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Illinois Rejects Ameren SVT (Gas Choice) Program, Directs Utility To Evaluate Alternative Mechanisms To Offer "Choice"

August 6, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Illinois Commerce Commission last month ordered Ameren to cease activity regarding implementation of a small volume transportation (SVT) natural gas program, which would have introduced retail choice for mass market natural gas customers.

"In this instance, we do not believe the record shows the SVT Program as proposed by Ameren Illinois is reasonable. The Commission is concerned with the substantial projected costs of the SVT Program as currently proposed and finds that it is not in the public interest to approve the continuation of the SVT Program at this time," the ICC said

"Both Ameren Illinois and CUB/AG raise concerns that the cost of the SVT Program may exceed the benefits to customers ... Presently, Ameren Illinois indicates it has completed only Phase 1 of the SVT Program and estimates it requires an investment of an additional $21 million to complete Phase 2 by 2016. Given the potential significant cost for consumers, the Commission finds that the benefits of the SVT Program must be adequately examined before Ameren Illinois can consider implementing the Program," the ICC said

The ICC noted that, "Ameren Illinois states that at the time the initial SVT Program was contemplated, natural gas markets were much different than they are today, while gas municipal aggregation was anticipated and the success of Ameren Illinois’ electric choice program gave rise to the potential for substantial switching for Ameren Illinois gas customers ... Given that those two conditions no longer appear to be present, it appears to Ameren Illinois that the premise for previous approval of the SVT Program (i.e., sufficient benefits to customers) is no longer present."

"Ameren Illinois suggests these new domestic gas supply discoveries have resulted in a significant positive shift of the supply curve, and the rapidly increasing domestic production has both moderated the price and volatility of natural gas markets. Ameren Illinois believes that low gas prices and decreased volatility reduces the ability of marketers to avail themselves of temporal price disparities with respect to commodity prices, futures, and derivatives," the ICC noted.

The Commission ordered Ameren Illinois, "to conduct workshops with Staff and interested stakeholders to determine how and when residential gas customers in its service territory will have access to a gas supplier choice program."

"The report shall include a discussion of the most cost-effective retail gas choice program for (1) Program participants, and (2) all Ameren Illinois ratepayers. Specifically, the analysis should include all costs and benefits attributable to such a program where benefits include, but are not limited to, new services and lower consumer costs. Costs shall include only those costs necessary to implement the program. Upon receipt of the report, the Commission may consider further procedural action," the ICC said.

One alternative "choice" program proffered by Ameren is what Ameren called a Gas Price Choice program (GPC), which would enable Ameren Illinois to maintain the responsibility to secure physical assets to purchase and deliver all gas supply to the residential and small commercial customers but would allow the suppliers to offer alternative pricing to the customers that they enroll. Under the Commodity Gas Charge (CGC) (or a program similar to it), Ameren Illinois would purchase gas supplies and bill enrolled GPC customers at an index rate and the supplier would bill/credit each GPC customer that they have enrolled for the difference between the index price and their individually contracted price. Instead of charging GPC customers the CGC of Rider PGA, Ameren Illinois would maintain a separate supply portfolio containing gas that is priced at index for the GPC program. Ameren Illinois notes all customers except those on Rider T could be charged the same non-commodity Gas Charge (NCGC) of Rider PGA since the cost of the assets recovered in NCGC could be used to serve them; while there could also be an over/under surcharge and annual reconciliation for each program.

Retail suppliers sought rehearing of the ICC's decision, stating that the Commission’s recent order, "ignores the purpose of this proceeding, as [previously] established by the Commission itself in its Order in Docket 13-0192."

"The instant proceeding is a compliance proceeding resulting from the Commission’s Order approving an SVT Program for Ameren in Docket 13-0192. The Commission directed Ameren to make the compliance filing in order to address unresolved issues regarding SVT tariffs. The Commission’s Order specifically found that the purpose of this proceeding was not to re-litigate matters resolved in Docket 13-0192," suppliers said.

"Instead of completing implementation of the SVT Program, as directed by the ALJPO [proposed order], Ameren is being allowed to backtrack on years of workshops and hearings spent preparing the already approved program," retail suppliers said.

Retail suppliers rebutted arguments concerning costs of the SVT program, and said that the ICC should hold hearings regarding the costs and benefits of the SVT Program. "[A]bsent hearings on rehearing, the Gas Suppliers are concerned that workshops with Ameren would be a waste of time because, as found in the ALJPO, 'Ameren does not appear serious about implementing the Program ordered by the Commission,'" the suppliers said.

The suppliers also requested an opportunity to offer new evidence on rehearing addressing the costs and benefits of the SVT Program, demonstrating that the benefits of the SVT program outweigh the costs. Suppliers said that such evidence was not fully litigated in their direct case, "because the proceeding was a compliance proceeding," and was not meant to re-litigate the ICC's prior approval of SVT

"[W]ith regard to costs, the Gas Suppliers would present evidence comparing Ameren’s Purchased Gas Adjustment ('PGA') to actual NYMEX settlement prices for the period November 2014 through March 2015, which demonstrates that Ameren’s cost analysis was inappropriately based on NYMEX future prices," the suppliers said.

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