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.
Comments: none

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.
Comments: none

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.
Comments: none

Universal Service Fund Can Be Tapped to Pay Marketers

Update courtesy of Utility Regulatory News #4031: The Georgia Court of Appeals has determined that the Georgia Public Service Commission (PSC) acted responsibly when, following the bankruptcy of a competitive natural gas supplier, the PSC tapped the state’s Universal Service Fund (USF) as part of its efforts to equitably divide the entity’s supply liability among remaining natural gas marketers.

The supplier, Catalyst Natural Gas, had filed for bankruptcy at a time when it was unable to fulfill its customers’ actual consumption quota. In fact, its supply deficit was so great that other natural gas marketers could not meet the needs of Catalyst’s customers without incurring substantial losses of their own. Neither, however, did Catalyst have the financial resources to pay the true-up charges that ordinarily would apply in such a situation, leaving the other marketers without full compensation for their service. The commission, although acknowledging that it could not make the marketers whole, nevertheless attempted to mitigate the marketers’ losses by ordering that some of the monies normally placed into the USF be redirected to the marketers, but the commission capped the marketers’ recovery at 60%. Not surprisingly, the marketers were dissatisfied with that limit, and appealed the ceiling to the court, arguing that it constituted an impermissible taking. The court, however, said that the marketers’ losses were caused by Catalyst’s bankruptcy and a free market economy, not by the commission taking private property for a public purpose. Moreover, the court pointed out that the marketers had entered into Georgia’s competitive natural gas market voluntarily and with full knowledge that there is always an element of risk in any market venture.

The court added that far from the PSC appropriating any of the marketers’ property rights for its own use, the commission had actually gone the extra mile in trying to devise a plan that would ensure at least some amount of compensation for their losses. For the full story, subscribe to URN.

Posted: August 25th, 2011 under energy markets, natural gas, retail competition.
Comments: none

Business-as-Usual Will Stifle Nuclear, Coal Development

In a letter dated July 21, Duke Energy CEO James Rogers urged Senate Majority Leader Harry Reid (D-Nev.) to “include a carbon title in your base energy bill that allows this country to move forward.” Rogers argued that a business-as-usual approach to carbon regulation would stifle development of new nuclear and coal-fired power plants and make America dangerously dependent on volatile natural gas markets.

Rogers also referred Sen. Reid to a McKinsey analysis that showed U.S. GDP would grow more under a “utility first” carbon regulation scenario than it would without any carbon regulation, and that carbon allowances and efficiency improvements would actually reduce electricity bills on average by 7 percent.

Rogers’ letter arrives just as Senate Democrats were convening to debate whether to include a carbon title in an energy bill sponsored by the majority leader. The San Francisco Chronicle’s website quoted Senate sources predicting that a scaled-down bill would proceed in late July and would not include carbon regulation, but some legislators—including Sen. Joe Lieberman (I-Ct.)—are hoping to retain the carbon title in Reid’s bill.-Michael T. Burr

Posted: July 22nd, 2010 under Current News, carbon regulation, climate change, coal, efficiency, energy policy, green energy, natural gas, nuclear renaissance, renewables.
Comments: 2