earthquake in Japan, ongoing economic woes, and faltering Congressional enthusiasm for carbon regulation, the North Carolina Utilities Commission has retreated from its prior showing of strong support for an electric utility’s proposal to further develop and expand its nuclear facilities.

The utility, Duke Energy Carolinas, had announced plans to augment its Lee Nuclear Station in South Carolina. When the project was first proffered, the utility had averred that growing demand, as well as the likelihood of carbon legislation within the foreseeable future, made it prudent to add more nuclear resources to the utility’s generation portfolio. However, given the questions about nuclear safety that had arisen since the Japan earthquake, and noting that Duke Energy has suffered continued load loss as a result of the moribund economy, the commission found that the utility’s present nuclear plans might be too ambitious.

Moreover, the commission pointed out that recent changes in the political composition of Congress made carbon regulation a more distant possibility rather than a nearer-term certainty. Consequently, the commission, while still allowing Duke Energy to proceed with certain aspects of its plan, decided that the project should have a cost cap, which the commission set at $120 million for the four-year period ending December 31, 2013. For the full story, subscribe to URN.

Posted: October 18th, 2011 under carbon regulation, nuclear.
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DEADLINE: Friday, Sept. 30, 5:00 p.m. Eastern time

Fortnightly has opened the nominations process for this year’s Top Utility Lawyers honors.

You’ll find the nomination form here …
And the FAQ document here …
And last year’s Top Lawyers article here.

Nominations are invited from executives at utility and energy companies, regulatory agencies, and trade associations serving the U.S. electric and gas industries. Eligible nominees include attorneys at law firms and private practices, as well as in-house counsel. Nominations from law firms, self-nominations, and intra-company nominations are considered on an informational basis only and will not be counted as votes.

Thanks for your nominations!

Posted: September 26th, 2011 under energy policy, finance, regulation.
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Few customers, negotiated rates don’t factor into definition

Update courtesy of Utility Regulatory News #4036: Although acknowledging that a natural gas gathering and transportation company would be serving only a very small, defined group of customers, the Pennsylvania Public Utility Commission nevertheless has affirmed an earlier ruling in which it determined that the company, Laser Northeast Gathering Co., fell within the definition of a “public utility” under state law. The commission said that an entity’s regulatory status depends not on how many or how few customers it serves, but on whether it indiscriminately holds itself out to serve all members of whatever segment of the public it wishes to serve.

The commission observed that Laser Northeast had expressed a willingness to serve any party that desired its services and that it had pledged to expand its capacity, as needed, to meet any growing demand. The commission said its view was not affected by the fact that the company’s services would be provided under individually negotiated contracts rather than pursuant to a schedule of tariffed rates. According to the commission, reliance on separate contracts was not meant to be “exclusionary” or to allow the company to pick and choose its customers, but instead was simply the most efficient way of setting forth terms and conditions of service for customers whose particular needs could vary widely. The commission cautioned, however, that its decision on public utility status was specific to Laser Northeast only and that the commission has no intention of extending such status to all gas gathering companies as a general rule.

Moreover, the commission pointed out that it had not yet been determined whether Laser Northeast would need a formal certificate of public convenience and necessity. That matter is still under consideration, the commission said. For the full story, subscribe to URN.

Posted: September 16th, 2011 under natural gas, regulation.
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