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Retail Suppliers Commit to Paying 75% of Columbia Gas Market Enhancement Costs to Maintain Threatened Choice Program
September 9, 2011
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Four retail natural gas suppliers have proposed bearing about 75% of Columbia Gas of Maryland's COMAR 20.59 implementation costs to date in exchange for the continuation of the choice program, and the assignment of the remaining 25% of costs to distribution customers via base rates.
As only reported by Matters, Columbia Gas has recommended ending the choice program due to the prohibitive costs of complying with COMAR 20.59 (which requires POR and other market enhancements) and low choice participation levels.
See our July 6 and March 30 stories regarding Columbia's recommendation to end the choice program.
IGS Energy, MXenergy, Maryland Gas and Electric (U.S. Gas & Electric), and Washington Gas Energy Services yesterday proposed an alternative which would maintain the choice program, and see each supplier contribute $40,000 each ($160,000 total) towards Columbia's COMAR 20.59 compliance costs to date of $209,847.
Under the suppliers' proposal, distribution customers would pay the remaining $49,847 in costs via a monthly surcharge of four cents over three years.
While the PSC has said that choice implementation costs should not be recovered in base rates, the suppliers stressed that under Columbia's recommendation to end the choice program, the "sunk" costs of $209,847 would still have to be collected in base rates, except that customers would receive no benefits from these costs since the choice program would be terminated.
"Customers could actually pay more under Columbia's proposal, without having the benefit of the Choice program," suppliers said.
The suppliers also noted that two of the four suppliers who have committed to the proposed contribution are not yet marketing in Columbia's territory (IGS and USG&E), demonstrating a commitment to choice in the territory and state as a whole.
"While shopping rates in Columbia's territory do not yet approach those of the other large utilities in the State, the Suppliers would not be willing to make this substantial investment if they did not believe many more customers will take advantage of the right to choose their natural gas supplier in the future," the suppliers said.
The sunk costs of $209,847 represent costs incurred by Columbia before the PSC directed Columbia to cease work on COMAR 20.59 implementation.
Columbia has estimated that, to fully implement COMAR 20.59, it would incur $162,844 in additional costs.
The suppliers propose that Columbia be granted a temporary waiver from the COMAR 20.59 provisions not yet paid for to avoid costs above the already incurred $209,847.
Specifically, absent additional costs, Columbia would not be able to comply with the following provisions: (1) separate POR rates for residential and commercial customers; (2) late payment charges for delivery services versus commodity services separately indicated on customer bills; (3) the ability for suppliers to search accounts by name and address; and (4) moving from a 15-day to a 12-day enrollment lead time.
The temporary waiver of these provisions would remain in effect for at least 24 months or until further Commission order, suppliers proposed.
"The Suppliers believe this waiver will not hamper the further development of the retail natural gas market in Columbia's territory in a discernible way, nor will consumers suffer any harm."
Suppliers also sought an order directing Columbia to develop and offer to all suppliers, for a reasonable, cost-based fee, a Residential Customer List based on an opt-out process that protects each customer's right to consent, which would include account name, billing address, and service address.
An opt-out customer list process is already in place at BGE, and suppliers recommended following the procedures in BGE's tariff.
The suppliers' proposal also includes a requirement for Columbia to participate in a separate process, outside of the COMAR 20.59 compliance proceeding, to resolve issues some suppliers have raised concerning Columbia's capacity assignment rider set forth on Columbia tariff pages 116 and 117.
Finally, suppliers sought to condition an order accepting their proposal on a statement that the supplier proposal is not a precedent that any party can cite as applicable to any other utility choice program in Maryland or in any other jurisdiction, and that it represents is a unique, one-time solution to preserve the Columbia Gas Choice Program in Maryland.
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