PUCO "Open" to Utility Exit from Merchant Function as New Rules Drafted

The Public Utilities Commission of Ohio is, "open to considering applications [from gas utilities] to exit-the-merchant-function and will seriously consider such applications that are just and reasonable," the Commission said in issuing proposed revisions to relevant rules governing any such exit (11-5590-GA-ORD).

The proposed revisions are part of a five-year annual review of administrative rules, but also include Staff recommendations for the addition of new rules and amendments to rules throughout Chapter 4901:1- 19, O.A.C, to address filing requirements and procedures related to applications to exit-the-merchant-function.

Among other things, "exit-the-merchant-function" is defined as the complete transfer of the obligation to supply default commodity sales service for choice-eligible customers from a natural gas company to retail natural gas suppliers without the occurrence of a competitive retail auction, such as the current Standard Service Offer and Standard Choice Offer auctions.

Notably, Dominion East Ohio had submitted to PUCO in March a notice of intent to continue with the next phase of its exit from the merchant function, but has not followed this notice with any substantive filing (see 3/2).

Among other things, LDCs seeking to exit the merchant function would be required to, "demonstrate that the retail natural gas suppliers providing default commodity sales service to the natural gas company's choice-eligible customers have done so reliably for at least two consecutive heating seasons through a competitive retail auction process."

The LDC seeking to exit the merchant function shall also, "provide details of the actual assignment and transfer of choice-eligible customers to retail natural gas suppliers for default commodity sales service."

Under the draft, retail natural gas suppliers which are assigned a choice-eligible customer shall:

(A) Not charge that customer any more than the company's posted standard variable rate, which the company shall submit to the Commission and which the Commission shall post on its web site.

(B) Not charge that customer a termination fee if the customer chooses another retail natural gas supplier.

(C) Not require that the customer remain a customer of that retail natural gas supplier for a minimum period of time.

(D) Keep the assigned customers' personal, billing, account number and usage information confidential except to the host distribution utility.

The LDC seeking to exit the merchant function shall also, "provide a plan for customer education regarding the exit-the-merchant-function plan, which shall include efforts to encourage customers to choose retail natural gas suppliers before the company fully exits the merchant function."

Per the proposed rules, a natural gas company that has an approved exit-the-merchant-function plan shall continue to supply default commodity sales service for choice-ineligible customers and Percentage of Income Payment Plan customers after the company's choice-eligible customers have been transferred to retail natural gas suppliers pursuant to the approved plan.

Furthermore, a natural gas company that has an approved exit-the-merchant-function plan shall retain the company's distribution and balancing functions, including safety, but shall not be responsible for supplying default commodity sales service to any choice-eligible customer.