National Energy Marketers Association Commissioner Donald L. Mason, Esq. Vice Chairman NARUC Gas...
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National Energy Marketers Association Commissioner Donald L. Mason, Esq. Vice Chairman NARUC Gas Committee March 31 st ,2004
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Choice needs accurate indices Marketers attempt to enroll customers against the LDC rate. The LDC rate is the price to beat. If the LDC heads into the winter with a price that is under recovering, the marketer will not be able to attract customers. LDCs have no money at risk because in the spring they can file for an under recovery. The downside is a consumer to a fixed GCR price does not realize that the price quote in the fall is not a firm price. It is subject to adjustments
Transcript of National Energy Marketers Association Commissioner Donald L. Mason, Esq. Vice Chairman NARUC Gas...
National Energy Marketers Association
Commissioner Donald L. Mason, Esq.Vice Chairman NARUC Gas Committee
March 31st,2004
Consumers need accurate price indices
As states begin to implement Choice Programs it is necessary to address gas cost recovery (GCR) or purchase gas adjustment (PGA) formulas.
Many states have annual or quarterly filings of GCR and PGA rates.
If the GCR/PGA does not represent the market then the marketers are disadvantaged.
Choice needs accurate indices
Marketers attempt to enroll customers against the LDC rate. The LDC rate is the price to beat.
If the LDC heads into the winter with a price that is under recovering, the marketer will not be able to attract customers.
LDCs have no money at risk because in the spring they can file for an under recovery.
The downside is a consumer to a fixed GCR price does not realize that the price quote in the fall is not a firm price. It is subject to adjustments
Marketers offer products based on price indices
The product of the leading Ohio marketer uses a fixed price contract adjusted annually against the NYMEX. Therefore it is important that the marketer and customer are relying on accurate information.
Alternative RegulationDayton Power and Light—(1990’s)Fixed price
contracts to secure a portion of capacity, another portion used one year blocks locked in against the NYMEX index.
Presently Vectren Energy Ohio (VEDO) and Cincinnati Gas and Electric (CG&E) adjust the expected gas cost (EGC) monthly based on NYMEX index so that the GCR reflects the real market. This reduces “recoveries” and adds clarity for customers.
Marketers are not disadvantaged.
Indices affect small LDC customers
Small LDC without “choice” programs can lock the EGC in for 24-30 months to guarantee price stability.
Pike, Eastern, and Southeastern gas companies locked prices in for 18 months and then again for 30 months
Savings at a time of high price volatility for the 15,400 total Pike, Eastern, and Southeastern customers was $2.837 million
Gas Choice Enrollment Trending Columbia vs. Dominion
0
10
20
30
40
50
60
1999 2000 2001 2002 2003 2004
perc
ent s
witc
hing
Columbia
Dominion
February 2004 CG&E Market Shares
7%
92%
1%
CG&E
Marketer A
Other
January 2004 Dominion East Ohio Market Shares
40%
17%
17%
9%
6%5%
2%2%2%
Dominion East Ohio
Marketer A
Marketer B
Marketer C
PIPP
Marketer D
Marketer E
Marketer F
Other
March 2004 Columbia Market Shares
4%
4%3%
13%
20%
54%
2%
Columbia
Marketer A
Marketer B
PIPP
Marketer C
Marketer D
Other
0
200000
400000
600000
800000
cust
omer
s
Columbia Dominion Vectren CG&E
Choice Participation
Enrolled with Marketer Enrolled in Gov't Aggregation
0
200000
400000
600000
800000
2000 2001 2002 2003 2004
Customer Switching 2000-2004 Dominion East Ohio
Residential Commercial/Industrial
0
200000
400000
600000
1999 2000 2001 2002 2003 2004
Customer Switching 1999-2004 Columbia Gas of Ohio
Residential Commercial/Industrial
010000
200003000040000
50000
1999 2000 2001 2002 2003 2004
Customer Switching 1999-2004 CG&E
Residential Commercial/Industrial
0
50000
100000
2003 2004
Customer Switching 2003-2004 Vectren
Residential Commercial/Industrial
