Retail Unbundling - Ohio

Status: The state has partially implemented comprehensive unbundling programs for its residential customers.

Overview: Retail unbundling by the major gas utilities in Ohio is being implemented through Ohio Public Utilities Commission (PUC) orders and stipulations with individual companies. Unbundled service in the residential and small commercial sectors began with a pilot program for customers of Columbia Gas of Ohio in April 1997. Pilot programs for Cincinnati Gas & Electric and East Ohio Gas began in late 1997. In June 1998, the PUC allowed the Columbia Gas and Cincinnati Gas & Electric programs to expand to include all customers in their service territories. The East Ohio Gas program was expanded to a company-wide program in July 2000. In March 2001, the Governor signed legislation that requires retail gas suppliers to be certified by the PUC; authorizes governmental aggregation for competitive retail gas service; authorizes the PUC to order open access for large local distribution companies; and consolidates consumer protection authority over certain retail natural gas transactions.

According to a report by the Ohio PUC in May 2001, the high natural gas prices in the winter of 2000-2001 caused some suppliers to exit the program because of difficulties in meeting fixed contractual obligations. The number and variety of rate plans offered also decreased, and many marketers scaled back or froze efforts to acquire new customers. This limited choice for consumers and also dampened consumer confidence in choice programs. Enrollment problems were also noted, with some enrollments delayed for more than 3 months and difficulties in changing back to LDC sales service because of enrollment cutoff dates.

EIA State Data: In 2000, Ohio had 3,456,770 residential and 292,415 commercial customers. They consumed 343 and 178 billion cubic feet of natural gas, respectively. The average prices paid for natural gas purchased from local distribution companies by residential and commercial customers were $7.70 and $7.02 per thousand cubic feet, respectively. The average city gate price in Ohio was $6.10 per thousand cubic feet.

Eligibility/Participation in Retail Choice Programs:

Status as of February 2001: Number of Customers

Customer Type
Total 2000 Eligible Participating
Total Percent of 2000 Total Total Percent of Eligible Percent of 2000 Total
Residential 3,456,770 2,744,000 79 825,148 30 24
Commercial* 292,415 232,000 79 66,859 29 23
Total 3,486,015 2,976,000 85 892,007 30 26

*Total 2000 commercial customers include both large- and small-volume customers. Data for eligible and participating customers include only small-volume commercial customers.

Sources: Total 2000: Energy Information Administration, Natural Gas Annual 2000 (November 2001). Eligibility and Participation: Public Utilities Commission of Ohio (May 2001).

LDC Customer Data as of February 2001 from the Public Utilities Commission of Ohio

Local Distribution Company
Number of Customers
Residential Small Commercial
Eligible Participating Eligible Participating
Columbia Gas of Ohio 1,300,000 429,956 105,000 42,321
Cincinnati Gas & Electric 346,000 10,471 39,000 2,317
East Ohio Gas 1,098,000 384,721 88,000 22,221
Total 2,744,000 825,148 232,000 66,859

Ohio: Regulatory and Legislative Actions on Retail Unbundling

Summary: The Ohio General Assembly passed the Natural Gas Alternative Regulation law in June 1996, which sets customer choice as a state goal in the provision of natural gas services. In March 1997, the Public Utilities Commission of Ohio (PUCO) adopted rules to implement this alternative regulation legislation. Currently, the PUCO is coordinating customer choice programs in the delivery areas of three local distribution companies with a total customer base of about 1.9 million. The PUCO has developed a series of price comparison charts known as "Apples to Apples" to provide customers with price information from the various marketers. Legislation was passed in 2001 that requires retail gas suppliers to be certified by the PUC; authorizes the formation of aggregate buying groups for natural gas; authorizes the PUC to order open access for large LDCs; and consolidates consumer protection authority over certain retail natural gas transactions. The PUC is in the process of drafting rules for competitive retail natural gas service and providers.

