Columbia Gas Files Revised Program for Standard Choice Offer Auction

April 18, 2011
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Columbia Gas of Ohio has sought approval from the Public Utilities Commission of Ohio for a revised program outline under which it would implement a Standard Choice Offer (SCO) auction for default service, effective April 1, 2012.

PUCO had previously approved a Standard Service Offer (SSO) auction at Columbia, and in doing so, contemplated that the transition to the SCO auction would occur in 2012, though any parties to the SSO settlement could contest the transition prior to implementation.

Columbia reported that at least two parties are expected to contest the transition to the SCO auction. Though Columbia did not identify the parties, it is expected that one of the parties is the Office of Consumers Counsel, based on its past opposition to the SCO at other utilities (due to tax issues, see 11/4/09), and its statement as part of the SSO/SCO stipulation at Columbia (10/8/09)

The current SSO auction is a competitive wholesale procurement under which suppliers provide gas to Columbia, and Columbia serves the customer. Under the SCO, Columbia bids out the right to serve specific retail customers for a 12-month term, with the winning supplier's name appearing on the customer's bill.

Columbia's SCO would follow the mechanism used at Vectren Energy Delivery of Ohio, where only a single SCO auction is conducted. Some customers -- including Percentage of Income Payment Plan, choice-ineligible, and transition customers -- would not be eligible for SCO service. These customers would be served by Columbia on Default Sales Service, and SCO suppliers would be allocated a proportional share of the gas supplies needed to serve these Default Sales Service customers. The Default Sales Service rate will equal the SCO rate.

This process is in contrast to the SCO mechanism at Dominion East Ohio, where a separate SSO auction is first conducted for SCO ineligible customers, and a separate SCO auction is then conducted.

Under Columbia's descending clock SCO auction, the forecasted requirements will be divided, as equally as is practical, into 16 tranches. For informational purposes, based upon current estimates, one tranche would equal approximately five Bcf per year of gas supply.

Columbia's SCO auction would feature a load cap of four tranches. The four tranche limit would also apply to bidders that are affiliated with and/or have an interest equal to or greater than 10% in other bidders.

Bidding in the SCO auction would be for the Retail Price Adjustment, which would be added to the monthly NYMEX price for gas to establish the monthly retail rate paid by customers to SCO suppliers.

Columbia's SCO program outline, filed in Case No. 08-1344-GA-EXM, contains further information regarding capacity release, credit requirements, and other operational provisions.

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