Retail Unbundling - U.S. Summary
Overview: Enrollment
in existing “customer choice” programs decreased in 2004, although more consumers
were eligible to participate than ever before. In total, nearly 33 million of
the approximately 62 million residential gas customers in the United States
have access to choice programs, a gain of about 2.5 percent since 2003, and
about 4 million are participating (12 percent of eligible) (Table 1). However,
enrollment dropped by almost 5 percent in 2004, marking the first downturn in
participation levels since some states began opening up residential retail
markets to competitive supply offers in the 1990s. Almost all of the decline
(88 percent) can be attributed to decreased participation in Ohio, as the state
had 168,173 fewer residential choice customers in 2004 than in 2003 (Table 2).
Still Ohio is second only to Georgia in the size of its residential choice
market with more than a third of all households participating and enrollment
levels of nearly 1.1 million. Michigan, which has the fourth largest choice
enrollment, had the next largest decrease with a participation decline of
37,844. Pennsylvania had a decline of 14,027.
Apparently, the sharply higher prices for natural gas in
the past few years and increased price variability have dampened consumer
interest in alternative supply options and reduced the number of marketers
interested in serving residential customers ( Marketer Summary
Table). About 30 percent fewer marketers were authorized to
serve residential customers in 2004 than in 2001 (115 vs. 165), and the number
of marketers actually selling to residential customers has dropped from 159 to
83 (Table 3). Furthermore, many marketers are not enrolling new customers. For
example, Michigan has only two marketers enrolling customers, and Pennsylvania
has virtually no marketer activity in large areas of the state.
Despite the overall enrollment decline, pilot programs in
several states (Kentucky, Indiana, and Wyoming) have requested extensions, and
state regulatory agencies are continuing to refine and evaluate existing
programs. Florida allowed another utility to exit the merchant function on a
2-year trial basis and transfer its residential and commercial sales customers
to aggregated customer pools. In New York, which has the third largest choice
enrollment, the public service commission affirmed its commitment to customer
choice and outlined strategies to boost participation, such as encouraging
aggregation programs and utility-specific programs that help customers switch to
third-party suppliers. In particular, utilities were encouraged to replicate
Orange & Rockland’s successful “PowerSwitch” program in which the utility
purchases marketers’ accounts receivable without recourse, which simplifies
marketers’ operations and eliminates their need to perform credit checks. In
return marketers in the program offered a guaranteed discount for a 2-month
period and agreed to take all residential and small commercial customers that
are referred by the utility. Customers are assigned randomly to participating
marketers.
In Pennsylvania, the public utility commission began an investigation in May 2004 to evaluate the competitiveness of natural gas supply services in the state. If it is determined that the market is not sufficiently competitive, further actions are to be considered, including legislation. Massachusetts began an investigation in January 2004 to determine whether retail markets are sufficiently competitive to allow local distribution companies (LDCs) to assign pipeline capacity voluntarily rather than on the currently mandated basis. The investigation is ongoing with most LDCs advocating for the status quo and most marketers advocating for changes. No suppliers are currently offering services to household consumers in Massachusetts.
No
significant changes occurred in the states that allow consumer choice but have
virtually no participation. As in 2003, Massachusetts had almost no
participation with fewer than 100 residential customers participating, while
West Virginia and New Mexico had no participants. The customer aggregation
program continues in California, but accounts for only 0.4 percent of
deliveries to residential customers (based on most recent EIA data). Only about
0.5 percent of residential and commercial customers in Montana have chosen
alternative suppliers, and only 0.2 percent of South Dakota gas consumers (all
sectors) use transportation service. Colorado allows utilities to offer
customer choice programs if approved by the public utilities commission, but no
utilities have submitted unbundling plans.
