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Columbia Choice Program Terminated

January 9, 2012

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Copyright 2010-12 Energy Choice Matters

The Maryland PSC has eliminated the choice program at Columbia Gas of Maryland, citing low participation which makes cost recovery of certain choice compliance costs impractical.

"[T]he Commission finds that the Company has too few customers enrolled in the Choice program to make it economically viable when funded through a purchase of receivables ('POR') discount rate, as the Commission's long-standing policy requires," the PSC said.

See background concerning continuing choice at Columbia

Transportation programs for larger volume customers will continue.

As only reported by Matters, Columbia Gas proposed ending the choice program after the PSC denied cost recovery for various COMAR 20.59 compliance costs through base rates. Such costs include implementation of Purchase of Receivables, XML transactions for supplier-LDC communication, and other choice enhancements.

Columbia Gas has only 32,739 delivery customers, of which only 772 (approximately 2%) take service under the choice program.

To date, Columbia has spent $255,031 on COMAR 20.59 compliance, and estimated that it would cost an additional $162,844 to finish implementation including POR.

As the PSC will not allow such costs to be recovered in base rates, recovering these costs only from customers participating in choice would require a POR discount rate of approximately 35%, or a cost of approximately $15–20 per month per customer participating in choice.

Although four retail suppliers (IGS Energy, MXenergy, Maryland Gas and Electric (U.S. Gas & Electric), and Washington Gas Energy Services) had offered to pay for $160,000 of the compliance costs, even with the contribution, "the Choice program will still not be economically cost-effective in the Company's service territory given the low customer enrollment and supplier presence," the PSC said.

"On this record, the Commission is not persuaded that the Choice program is workable for the Company's customers at this particular juncture. The Commission is not willing to deviate on these facts from the important principle of requiring suppliers to internalize the cost of Choice implementation. Where a Choice program can't be funded on reasonable terms through an appropriate POR discount rate, the Commission is not willing to impose costs on the Company's entire customer base through distribution rates, solely for the purpose of keeping a possibility of supplier choice available," the PSC continued.

"If the economics of customer choice change in the Company's service territory, the Commission urges the Company to re-examine the program and reapply," the PSC said.

The Commission granted Columbia related waivers from the requirements of COMAR 20.59 in connection with the cessation of choice, and Columbia will be allowed to recover compliance costs actually incurred through July 6, 2011. In other words, Columbia expended $255,031 on a program which is now terminated, and customers will be forced to pay such costs intended to enhance a now-terminated program.

The PSC also directed Columbia to file by February 15, 2012, "a transition plan to move customers currently in the Choice program back to the Company's customer base."

Under Columbia's original proposal, choice would cease for residential customers, but it would provide an apparently one-time opportunity for non-residential customers currently taking choice service (and otherwise ineligible for transportation service) to move to the gas transportation program (see 3/30).

Under this original proposal, for small non-residential customers on the choice tariff wishing to continue competitive supply, Columbia would install daily metering equipment to permit such customers to take transportation service, and suppliers could "move" these non-residential customers to transportation service.

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