Retail Unbundling

Retail Unbundling - Virginia
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Status: The State has begun the process of implementing comprehensive unbundling programs for its residential gas customers.

Overview: Since July 1, 2000, Virginia law has allowed utilities to offer statewide customer choice programs if approved by the State Corporation Commission (SCC). Effective April 1, 2001, Washington Gas Light Company (WGL) became the first utility with authorization to permit all of its customers in the State to buy natural gas directly from a certified, retail energy supplier. The program was phased in during a 1-year period, with choice available at first to 150,000 residential customers and then to the rest of the company's residential customers in the State in January 2002. As of January 2009, about 45,901 residential customers (11 percent of eligible) in WGL’s service territory were enrolled (which includes customers of Shenandoah Gas Company, a division of WGL), down from 47,120 residential customers in January 2008 and 53,195 (13 percent) in January 2006. Columbia Gas of Virginia also has had a choice program in place for all customers in its service area since October 1, 2002, with about 5,863 residential customers and 2,113 nonresidential customers enrolled as of January 2009. Similar to WGL's program, residential customer enrollment in Columbia Gas of Virginia's program has decreased in the past few years. The company had conducted a pilot program from 1997 to 2002 in selected areas of Northern Virginia, with about 9,600 residential customers enrolled as of July 2002.

The SCC adopted permanent rules for energy choice in 2001. These rules require that local distribution companies provide marketers with names and addresses of eligible customers and their monthly energy consumption for the previous 12 months, if customers choose to have the information released. All bills must use standard terms and include a customer's monthly energy consumption for the past 12 months and a description of all applicable charges and rate changes. Marketers must be licensed by the SCC and demonstrate the financial and technical ability to deliver services to Virginia utility customers. As of December 2008, 10 marketers have licenses to serve residential natural gas customers in the State: 6 in WGL’s service area and 5 in Columbia Gas of Virginia’s. Overall, 11.4 percent of WGL's customers in the State and 3.3 percent of Columbia's purchase natural gas from marketers.

EIA State Data: In 2007, Virginia had 1,101,863 residential and 93,015 commercial customers. They consumed approximately 81 and 66 billion cubic feet of natural gas, respectively. The average prices residential, and commercial customers paid for natural gas from local distribution companies and marketers were $15.42 and $11.99 per thousand cubic feet, respectively.

Eligibility and Participation in Retail Choice Programs

Eligibility and Participation by Customer Class, December 2008

Customer Type	2007 Customer Total	Eligible December 2008		Participating December 2008
Customer Type	2007 Customer Total	Total	Percent of 2007 Customer Total	Total	Percent of Eligible	Percent of 2007 Customer Total
Residential	1,101,863	656,773	59.6	51,764	7.9	4.7
Commercial	93,015	45,135	48.5	10,177	22.5	10.9
Total	1,194,878	701,908	58.7	61,941	8.8	5.2
Sources: 2007 Customer Total: Energy Information Administration, Natural Gas Annual 2007 (January 2009). Eligibility: Based on customer totals for Washington Gas Light Company, Shenandoah Gas Company, and Columbia Gas of Virginia 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. Participation: Virginia State Corporation Commission (March 2009).

Legislative and Regulatory Actions on Retail Unbundling

Summary: The Virginia General Assembly enacted legislation on July 1, 1999, that allowed all natural gas utilities in the State to offer retail supply choice to its customers as of July 2000. All retail choice plans must first be approved by the State Corporation Commission. The legislation was reenacted and modified in 2000 and included provisions for a natural gas consumption tax that would be added to customers' bills. The General Assembly also passed legislation (enacted July 1999) that opened the retail electricity market to competition during a phase-in period from January 1, 2002, to January 1, 2004. However, new legislation enacted in July 2007 re-established rate regulation for most electricity customers in Virginia on January 1, 2009. Still, the legislation continued the policy to allow retail customers of the State's two largest gas companies, Columbia Gas of Virginia and Washington Gas Light, to select other companies to provide their gas supply service. Competitive suppliers participating in natural gas choice programs must apply for a permanent license and operate under rules adopted by the SCC that became effective on August 1, 2001. In order to become licensed, a provider must demonstrate the financial and technical ability to deliver services to Virginia utility customers.

Regulatory and Legislative Actions

Legislation	07/07	Electric Re-Regulation Legislation Enacted. The General Assembly passed legislation (Senate Bill 1416 and House Bill 3068) re-establishing retail rate regulation for most electricity customers in Virginia on January 1, 2009. However, the legislation continued the policy to allow retail customers of the State's two largest gas companies, Columbia Gas of Virginia and Washington Gas Light, to select other companies to provide their gas supply service.
	03/00	Modifications to Retail Choice Legislation, HB 279 and SB 185. Legislation approved (enacted July 2000) that authorizes gas suppliers, pipeline distribution companies, and gas utilities to file a retail supply choice plan that includes provisions to implement the program, methodology to recover stranded costs, proposed unbundled rates and terms, and provisions to insure that one class of customer does not subsidize another class. The bill would also create a natural gas consumption tax, which would be added to the consumer's bill.
	03/99	Statewide Retail Choice Approved, Senate Bill 1105. Legislation (enacted July 1999) authorizes all natural gas local distribution companies to offer supply choice to their customers. Such plans are to be approved by the SCC and would not start before July 2000. The law also calls for a study of gas utility taxation issues before the 2000 legislative session. The legislation will expire on July 1, 2000, unless reenacted by the General Assembly.
Regulatory Actions	09/07	Annual Report on Status of Competition. Report to the Governor focuses on electric power competition but also provides a brief summary of gas retail access programs. As of August 1, 2007, Washington Gas Light Company's (WGL) program had 4 active marketers serving about 47,000 residential customers and 11 marketers serving about 8,000 non-residential customers. Columbia Gas of Virginia's program had two marketers serving 6,354 residential customers and three marketers serving 1,976 non-residential customers. Cumulatively, choice customers account for about 12 percent of gas consumers in WGL's service area and 4 percent of those in Columbia Gas of Virginia's area.
	09/06	Annual Report on Status of Competition. Report to the Governor focuses on electric power competition but also provides a brief summary of gas retail access programs. As of August 1, 2006, WGL's program had 4 active marketers serving about 51,000 residential customers and 12 marketers serving about 7,600 non-residential customers. Columbia Gas of Virginia's program had two marketers providing service to 6,837 residential customers and three marketers serving 2,257 non-residential customers. Cumulatively, choice customers account for about 13.1 percent of gas consumers in WGL's service area and 4.0 percent of those in Columbia Gas of Virginia's area.
	09/05	Annual Report on Status of Competition. WGL's program has four active marketers serving about 56,000 residential customers and 12 marketers serving 6,977 non-residential customers. Columbia Gas of Virginia's program has four marketers providing service to 7,370 residential customers and 1,988 non-residential customers. Cumulatively, choice customers account for about 14.6 percent of gas consumers in WGL's service area and 4.2 percent of those in Columbia Gas of Virginia's area.
	09/04	Annual Report on Status of Competition. Report appendix provides a summary of gas retail access programs. WGL's program has four active marketers serving 65,840 residential customers and 12 marketers serving 7,155 nonresidential customers. Columbia Gas of Virginia's program also has four marketers providing service to 8,818 residential customers and 1,212 non-residential customers.
	08/03	2003 Report to the Governor on Status of Competition. Report provides details on development of competitive retail energy markets, with emphasis on electric power markets. Appendix notes that marketer activity has been better in the natural gas program than in electric programs but actual level of competition may be distorted because of the high level of affiliate concentration.