As
of December 2004, 21 states and the District of Columbia have legislation or
programs in place that allow residential consumers and other small-volume gas
users to purchase natural gas from someone other than their traditional utility
company. 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. Eight states have begun to implement statewide programs, and
eight states have pilot or partial unbundling programs in place. An additional
eight states are considering action on customer choice, two fewer than in 2003,
while nineteen states have thus far taken no action and two states have
discontinued their pilot programs. The most far-reaching program still exists
in Georgia where all residential customers in Atlanta Gas Light Company's
service territory (more than 80 percent of the residential gas customers in the
state) purchase their natural gas directly from marketers. Atlanta Gas Light
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 until they could
ensure reliable service.
EIA Data: In 2003, the United States
had 61,857,913 residential and 5,150,925 commercial customers. They consumed
5,078 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 $9.52 and $8.29 per thousand cubic
feet, respectively.
Table 1.
Eligibility/Participation in Retail Choice Programs
Status as of
December 2004: Number of Residential Customers
|
Category/State |
Total 2003 |
Eligible in 2004 |
Participating in 2004 |
|||
|
Total |
Percent of 2003 Total |
Total |
Percent of Eligible |
Percent of 2003 Total |
||
|
Statewide
Unbundling: 100-Percent Eligibility |
||||||
|
D.C. |
136,258 |
136,258 |
100 |
16,405 |
12.0 |
12.0 |
|
New
Jersey |
2,562,856 |
2,562,856 |
100 |
133,226 |
5.2 |
5.2 |
|
New
Mexico |
498,852 |
498,852 |
100 |
0 |
0 |
0 |
|
New
York |
4,218,180 |
4,218,180 |
100 |
304,626 |
7.2 |
7.2 |
|
Pennsylvania |
2,572,746 |
2,572,746 |
100 |
180,863 |
7.0 |
7.0 |
|
West
Virginia* |
360,022 |
360,022 |
100 |
0 |
0 |
0 |
|
Subtotal |
10,348,914 |
10,348,914 |
100 |
635,120 |
6.1 |
6.1 |
|
Statewide
Unbundling: Implementation Phase |
||||||
|
California* |
9,803,306 |
9,803,306 |
100 |
38,030 |
0.4 |
0.4 |
|
Georgia |
1,747,017 |
1,427,661 |
81.7 |
1,427,661 |
100 |
81.7 |
|
Maryland |
987,863 |
984,495 |
99.7 |
142,917 |
14.5 |
14.5 |
|
Massachusetts |
1,315,103 |
1,315,103 |
100 |
83 |
(*) |
(*) |
|
Michigan |
3,140,021 |
2,884,930 |
91.9 |
203,866 |
7.1 |
6.5 |
|
Ohio |
3,225,908 |
2,937,280 |
91.1 |
1,085,423 |
37.0 |
33.6 |
|
Virginia |
996,564 |
579,812 |
58.2 |
70,826 |
12.2 |
7.1 |
|
Subtotal |
21,215,782 |
19,932,587 |
94.0 |
2,968,806 |
14.9 |
14.0 |
|
Pilot
Programs/Partial Unbundling |
||||||
|
Florida |
617,373 |
12,635 |
2.0 |
12,635 |
100 |
2.0 |
|
Illinois |
3,702,308 |
2,083,400 |
56.3 |
161,082 |
7.7 |
4.4 |
|
Indiana |
1,644,715 |
150,000 |
9.1 |
47,789 |
31.9 |
2.9 |
|
Kentucky |
762,130 |
127,932 |
16.8 |
41,121 |
32.1 |
5.4 |
|
Nebraska |
492,451 |
74,848 |
15.2 |
74,848 |
100 |
15.2 |
|
Wyoming |
135,441 |
61,256 |
45.2 |
27,502 |
44.9 |
20.3 |
|
Subtotal |
7,354,418 |
2,510,071 |
34.1 |
364,977 |
14.5 |
5.0 |
|
Total
|
38,919,114 |
32,791,572 |
84.3 |
3,968,903 |
12.1 |
10.2 |
|
U.S.
2003 Total |
61,857,913 |
-- |
-- |
-- |
-- |
-- |
--
= Not applicable.
(*)
= Less than 0.05 percent.
* Based on Energy Information Administration, Natural Gas
Annual 2003 (December 2004).
