Retail Supplier Seeks Shopping Credits at Duke Energy Ohio due to Lack of Unbundling

Interstate Gas Supply, Inc. has recommended that the Public Utilities Commission of Ohio introduce a form of shopping credit for natural gas customers at Duke Energy Ohio due to the inclusion of natural gas procurement costs in nonbypassable base rates.

IGS Energy's recommendation came in testimony on a Duke Energy Ohio rate case (12-1686-GA-ATA et. al.)

"[T]he cost of procuring natural gas, the cost of scheduling and balancing, and the cost of providing customer information for commodity supply for Gas Cost Recovery ('GCR') customers are all provided by Duke utility personnel and are recovered by Duke in base rates. However, Choice customers as well as GCR customers, pay Duke's distribution base rates; and, thus, Choice customers are paying for natural gas procurement, daily scheduling and related support for GCR customers," IGS Energy said.

"The costs of procuring and administering gas for the GCR customer, if rolled into the base rates, must be accompanied by a credit to the shopping customers to avoid this inequity and barrier to effective competition. This credit should be designed and implemented so that Duke is compensated for its personnel and equipment costs in supplying the natural gas commodity, but in such a manner as to ensure that those costs are paid exclusively by GCR customers," IGS Energy said.

IGS Energy also raised concerns with retail suppliers' inability to receive full value of Firm Balancing Service assets for which they are charged. "In essence, GCR customers are using similar assets for balancing and peaking services, while shopping customers are receiving only the value for balancing service," IGS Energy said.

"One means of addressing these inequities is to create a charge to GCR customers that would be credited to all distribution customers," IGS Energy said. "This would rectify the inclusion in base rates of commodity related procurement costs and reduce the inequity created by base rate inclusion. In Pennsylvania, a similar process has been underway by all the major gas utility companies, resulting in identification of commodity related procurement costs in base rates ranging from 4 cents per Mcf to 12 cents per Mcf. In addition, the credit to distribution rate customers should take into consideration the fact that Choice suppliers are not receiving the full value of the FBS assets that they pay for," IGS Energy said.

IGS Energy proposed to charge GCR customers 17 cents per MCF, which is essentially the FBS charge CRNG suppliers pay, with the revenue from that charge to be credited back to distribution customers. "When you take [into] consideration the inclusion [in] base rates the cost[s] Duke acknowledges are solely GCR related, and the balancing only services provided from the FBS assets, coupled with GCR customers receiving the full value for all of the above, a 17 cent per MCF charge to the GCR is justified."

IGS Energy, and Direct Energy in separately filed testimony, both sought to increase the current limit of 40 rate codes under Duke's utility consolidated billing.