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The Auction & the SSO What It Means for Columbia and Its Customers Ken Stammen April 13, 2010.

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Presentation on theme: "The Auction & the SSO What It Means for Columbia and Its Customers Ken Stammen April 13, 2010."— Presentation transcript:

1 The Auction & the SSO What It Means for Columbia and Its Customers Ken Stammen April 13, 2010

2 What are we auctioning, anyway? Auction probably not the best name NOT about selling the company, or assets or customers We won’t make money Marketers bid on the right to supply Columbia Gas of Ohio with the gas it needs to serve its sales customers Lowest bidders win

3 What is the SSO? The Standard Service Offer Replaced Gas Cost Recovery (GCR) charge It’s the price COH charges its sales customers for natural gas Adjusted monthly, based on market price Just like the GCR, it’s a dollar-for-dollar pass through of gas costs at zero profit to COH

4 What changes for customers? Very little If you’re a sales customer, you’ll automatically become an SSO customer If you have a contract with a CHOICE® marketer, you’re not affected If you’re part of your community’s aggregation pool, you’re not affected

5 SSO Price = Market Price + Retail Price Adjustment Market Price Changes monthly Covers cost of the gas commodity Based on New York Mercantile Exchange monthly closing price Retail Price Adjustment Set once a year by the auction Covers marketer’s non-gas costs – Interstate pipeline transmission & storage – Administrative costs – Marketer profit

6 Will the bill look different? If you’re a sales customer, the term Standard Service Offer (SSO) will appear on bill The bill will still come from Columbia Customer won’t see a marketer’s name on the bill

7 Are customers still free to choose? YES. All options remain for customers SSO customers may choose to sign up for a CHOICE® plan with a marketer CHOICE® customers may switch to the SSO Aggregation customers may opt out of their community’s plan and become SSO customers, or sign up for a CHOICE® plan

8 What will this mean for prices? April SSO Rate = $0.58 per 100 cubic feet (Ccf) SSO = market rate ($0.384) + Retail Price Adjustment ($0.193) Comparisons with GCR are not apples-to-apples Recent GCRs (Jan-Feb-Mar) historically low July 2005-December 2008: 35 of 42 GCRs were over $1 per Ccf April $0.77; April $1.21; April $1.08

9 What will this mean for prices? Longer-term: Very difficult to predict Prices will be tied more directly to the market Could attract more marketers to Columbia’s service territory Increased competition and options could lead to better prices PUCO will monitor the process closely, as it has with the GCR

10 What’s the impact on Columbia? The process we use to acquire and price the gas we provide to our sales customers has changed Safe, reliable gas delivery remains our core business COH still builds and maintains the distribution system, responds to emergencies, reads meters, issues bills, offers payment plans and answers customer calls

11 Why is COH making this change? We’re being responsive to the PUCO and the Ohio Consumers’ Counsel, which support it Dominion East Ohio Gas and Vectren Energy Delivery of Ohio have already done so It’s a less-complicated, easier-to-explain price which more directly reflects the market

12 Timeline February 23 – Gas Supply Auction April 1 – Gas flows under SSO system April 1, 2010 – March 31, 2011: First SSO period February 2011 – Second Gas Supply Auction April 1, 2011 – March 31, 2012: Second SSO period

13 What’s Next? The SCO SCO = Standard Choice Offer SCO Auction tentatively scheduled for February 2012 Similar to SSO, but winning SCO bidders are assigned to specific customers Customer will see the SCO marketer’s name on the bill All SCO customers pay the same, regulated gas price regardless of which marketer is assigned to serve them SCO customers will pay state sales tax at their county’s prevailing rate


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