MichCon Seeks Changes to Gas Choice Program

Michigan Consolidated Gas Company has filed at the Michigan PSC a number of changes to the natural gas choice program.

Among these changes are:

• Requiring alternative gas suppliers to satisfy credit deposits three business days prior to month end rather than by the last calendar day of the month;

• Modifying the annual reconciliation process such that supplier deliveries that exceed the volume their customers have used will be returned in-kind.

• Replacing the term "authorized supplier" in the tariff with the term "alternative supplier"

MichCon said that requiring suppliers to satisfy credit deposits three business days prior to month-end, rather than by the last calendar day of the month, "will significantly improve MichCon's ability to perform the manual tasks associated with this aspect of the program before the end of the month when such changes need to be in place to properly operate the gas choice program."

In particular, MichCon said that this change is needed because there have been instances where the supplier deposit is not satisfied on the last day of the month. In such cases, MichCon contacts the supplier to resolve the situation, but this can take several days, particularly if the end of the month falls on a non-business day. In the past, MichCon has allowed suppliers to nominate supply for the upcoming month even if the supplier deposit was not satisfied on the due date.

"However, MichCon believes this is a poor business practice and unduly burdensome from an administrative standpoint."

By changing the due date to three business days prior to month-end, MichCon said that the process can be completed in a more orderly fashion.

Regarding the modification to the annual reconciliation process so that supplier deliveries which exceed the volume their customers have used are returned in-kind, MichCon said that this change will align its choice program with the practice at Consumers Energy, and eliminate the impact of excess gas customer choice volume purchases on the GCR charged to sales customers.

Currently, when a supplier's deliveries for the choice program year exceed its customers' usage for the program year, that supply is either 1) retained by MichCon and rolled into its GCR supply or 2) returned to the choice supplier.

MichCon noted that there are times when the purchase of choice reconciliation volumes has arguably increased GCR costs from what they otherwise would have been. If choice volumes are purchased, MichCon must reduce GCR purchase volumes. Because choice volumes are priced based on a comparison to the prior year's GCR factor, they may be priced higher or lower than current market prices MichCon would otherwise pay. "At the time the GCC [gas customer choice] program was designed, it was believed that comparison to the prior year's GCR would protect and benefit GCR customers. Based on actual experiences, GCR customers do not always benefit from these purchases. MichCon believes it is more reasonable to completely eliminate the impact of excess GCC volume purchases on the GCR," MichCon said.

MichCon also proposes to eliminate the term "authorized supplier" in the tariff, to be replaced with "alternative supplier," because, "the term 'Authorized' may give customers the false impression that MichCon somehow licenses, regulates, endorses or partners with GCC suppliers."

MichCon cited supplier marketing materials in which the term "Authorized Supplier" is used in a manner that MichCon believes, "could reasonably be interpreted as MichCon somehow providing some sort approval of the GCC supplier."

As of June 2012, a total of 19 choice suppliers were participating in the MichCon choice program.