PUCO Approves Price Cap for Monthly Variable Rate Backstop Service at Dominion East
Ohio Email This Story 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
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
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.