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Utility Proposes New Carbon-Free Natural Gas Service To Be Provided By Retail Suppliers

Utility, With Active Choice Program, Says If New Service Not Successful, Utility Could Itself Offer Carbon-Free Gas Option

March 11, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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The East Ohio Gas Company d/b/a Dominion Energy Ohio (DEO, Dominion or the Company) has proposed at the Public Utilities Commission of Ohio a service meant to facilitate the optional purchase of "decarbonized" natural gas by customers from competitive retail energy suppliers

Under DEO's proposed Decarbon Ohio Program, certified Energy Choice suppliers would be responsible for the purchase and sale of carbon offsets and marketing carbon-offsetting rate offers to interested customers. DEO would facilitate the Program by fulfilling three roles: "(a) educating customers on the importance of sustainability and the general availability of carbon-offsetting rate offerings; (b) administering the Program, including initial and ongoing review of supplier eligibility and Program compliance, customer enrollment, and the creation and maintenance of customer portals; and (c) validating that suppliers obtained sufficient certified carbon offsets to fully offset emissions associated with enrolled customers. The Program would be a voluntary, opt-in program for both customers and suppliers."

"DEO believes that a joint approach, by both the utility and suppliers, will bring additional visibility to such offerings and better enable customers to identify and understand available carbon-offsetting rate offerings," Dominion said in its application

Dominion said that because it has largely exited the merchant function, "rather than have DEO purchase and sell carbon offsets itself, DEO designed the Program to encourage voluntary transactions by providing an avenue for interested suppliers to offer interested customers carbon-offsetting commodity rates."

However, Dominion in its application stated, "DEO believes that this activity [carbon-free gas sales] could also appropriately be carried out by the utility. In this regard, if the Program is approved by the Commission, but does not prove successful with respect to customer and/or supplier participation, or if other evidence suggests that the Program is not achieving the intended benefits or in the public interest, DEO may consider discontinuing the Program as structured and file a new application requesting authority to offer carbon offset credits directly to customers."

As further discussed below, Dominion would provide customer education concerning the optional carbon-free products, including providing an active supplier list and contacts, and would include a Decarbon Ohio Program logo on participating customers' utility consolidated bills

The Program would be available to Choice-eligible residential and nonresidential customers taking service under the following rate schedules: (1) Energy Choice Transportation Service – Residential and (2) Energy Choice Transportation Service – Nonresidential

DEO said that, at this time, the Program would not involve service under the Standard Choice Offer (SCO), Standard Service Offer (SSO), or Monthly Retail Rate (MRR) Commodity Services.

"No change is being proposed to those services, and such customers (if eligible for Energy Choice) would not be restricted from leaving such services and enrolling with a participating supplier if they so choose," DEO said

Customers receiving service under DEO’s other transportation rate schedules (Daily Transportation Service, General Transportation Service, Transportation Service for Schools, and Large Volume Energy Choice Transportation Service), and any customers for whom DEO does not bill commodity service, would not be eligible to participate in the Program.

"DEO would not prohibit governmental aggregators from participating in the Program, provided that all Program goals, terms, and conditions can be satisfied. From a billing standpoint, DEO believes that it would be technically feasible to include an aggregation commodity service in the Program. Given the significantly larger load and other potential administrative issues, however, it may be necessary to require additional protections and conditions on governmental aggregator participation," DEO said

DEO proposed the following retail supplier eligibility requirements for participation in the Decarbon Ohio Program

a. The supplier must have been providing Energy Choice service for at least 12 months.

b. The supplier must either (i) have at least 100 non-MRR, non-SSO, and non- SCO Energy Choice Customers under contract for competitive retail natural gas service or (ii) be serving at least 10,000 Mcf of non-MRR, non-SSO, and non-SCO Energy Choice annual load.

"As DEO will not be financially responsible for acquiring the carbon offsets, DEO does not believe at this time that any revisions to supplier collateral requirements are necessary," DEO said

With respect to customer education concerning the program and its offerings, DEO proposed to work to create websites and other information enabling customers to identify and pursue enrollment with a Program supplier.

