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Consumers’ Counsel: Columbia customers deserve millions in credits; auction process could help produce lower rates

COLUMBUS, Ohio – April 18, 2007 – The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, believes that Columbia Gas of Ohio customers are due credits of up to approximately $70 million. The OCC will file its arguments today at the Public Utilities Commission of Ohio (PUCO).

In a 2003 agreement, Columbia was permitted to off-set certain natural gas choice-related costs with revenues from Off-System Sales and Capacity Release accounts. If the revenues from those accounts were insufficient to cover the costs, Columbia could use revenues from the Transition Capacity Cost Recovery Pool (TCCRP) account. However, the OCC believes Columbia improperly used revenues from the TCCRP account first instead of the Off-System Sales and Capacity Release accounts as the agreement stated. As a result, the OCC believes customers may not receive the entire $70 million to which they are entitled. The key issue is ensuring that costs are off-set by using revenues from the appropriate accounts since the company retains the majority of unused revenues from the Off-System Sales and Capacity Release while the excess revenues in the TCCRP account would be automatically returned to customers at the end of 2008.

“Columbia should be made to follow the 2003 agreement approved by the PUCO and provide customers with the full credit to which they are entitled or in the alternative the PUCO should modify the agreement to better protect customers,” said Janine Migden-Ostrander, Consumers’ Counsel.

In its filing the OCC requested the PUCO terminate the 2003 agreement or significantly modify it to restore appropriate benefits to customers. The OCC believes the company failed to properly implement the agreement. The OCC and the PUCO staff opposed the original agreement, but it was approved by PUCO Commissioners and went into effect.

In addition, the OCC recommended an auction process be developed to determine the rate that would be paid by customers who had not switched to an alternative supplier. The auction would allow natural gas suppliers to bid on the natural gas supplies that Columbia purchases for its customers who have not chosen an alternative natural gas supplier. Columbia would continue to be responsible for the distribution of natural gas as well as billing, reading meters and maintaining pipelines.

This auction process could be similar to the one currently being used by Dominion East Ohio. The Dominion auction, which was deemed successful by all participating stakeholders including the OCC, PUCO, Dominion and suppliers, resulted in a fee of $1.44 that would be added to natural gas market prices to determine monthly rates for consumers. This new rate is consistently less than customers had been paying under the traditional Gas Cost Recovery (GCR) rate, which typically ran $2.37 over monthly market prices. The OCC determined that Columbia’s GCR was on average $2.60 over the monthly market price. Customers in northern Ohio are projected to save approximately $100 per year under the Dominion plan.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at www.pickocc.org.