PUCO Approves Price Cap for Monthly Variable Rate Backstop Service at Dominion East Ohio

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November 23, 2010

The Public Utilities Commission of Ohio has approved tariff changes, with one modification, at Dominion East Ohio which will limit the rate that competitive suppliers may charge under the tariffed "Monthly Variable Rate Commodity Service," which serves as a backstop for customers whose competitive supply contract is not renewed by their competitive retail natural gas (CRNG) supplier (10-2469-GA-ATA).

In Dominion East Ohio's Energy Choice program, a customer whose contract with a competitive supplier terminates without renewal will, after two months of receiving Standard Service Offer commodity service, be randomly assigned to one of the competitive suppliers that has elected to provide Monthly Variable Rate (MVR) commodity service.

Monthly Variable Rate commodity service is provided by competitive retail natural gas suppliers at the supplier's posted price.  Unlike the SSO and Standard Choice Offer prices that are based on auction results approved by PUCO, Monthly Variable Rate prices are not subject to Commission approval.

As previously reported (11/2), Dominion East Ohio filed tariff changes to cap the price charged by a supplier under the Monthly Variable Rate tariff at the price of "any" of the supplier's monthly variable rates posted on the PUCO's Apples-to-Apples Chart (e.g. competitive rates) for the same billing period.  Additionally, per the filed tariff, all competitive suppliers offering the tariffed Monthly Variable Rate commodity service were to be required to have a competitive variable rate posted on their list of active offers on the PUCO's Apples-to-Apples Chart.

PUCO slightly modified the tariff language to provide as follows:

"A CRNG Supplier's MVR price charged for a monthly billing period shall be no greater than any of its monthly variable rates ('Competitive MVRs') posted on the PUCO's Apples-to-Apples Chart for the same billing period.  All CRNG Suppliers offering MVR commodity service are required to have a Competitive MVR posted on their list of active offers AVAILABLE TO ALL ELIGIBLE CUSTOMERS on the PUCO's Apples-to-Apples Chart."

PUCO's change requires that the variable rate on the Apples-to-Apples chart that supplier must post, as a condition of participating in the Monthly Variable Rate tariff option, shall be available to all customers.  

However, while the PUCO-modified the language is explicit that the supplier must offer at least one variable rate plan available to all customers on Apples-to-Apples in order to participate in the Monthly Variable Rate tariff program, the PUCO language does not appear to hold that only these market-wide offers are to be used in setting the Monthly Variable Rate tariff price cap for a specific supplier.

In other words, the language still requires that the Monthly Variable Rate charged by the supplier under the tariff shall not exceed "any" of its monthly variable rates on Apples-to-Apples, seemingly including promotional or discounted rates, such as military discounts.  

SCO Auction Changes
PUCO also accepted without modification filed tariff changes to automatically provide for a supplemental Standard Choice Offer (SCO) auction at Dominion East Ohio under certain conditions.

Dominion East Ohio's current Standard Service Offer auction structure includes a provision under which a supplemental SSO auction may be held in the event that a default causes a supplier's SSO supply obligation to increase more than 50%.

However, the current Standard Choice Offer auction structure does not include such a provision.  Instead, Dominion East Ohio must first request Commission approval to conduct a supplemental SCO auction in the event a default causes a supplier's SCO supply obligation to increase more than 50%.  The requirement to seek PUCO approval for a supplemental SCO auction, "increases the uncertainty and risk faced by [competitive] suppliers participating in the SCO auction," Dominion East Ohio had noted.

Accordingly, PUCO approved tariff changes to make the SCO supplemental auction automatic if it is necessary, similar to the SSO structure.  Current suppliers will first have an opportunity to volunteer to assume any customers of the defaulting SCO supplier, prior to the supplemental auction, on a load ratio share basis or other non-discriminatory manner as directed by PUCO Staff.

PUCO agreed that the reduced risk should encourage greater bidder participation in the SCO auction.

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