DEO intends to use multiple channels to provide customers with information demonstrating the importance of sustainability and to make customers who are interested in reducing their environmental impact aware of offerings under the Program. These include social media, digital media, e-mail communications, as well as more traditional channels (such as print, television, radio, and mail). Customers will remain free to choose a commodity rate in keeping with their own priorities and supply preferences, DEO said

DEO proposed to also provide information to identify which suppliers are participating in the Program and provide contact information (as currently provided for all Energy Choice suppliers), to ease the selection and enrollment process for customers who choose to participate.

"DEO is willing to consult with Staff, regularly or on request, to review educational and promotional materials and to ensure that the presentation of participating suppliers is carried out in a competitively neutral manner," Dominion said

DEO proposes to include a Decarbon Ohio Program logo on the participating customer's utility consolidated bill and to also indicate on the bill the participating customer is receiving a "Decarbon Ohio Rate."

Once a customer chooses to enroll, the supplier will send DEO a change order or new enrollment record for that customer. If the supplier is the customer’s current supplier, the change in rate to the Program rate will take effect for the customer’s current billing cycle. If the supplier is not the customer’s current supplier, the change in supplier and to the Program rate will take effect for the customer’s next billing cycle, following billing with the customer’s previous supplier one more time after the change was initiated.

Once a customer has enrolled with a participating supplier on a Program rate, that customer will receive an accreditation in the form of a Decarbon Ohio Program logo on his or her DEO bill and customer profile to recognize the customer’s role in reducing his or her carbon footprint. DEO plans to include the accreditation on the customer’s first bill at the new Program rate and for it to remain on the bill as long as the customer is enrolled. The accreditation will also appear on the customer’s electronic account page and other portals.

Concerning validation of offsets, DEO said that DEO will be responsible for running a customer usage data query for participating suppliers, converting the Mcf usage for the supplier’s enrolled customers to metric tons using an appropriate EPA conversion factor, and providing that information to the supplier. To determine the supplier’s total consumption for its enrolled customers, the starting point for measuring each customer’s consumption will be the first billing cycle for which the Program rate is in effect for that customer. DEO will also validate that carbon certifications are from pre-approved third-party verifiers.

As proposed, DEO will also conduct a reconciliation and review of the participating supplier’s carbon offset credits, including any 'true-up' assessment, to ensure that the supplier’s carbon offset credits are equal to or greater than the total usage for the supplier’s enrolled customers. Suppliers would be prohibited from relying on any carbon offset credits that the supplier had utilized for other carbon offset programs in Ohio or any other jurisdiction, for other customers, or for other time periods, or that have otherwise been double-counted in any way. DEO intends to conduct the review and reconciliation of participating suppliers’ certified carbon offset credits on an annual basis. If DEO determines that an annual reconciliation is insufficient to ensure compliance with the Program, whether as to a particular supplier or Program-wide, DEO reserves the right to reconcile on a more frequent basis following due notice to affected suppliers.

DEO will notify the supplier of the results of its reconciliation review. If excess credits were acquired but not utilized during the period covered by the reconciliation, the credits will not expire and will be tracked within the “true-up” process to be used in the reconciliation of the following period. If DEO determines that the supplier has not acquired carbon offset credits equal to or greater than the total usage for the supplier’s enrolled customers, the supplier will have 30 days from the date of DEO’s notice to rectify any shortfall. If the supplier does not do so, the supplier’s customers will be dropped from the Program and from the supplier. As noted above, any failure to adhere to the terms and conditions of the Program, including but not limited to the failure to produce the requisite carbon offset credits, if not timely rectified, may also be considered a material default under the ECPS [Energy Choice Pooling Service] Tariff and potentially subject the supplier to termination from the Energy Choice program, as well as suspension or rescission of its certification.

Any residential customer account that is dropped from the supplier would revert to the SSO for up to two billing cycles before moving to SCO (assuming they remain eligible), unless the customer makes an election to enroll with another supplier or supply option prior to the SCO order being posted. Transition of nonresidential customers dropped from the Program would vary based on usage, consistent with DEO’s SCO and MRR Commodity Service rate schedules

Case No. 22-0179-GA-ATA et al.

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