Retail Unbundling - Connecticut
|Status: The State has no unbundled service programs for residential customers.|
|Overview: Connecticut lawmakers introduced a bill in the State legislature in 2006 to direct the Department of Public Utility Control (DPUC) to develop a “residential natural gas customer supplier choice program,” but the bill did not pass in the 2006 session. The DPUC and the Connecticut Office of Consumer Counsel each presented testimony opposing the bill. The Consumer Counsel’s testimony listed pros and cons for residential customer choice. The pros included customer empowerment; the advantage of fixed, long-term price offerings; and the possibility of gaining slightly lower short-term prices. The cons included the risk of slamming by marketers, problems with marketers rapidly exiting the program because of bankruptcy, marketers offering deals that would not be honored later, residential customers’ lack of expertise in negotiating with marketers, marketers favoring some customers over others, and improper shutoff of customer service as a result of billing errors.
In 2007, a new bill (SB-1206, "An Act Concerning Natural Gas Customer Choice") was introduced in the legislature that would extend customer choice to “all retail natural gas customers.” The bill does not specifically mention residential customers and deals with issues that were brought up in a DPUC docket related to natural gas commercial and industrial unbundling. The bill mentions storage, peaking and balancing, transmission capacity, the recall of assigned capacity, and the reallocation of costs by type of service. The bill does not mention residential consumer protection issues such as slamming, resolution of billing errors, bankruptcy of marketers, or preferential treatment of certain customers or service areas.
On February 22, 2007, the Office of Consumer Counsel presented testimony in the State legislature opposing the new bill. The Consumer Counsel argued that the proposed measures would jeopardize local distribution companies' (LDCs) reliability planning by mandating the release of all pipeline capacity to marketers. The capacity recall provision for LDCs proposed in the bill would not deal with concerns over the potential bankruptcy of marketers. The bill would also require LDCs to purchase the receivables of marketers, shifting the marketers’ business risk onto the LDC and its ratepayers. Residential choice issues, outlined in the Consumer Counsel’s 2006 testimony, are not addressed by the 2007 bill. LDC ratepayers would lose financial benefits accruing to them whenever LDCs make sales using excess capacity. Currently, DPUC rulings allow LDCs to keep only 15 percent of the gains from such sales; the remaining 85 percent of the gain must go to ratepayers. The 2007 bill would allow marketers to collect most of these excess capacity benefits instead. The Consumer Counsel suggested that a DPUC docket be opened to study the possible creation of a residential choice program, but noted that the bill did not allow for this. Therefore, the Consumer Counsel could not support passage of the bill.
No action was taken on SB-1206 in 2007. However, the same bill provisions were included in a new bill, SB-504, “An Act Concerning Natural Gas Customer Choice,” proposed in 2008. At a March 3, 2008, public hearing on SB-504, Hess Corporation, LEVCO Technology Incorporated, Direct Energy Services, LLC, and Dominion Retail spoke in support of the bill, citing the benefits of opening the market to competitive forces while safeguarding the need for reliable gas supply and protecting consumer rights. Representatives from Connecticut Natural Gas Company, Southern Connecticut Gas Company, and Yankee Gas Company spoke against the bill, maintaining that its passage would lead to an increase in gas costs and a reduction in supply reliability. Representatives from Connecticut Natural Gas Company, Southern Connecticut Gas Company, and Yankee Gas Company spoke against the bill, maintaining that its passage would lead to an increase in gas costs and a reduction in supply reliability. The Office of Consumer Counsel presented testimony recommending that prior to adopting a residential choice program a study should be conducted to identify the risks and benefits of such a program. The bill was voted out of the Energy and Technology Committee on March 11, 2008, and referred to the Senate Committee on Appropriations, where no action was taken.
Industrial and commercial customers have been able to receive unbundled service from local distribution companies since April 1996. There are no minimum volume requirements for industrial or commercial customers that want this service. Multi-family customers (with six or more dwelling units supplied through one meter) are also eligible to purchase their gas directly from a marketer under an agreed-upon pricing arrangement.
|EIA State Data: In 2007, Connecticut had 482,902 residential and 52,389 commercial customers. They consumed approximately 43 and 36 billion cubic feet of natural gas, respectively. The average prices residential and commercial customers paid for natural gas from local distribution companies were $16.39 and $12.61 per thousand cubic feet, respectively.|