Report: Retail-Style Auction Did Not Appreciably Increase Migration; Winning Suppliers Fail to Convert Most Customers to Choice Product

Over its first 12 months of service, the Standard Choice Offer (SCO) program at Columbia Gas of Ohio did not lead to any appreciable change in migration to choice (non-SCO) service, a report from Staff of the Public Utilities Commission of Ohio concluded.

Columbia instituted the SCO program starting April 1, 2012. Under the SCO, retail suppliers bid to serve blocks of specific customers for a 12-month term. The SCO replaced the Standard Service Offer (SSO), which relied on wholesale suppliers to serve slices of Columbia's default service obligations.

Staff found that during the first year of the SCO program, from April 2012 to April 2013, migration of choice-eligible customers away from the SCO did not materially increase.

Specifically, over the 12-month period following initiation of the SCO program, Choice enrollment increased from 37 percent of Choice-eligible customers at the beginning of the period to 38 percent at the end of the period, resulting in only a one percent change. Staff noted that the April 2013 enrollment percentages have remained about the same through July 2013.

Staff noted that migration was higher in the winter months (hitting a high-water mark of about 42% from October 2012 to March 2013), but receded to 38% by April 2013, indicating that migration may be seasonal.

The slow pace of migration was evident for both residential and non-residential customers. Residential migration increased from 36% to 37% from April 2012 to April 2013, while non-residential migration increased from 48% to 49% from April 2012 to April 2013

Additionally, Staff examined whether SCO suppliers were successful in enrolling their SCO customers, as won in the auction, onto a choice product.

During the 12-month period from May 2012 through April 2013, nearly 120,000 Columbia customers switched from the SCO to the choice program.

Just over 4,300, or four percent, of the 120,000 selected a choice offer made by the customer's SCO provider.

Staff also reported that most of the customers switching to choice service enrolled onto a non-fixed product. About 46,000, or 38 percent of the customers leaving the SCO, selected a fixed rate contract.

Staff said that this result indicates that a "substantial" portion of switching customers were attracted to fixed-rate offers, which are not available in the SCO program, as the SCO is a monthly rate.

Staff's report was filed in Case 12-2637-GA-EXM