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Ohio Consumers' Counsel Files Complaint Against Interstate Gas Supply

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October 25, 2010

The Office of the Ohio Consumers' Counsel, along with two gas marketers and other parties, filed a complaint against Interstate Gas Supply at the Public Utilities Commission of Ohio concerning IGS' use of the Columbia Retail Energy trade name (10-2395-GA-CSS).

While much of the complaint reiterates arguments OCC has attempted to raise in IGS' licensing docket (previously reported here), the complaint also makes allegations against IGS' marketing wholly unrelated to the use of the Columbia Retail Energy trade name, concerning comparisons between the IGS rate and default rates. In particular, in an allegation with market-wide implications, OCC suggests that the comparison of a "fixed rate offer to an SSO rate which is by definition a variable monthly rate," constitutes a deceptive practice.

OCC alleged that an IGS solicitation letter claims that, "had the SSO [Standard Service Offer] pricing structure been in place over the last five years, the average price would have been $0.88 which is 17% higher than this Columbia Retail Energy fixed rate plan."

"This claim is unfair, misleading, deceptive, or an unconscionable act or practice because it compares the actual IGS fixed rate offer to an SSO rate which is by definition a variable monthly rate," OCC alleged.

"This claim is unfair, misleading, deceptive, or an unconscionable act or practice," OCC further alleged, "because any price comparison of historic rates to today's rates or future rates includes some historic high prices from the past compared to some historic low rates today."

"Any lower rate today is due in large part to the current record low market prices and not necessarily any action on the part IGS. IGS is essentially, [sic] misleading customers into believing that the low rates today are largely tied to IGS' actions or expertise," OCC alleged.

OCC further alleged that the claim is misleading because, "the IGS fixed rate offer is based on recent natural gas futures rates plus IGS' markups, which is considerably lower that the New York Mercantile Exchange ('NYMEX') futures rates during the past five year period, because natural gas prices are at five year low prices. Thus, customers are misled into believing that the IGS fixed rate offer is superior to the SSO, when in fact the NYMEX Natural Gas futures strip rates over the next 12 months, $4.2888 as of October 30, 2010, plus the Columbia [Gas of Ohio] auction RPA [retail price adjustment] of $1.93, produces an SSO price of $6.1975 per Mcf or $0.62188 per Ccf, a price which is 17% lower than IGS's fixed price of $0.75."

"As part of its overall marketing efforts, IGS has set up a Columbia Retail Energy web site. That web site urges customers to 'take control of your energy costs' and to have 'confidence' in IGS 'because [sic] 'Columbia Retail Energy is continuously seeking ways to deliver energy more efficiently and make life easier for our customers.' This claim is unfair, misleading, deceptive, or an unconscionable act or practice because as a natural gas supplier IGS takes absolutely no role in the delivery of natural gas to Ohio customers," OCC alleged.

OCC alleged that an IGS solicitation sent to customers in the Columbia Gas of Ohio territory in late September was sent in an envelope which showed a return address of "Columbia Retail Energy."

"There is no disclaimer on the envelope that explains that Columbia Retail Energy is IGS and not Columbia - the local distribution gas company," OCC alleged.

OCC further alleged that the solicitation envelope was addressed to "Columbia Gas of Ohio Natural Gas Customer" and stated that it contained "Important Natural Gas Information."

"In addition to the IGS use of the Columbia trade name and Columbia logo, an actual Nisource subsidiary and Columbia affiliate -- Columbia Retail Services -- is also currently using the Columbia trade name and Columbia logo as part of its marketing efforts to sell inside gas line protection," OCC said.

"Thus at virtually the same time, Columbia consumers are forced to differentiate between mailings from Columbia Gas, the utility company; Columbia Retail Services, the affiliate inside line protection company; and Columbia Retail Energy, the non-affiliate who is IGS. Making this task almost impossible is the fact that all three companies use the same name -- Columbia -- and the same logo. Columbia Gas customers are forced to open letters from Columbia Retail Services -- the affiliate -- and Columbia Retail Energy -- IGS the non-affiliate -- in order to determine if the envelope contains a bill or important safety information from their gas company, only to learn that they have been fooled into opening just another piece of junk mail. The similarity between the three company names causes consumer confusion," OCC said.

OCC also offered the following "background" in its complaint, but made no formal claim regarding the information.

"On March 28, 2008, the Manchester Group, LLC ('Manchester') filed a Complaint against Columbia Gas of Ohio, Inc. alleging that Columbia was providing affiliate companies with access to the Columbia billing system that was not available to non-affiliates such as Manchester ... The Case remained open for over two years with numerous extensions of the procedural schedule," OCC said.

"On July 29, 2010, within a week of Manchester filing to withdraw its Complaint, Manchester's affiliate IGS filed a Notice of Material Change informing the PUCO that IGS had entered into a Licensing Agreement with Columbia's parent company -- Nisource Corporate Service Company -- which included IGS using the Columbia Gas trade name and logo in the Columbia Gas service territory under the name Columbia Retail Energy," OCC said.

The complaint was joined by Stand Energy Corporation, Border Energy, Inc., the Northeast Ohio Public Energy Council, and the Ohio Farm Bureau Federation.

Maryland PSC Notes Filing

Separately, the Maryland PSC noted Interstate Gas Supply's filing to add the trade name Columbia Retail Energy to its license.

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