Note:
Colorado law permits unbundling if approved by the state public utility
commission, but no utilities have submitted unbundling plans. Also, two other
states (Montana and South Dakota) have pilot programs or partial unbundling but
residential data are not available (see state information pages).
Sources:
Total 2003: Energy Information Administration, Natural Gas Annual
2003 (December 2004). Eligibility and Participation: State public
utility commissions, utility company web sites, and Energy Information
Administration estimates.
Table 2. Historical Overview:
Number of Residential Customers in Customer Choice Programs,
2000-2004
|
State |
Residential Participation Levels
as of: |
Percent of
Eligible |
||||||||
|
Mar 2000 |
Dec 2001 |
Dec 2002 |
Dec 2003 |
Dec 2004 |
2000 |
2001 |
2002 |
2003 |
2004 |
|
|
CA |
-- |
-- |
(R)21,119 |
25,319 |
38,030 |
-- |
-- |
0.2 |
0.3 |
0.4 |
|
DE* |
6,076 |
-- |
-- |
-- |
-- |
40.5 |
-- |
-- |
-- |
-- |
|
DC |
11,014 |
15,807 |
26,438 |
21,673 |
16,405 |
8.3 |
11.4 |
19.5 |
15.1 |
12.0 |
|
FL |
-- |
-- |
10,187 |
10,388 |
12,635 |
-- |
- |
100 |
100 |
100 |
|
GA |
1,370,421 |
1,375,556 |
1,430,323 |
1,419,131 |
1,427,661 |
100 |
100 |
100 |
100 |
100 |
|
IL |
25,800 |
65,833 |
132,577 |
153,897 |
161,082 |
9.1 |
23.1 |
6.8 |
7.4 |
7.7 |
|
IN |
14,120 |
10,001 |
40,488 |
43,014 |
47,789 |
2.3 |
1.6 |
27.0 |
28.7 |
31.9 |
|
KY |
-- |
NA |
45,570 |
41,095 |
41,121 |
-- |
NA |
36.2 |
32.0 |
32.1 |
|
MD |
161,129 |
166,800 |
162,889 |
151,233 |
142,917 |
21.7 |
17.9 |
17.1 |
15.6 |
14.5 |
|
MA |
17,024 |
NA |
255 |
208 |
83 |
20.5 |
-- |
(*) |
(*) |
(*) |
|
MI |
207,863 |
199,218 |
332,244 |
241,710 |
203,866 |
NA |
24.7 |
23.2 |
10.3 |
7.1 |
|
NE |
74,194 |
73,669 |
73,228 |
73,842 |
74,848 |
100 |
100 |
100 |
100 |
100 |
|
NJ |
67,635 |
57,040 |
105,576 |
126,519 |
133,226 |
3.0 |
2.4 |
4.3 |
5.2 |
5.2 |
|
NM |
0 |
0 |
0 |
2 |
0 |
0 |
0 |
0 |
(*) |
0 |
|
NY |
75,787 |
244,823 |
318,670 |
295,322 |
304,626 |
1.8 |
5.9 |
7.5 |
6.9 |
7.2 |
|
OH |
572,099 |
825,148 |
1,082,073 |
1,253,596 |
1,085,423 |
33.3 |
30.1 |
40.1 |
42.9 |
37.0 |
|
PA |
NA |
253,734 |
215,614 |
194,890 |
180,863 |
-- |
10.0 |
8.5 |
7.6 |
7.0 |
|
VA |
45,736 |
45,630 |
81,042 |
73,996 |
70,826 |
52.5 |
24.8 |
14.9 |
12.9 |
12.2 |
|
WI* |
1,869 |
-- |
-- |
-- |
-- |
7.5 |
-- |
-- |
-- |
-- |
|
WV |
40 |
21 |
12 |
10 |
0 |
(*) |
(*) |
(*) |
(*) |
0 |
|
WY |
9,169 |
9,185 |
48,339 |
33,760 |
27,502 |
100 |
100 |
100 |
56.0 |
44.9 |
|
Total |
2,659,976 |
3,342,465 |
(R)4,126,644 |
4,159,605 |
3,968,903 |
21.6 |
19.6 |
13.5 |
13.0 |
12.1 |
-- = Not
applicable. (R) = Revised.
