Retail Unbundling - Kentucky


Status: The state has a pilot unbundling program for residential customers.


Overview: In January 2000, the Kentucky Public Service Commission (PSC) approved a pilot customer choice program for residential and small-volume commercial customers of Columbia Gas of Kentucky. The program, "Columbia Customer Choice," began on September 2000 and is available to all Columbia customers who consume less than 25 million cubic feet of natural gas per year. Columbia continues as the supplier of last resort and remains in the merchant business, both selling and transporting natural gas to consumers. In June 2003, Columbia stated that choice participants were not saving money and asked that the pilot be discontinued 7 months before its scheduled termination date of October 31, 2004. Interstate Gas Supply (IGS), which supplies gas to most of Columbia's choice participants, disputed the claim, as did many other parties. Subsequently, the PSC determined that Columbia had used an inaccurate accounting procedure to evaluate the program. Instead, the PSC found that program participants, in the aggregate, have saved on their gas bills and ordered Columbia to extend the pilot through March 31, 2005. The PSC also directed Columbia to hire an external consultant before the end of the 2003-2004 heating season to evaluate the customer choice program. As of December 2004, about 41,000 of the company’s 128,000 residential customers were participating, down from about 45,600 in June 2002. In November 2004, the company submitted an application for a new Choice program that would run from April 1, 2005, to March 31, 2009.


On January 13, 2002, the PSC approved an agreement wherein marketers participating in Columbia’s choice program will “take assignment of minimum levels of the utility’s storage and transportation capacity and undergo a prospective capacity audit.” If a marketer does not meet its capacity requirements, the utility may assign capacity to meet the shortfall. According to Columbia’s most recent report (June 2003), three marketers were participating in the pilot program, with one marketer serving about 80 percent of the choice participants. As of December 2004, only two marketers were actively adding new customers. Larger volume customers throughout the state have had access to unbundled service since the 1980s.


EIA State Data: In 2003, Kentucky had 762,130 residential and 84,014 commercial customers. They consumed 62 and 38 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 $9.18 and $8.62 per thousand cubic feet, respectively.



Eligibility/Participation in Retail Choice Programs:


Estimated Status as of December 2004: Number of Customers

Customer Type

Total 2003

Eligible in 2004

Participating in 2004

Total

Percent of 2003 Total

Total

Percent of Eligible

Percent of 2003 Total

Residential

762,130

127,932

16.8

   41,121

32.1

5.4

Commercial

 84,014

14,728

17.5

 5,278

35.8

6.3

Total

846,144

142,660

16.9

46,399

32.5

 5.5


Sources: Total 2003: Energy Information Administration, Natural Gas Annual 2003 (December 2004). Eligibility Rate: Based on customer totals for Columbia Gas of Kentucky reported on Form EIA-176, "Annual Report of Natural and Supplemental Gas Supply and Disposition," which is the primary data source for EIA's Natural Gas Annual. Estimated Participation Rates: Kentucky Public Service Commission.

 

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File last modified: 01/31/2005