Retail Unbundling - U.S. Summary

Overview: Concerns about the high energy prices in 2000 and early 2001 and the crisis in California's deregulated electricity market have slowed the move toward increased competition in retail natural gas markets. In fact, some states have chosen not to expand pilot programs or have deferred legislative action until new questions concerning reliability and costs can be resolved. Still, 20 states and the District of Columbia have programs underway that allow residential consumers and other small-volume gas users to purchase natural gas from someone other than their traditional utility company. However, the availability, characteristics, and participation rates of these "customer choice" programs vary widely across states. Five states and the District of Columbia allow all residential consumers to choose their natural gas suppliers, but a lack of marketer participation has precluded the development of competitive retail markets in two of these states. Seven other states have begun to implement statewide programs, and eight states have pilot or partial unbundling programs in place. An additional 10 states are considering action on customer choice, while 18 states have thus far taken no action and two states have discontinued their pilot programs. Five states and the District of Columbia have changed their unbundling status in the past 18 months. Pennsylvania has allowed customer choice statewide since July 2000, and D.C. gave approval for a full-scale choice program in February 2001. Michigan and Virginia are in the process of implementing statewide choice programs after conducting pilot programs for several years. In contrast, Delaware and Wisconsin discontinued their pilot programs on October 31, 2001.

Consumer reaction to these choice programs has been mixed. In some states, such as Nebraska and Wyoming, all of the eligible residential and commercial customers are electing to choose suppliers, while in other states, such as New Mexico and West Virginia, virtually no one is participating. The most far-reaching unbundling program exists in Georgia where all residential customers in the Atlanta Gas Light Company (AGL) service territory (more than 80 percent of the residential gas customers in the state) purchase their natural gas directly from marketers. AGL still delivers the gas but no longer provides any sales service. Large commercial and industrial consumers have had the option of purchasing the natural gas commodity separately from natural gas services for many years. State regulators and lawmakers, who are responsible for designing and implementing retail restructuring programs, have moved more slowly in implementing choice programs for residential and small-volume commercial customers, traditionally known as "core" consumers, until they could ensure reliable service.

EIA Data: In 2000, the United States had 59,478,980 residential and 5,090,586 commercial customers. They consumed 4,991 and 3,217 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 $6.69 and $5.33 per thousand cubic feet, respectively. The average city gate price in the United States was $3.10 per thousand cubic feet.

Eligibility/Participation in Retail Choice Programs:

Status as of December 2001: Number of Residential Customers



Category/State


Total 2000

Eligible Participating
Total Percent of 2000 Total Total Percent of Eligible Percent of 2000 Total
Statewide Unbundling: 100-Percent Eligibility
D.C. 138,252 138,252 100 15,807 11.4 11.4
New Jersey 2,364,058 2,364,058 100 57,040 2.4 2.4
New Mexico 479,894 479,894 100 0 0 0
New York 4,162,450 4,162,450 100 244,823 5.9 5.9
Pennsylvania 2,519,523 2,519,523 100 253,734 10.0 10.0
West Virginia 360,471 360,471 100 21 0.01 0.01
Subtotal 10,024,648 10,024,648 100 571,425 5.7 5.7
Statewide Unbundling: Implementation Phase
Georgia 1,679,152 1,375,556 81.9 1,375,556 100 81.9
Maryland 941,384 933,051 99.1 166,800 17.9 17.7
Ohio 3,456,770 2,744,000 79.4 825,148 30.1 23.9
Virginia 907,855 184,000 20.3 45,630 24.8 5.0
Subtotal 6,985,161 5,236,607 75.0 2,413,134 46.1 34.5
Pilot Programs/Partial Unbundling
Illinois 3,631,762 285,000 7.8 65,833 23.1 1.8
Indiana 1,590,925 610,000 38.3 10,001 1.6 0.6
Michigan 2,979,832 806,137 27.1 199,218 24.7 6.7
Nebraska 465,718 73,669 15.8 73,669 100 15.8
Wyoming 129,274 9,185 7.1 9,185 100 7.1
Subtotal 8,797,511 1,783,991 20.3 357,906 20.1 4.1
Total 25,807,320 17,045,246 66.0 3,342,465 19.6 13.0
U.S. 2000 Total 59,478,980 --

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-- = Not applicable.

Note: Three other states (California, Colorado, and Massachusetts) are in the implementation phase of statewide unbundling, but eligibility and participation data are not available. Also, three other states (Kentucky, Montana, and South Dakota) have pilot programs or partial unbundling, but residential data are not available (see state information pages).

Sources: Total 2000: Energy Information Administration, Natural Gas Annual 2000 (November 2001). Eligibility and Participation: State public utility commissions.

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File last modified: 06/19/2002