NA= Not available.
*Pilot
program was discontinued.
(*) = Less than 0.05 percent.
Note:
Colorado law permits unbundling if approved by the state public utility
commission, but no utilities have submitted unbundling plans. Also, two other
states (Montana and South Dakota) have pilot programs or partial unbundling but
residential data are not available (see state information pages).
Sources: 2004: State public utility commissions, local
distribution companies, marketers, and Energy Information Administration, Natural
Gas Annual 2003 (December 2004). 2000-2003: Energy Information
Administration, Historical files. http://www.eia.gov/oil_gas/natural_gas/restructure/restructure.html.
Table 3. Historical Overview:
Number of Marketers Serving Residential Customers, 2001-2004
|
State/District |
December 2001 |
December 2002 |
December 2003 |
December 2004 |
||||
|
*Total |
**Active |
*Total |
**Active |
*Total |
**Active |
*Total |
**Active |
|
|
CA |
-- |
-- |
3 |
3 |
2 |
2 |
1 |
1 |
|
DC |
3 |
3 |
5 |
5 |
4 |
4 |
4 |
4 |
|
FL*** |
-- |
-- |
0 |
0 |
(R)1 |
(R)1 |
1 |
1 |
|
GA |
8 |
8 |
10 |
10 |
10 |
10 |
10 |
10 |
|
IL |
2 |
2 |
6 |
6 |
8 |
6 |
10 |
9 |
|
IN |
4 |
1 |
4 |
2 |
7 |
7 |
7 |
7 |
|
KY |
-- |
-- |
5 |
3 |
3 |
3 |
2 |
2 |
|
MD |
12 |
12 |
13 |
10 |
13 |
9 |
14 |
9 |
|
MA |
4 |
1 |
3 |
3 |
0 |
0 |
0 |
0 |
|
MI |
3 |
3 |
6 |
6 |
8 |
8 |
7 |
4 |
|
MT |
4 |
4 |
11 |
11 |
4 |
4 |
4 |
4 |
|
NE |
6 |
6 |
4 |
4 |
3 |
3 |
3 |
3 |
|
NJ |
6 |
3 |
8 |
6 |
6 |
5 |
5 |
5 |
|
NY |
52 |
50 |
50 |
44 |
45 |
42 |
38 |
37 |
|
OH |
10 |
8 |
22 |
10 |
24 |
10 |
27 |
8 |
|
PA |
35 |
10 |
(R)29 |
4 |
29 |
4 |
29 |
4 |
|
VA |
13 |
4 |
8 |
6 |
4 |
4 |
6 |
6 |
|
WY |
3 |
3 |
4 |
4 |
5 |
5 |
5 |
5 |
|
Total**** |
165 |
159 |
(R)131 |
104 |
(R)122 |
(R)93 |
115 |
83 |
--
= Not applicable. (R) = Revised.
*Total
Marketers: Number of companies that have been authorized by the public service
commission to provide gas service in the state, even if not actively serving
customers.
**Active
Marketers: Supplier has been authorized by the public service commission to provide
gas service in the state and is actively serving customers in the state.
***Florida
marketer data were not included in previous years.
****Totals
do not equal sum of state totals because some companies are licensed and
operate in multiple states. Also note that the December 2002 Total differs from
data in the historical file in that the number of PA active marketers (4) was
inadvertently listed as total marketers for the state, rather than 29
(estimated). The revision results in an additional 12 marketers in the United
States in 2002.
Sources: 2004: State public utility commissions and utility
company web sites. Energy Information Administration, Natural Gas Annual
2003 (December 2004). 2001-2003: Energy Information Administration,
Historical files.
http://www.eia.gov/oil_gas/natural_gas/restructure/restructure.html
File last modified: 01/31/2005