Exit from the Merchant Function: OPAE has been working somewhat successfully to prevent natural gas companies from exiting the merchant function since 2005. What does this mean? All customers, except commercial customers in the Dominion East Ohio service territory, can purchase gas through a default supply called the Standard Choice Offer (SCO). The price of the SCO is set through a declining clock auction, which is the closest thing to a pure market, and tends to result in the lowest variable rate available to customers. It is the rate PIPP customers pay.
The Public Utilities Commission of Ohio (PUCO) authorized in 2013 an experimental effort to permit Dominion to exit the merchant function, but only for commercial suppliers. OPAE took the case to the Supreme Court and lost, but the Court stressed the commitment to Commission oversight and implied that if the exit no longer proved effective at encouraging shopping, the Commission could reverse course.
In 2018, OPAE filed a motion asking the PUCO to do just that. The case will go to hearing in December. OPAE testimony demonstrates that member agencies in the Dominion territory paid more than they would have under the SCO, with the exception of one property that was in a governmental aggregation – another OPAE initiative to protect customers. We do recommend governmental aggregations generally, because the price is pretty good, but it is not lower than the SCO. These days, the government aggregations seem to be offering fixed rates, so if you like knowing what your gas will cost you can lock in a price. But the SCO, even though it is a variable rate, is overall a better deal.
Ohio has completed the deregulation of natural gas, the commodity. All prices are set through a competitive process. The SCO is priced through the most transparent competitive process. Government aggregations offer a check on excessive pricing. But bilateral contracts are always a negotiation, and the marketer knows a lot more about the gas market than the average customer. Door-to-door salesmen prey on our clients. We need customers to have a fairly priced option.
OPAE will continue its efforts to protect residential customers and our members from exorbitant prices for natural gas service. We’ll keep you informed on the case and make recommendations on the energy choice you make, including no choice at all.