Regulatory and Legislative Actions
Legislation 3/01 House Bill 9. Governor signed amended substituted HB 9, which requires retail gas suppliers to be certified by PUCO; authorizes governmental aggregation for competitive retail gas service; authorizes PUCO to order open access for large LDCs; and consolidates consumer protection authority over certain retail natural gas transactions.
6/96 The Natural Gas Alternative Regulation Law, House Bill 476. Establishes customer choice as a state policy goal.
Regulatory Action 7/01 Proposed Retail Choice Rules. On June 19, 2001, PUC issued for comment proposed rules for competitive retail natural gas service and providers. Rules are modeled after those developed for electric service.
5/01 PUC Report:Gas Price Issues, Winter 2000-01. Rising commodity prices caused some suppliers to exit the program- difficult to compete with slower rising GCR and to meet fixed contractual obligations. Difficulty maintaining rate plan options - Number of rate plans offered and variety of options decreased (fixed rate options, discounts off GCR rate). Variable rate contracts introduced or only options remaining. Fewer marketers - thus limiting choice and eroding consumer confidence in choice programs. Also some scaled back or froze efforts to acquire new customers. Enrollment problems - some enrollments delayed for more than 3 months - also difficulty in changing back to LDC because of enrollment cutoff date.
3/01 Request for Study of Natural Gas Price Issues. PUC directed staff to investigate the impact of recent high prices on Ohio gas consumers and the natural gas choice programs. Report request initiated in response to a petition filed by the Ohio Consumers' Counsel in January 2001 and numerous inquiries by the public and the Ohio General Assembly.
12/99 Continuation of Pilot Programs Approved, Cases 98-593-GA-COI, 98-594-GA-COI, 98-595-GA-COI, 98-1167-GA-COI, 99-661-GA-COI. PUCO approved, with conditions, the continuation of pilot customer choice programs for Columbia Gas of Ohio, East Ohio Gas, and Cincinnati Gas and Electric. One of the prominent conditions for approval is that the PUCO staff will develop a proposal, within 30 days, designed to address complaints associated with door-to-door solicitations on the part of marketers. Another concern is the lack of timely reporting by marketers to PUCO staff of rates for residential customers to be included in the"Apples to Apples" comparison chart. In today's order, PUCO directed local distribution companies to make such reporting a requirement for marketer participation in the program.
12/99 Columbia Gas Pilot Extended, Cases 94-987-GA-AIR, 96-1113-GA-ATA, 98-222-GA-GCR, 97-122-GA-FOR. PUCO approved a stipulation that, among other things, extends Columbia Gas of Ohio's Customer Choice program through October 2004, freezes Columbia's base rates through October 2004, and establishes a process to address issues related to merchant function, obligation to serve, and provider of last resort roles and responsibilities.
6/99 Staff Report: Second Evaluation of Natural Gas Choice Programs. Staff recommends that the East Ohio pilot remain limited to 10-county area for the 1999-2000 heating season because of continuing computer problems. Recommends that the PUCO continue to provide marketer price comparisons and that marketers who fail to provide timely information be excluded. Supports incorporation of marketer conduct guidelines in LDCs' Code of Conduct section of tariff filings. Endorses Columbia Gas's telephone and Internet enrollment process as a model for other programs and recommends improved enforcement of Codes of Conduct rather than restricting door-to-door solicitations. Agrees with LDCs that under existing law LDCs have sole right to propose changes to the gas cost recovery (GCR) mechanism and other service modifications and that the PUCO cannot order companies to exit the merchant function; thus recommends a forum approach for further discussion of issues relating to GCR reform and obligation to serve.
6/99 Investigation of Code of Conduct Tariff Language, Case 99-661-GA-COI. The PUCO approved interim rules that would exclude or suspend marketers from participation in retail choice programs if they violated existing codes of conduct. Customers of noncomplying marketers would then return to being bundled service customers of the LDC.
1/99 Internet Enrollment Allowed, Cases 98-549-GA-ATA. The PUCO approved use of the Internet for enrolling customers in Columbia Gas's retail choice program. The enrollment must be initiated by the customer rather than the marketer. Required safeguards include: a 7-day period during which customers can cancel without penalty; written confirmation of enrollment; and a secure encryption account number code.
6/98 Columbia Gas Program Expanded, Cases 94-593-GA-COI et al. The PUCO approved expansion of Columbia Gas retail choice program to all its residential and small business customers (1.3 million) during the 1998-99 winter and the continuation of the existing programs of East Ohio Gas and Cincinnati Gas and Electric. Marketers may not sign up new customers until August 1, 1998.
1/98 Transition Cost Recovery Mechanism Approved for Columbia Gas, Cases 94-987-GA-AIR and 96-113-GA-ATA. The PUCO approved a transition cost recovery mechanism for Columbia Gas that was proposed by a 13-member collaborative representing consumers, government, industry, and PUCO staff and would take effect if Columbia Gas pilot is expanded statewide. Base rates would remain the same until 2000. A 4-year fund would be established from revenue from voluntary capacity assignments, balancing services, interstate pipeline company refunds, and some of the offsystem revenue to offset purchased interstate pipeline and storage services that would be unneeded if customers bought gas from marketers. Columbia would be "at risk" for 11 percent of its transition costs. Half the revenues from offsystem sales that exceed $17.2 million in any of the next 4 years would be allocated to the cost recovery mechanism and the other half would be kept by Columbia.
7/97 CG&E and East Ohio Pilot Programs Approved, Cases 95-656-GA-AIR and 96-1019-GA-ATA. The PUCO approved 18-month pilot programs for Cincinnati Gas and Electric (CG&E) and East Ohio Gas companies. All CG&E residential and small business customers are eligible to participate, while the East Ohio program covers customers in a 10-county area. After 1 year, the PUCO decides whether or not East Ohio's pilot should be expanded to a wider service territory. Both companies must provide consumer education programs and continue as suppliers of last resort. Under the East Ohio settlement, upstream pipeline and storage capacity would be assigned to the marketer on a pro-rata basis; if the assignment was below a set level, East Ohio would use the capacity for its core market and the marketer would have to obtain alternative capacity. Part of the assigned storage capacity could be remarketed.
3/97 Rules Adopted To Implement Alternative Regulation Legislation, Case 96-700-GA-ORD. The PUCO adopted rules to implement the Natural Gas Alternative Regulation Law. The rules allow LDCs to apply to the Commission for the opportunity to compete directly with marketers for supplies, allowing the general public to benefit from an array of natural gas suppliers. The rules also require a natural gas company to adopt a "code of conduct" to demonstrate how it is guarding against cross subsidies or other anticompetitive actions.
1/97 Columbia Gas Pilot Approved, Case 96-1113-GA-ATA. The PUCO approved Columbia Gas of Ohio's request to operate a pilot choice program for natural gas residential and small business customers (using less than 2 million cubic feet (MMcf) per year) in the Toledo area. The program begins in April 1997 and is open to all marketers who agree to participate in Columbia's aggregation service. Participating marketers must have at least 200 residential customers or a group of commercial customers with annual throughput of at least 2 MMcf. Marketers will be charged a daily balancing fee if they do not take storage and upstream capacity from Columbia.

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File last modified: 06/19/2002