Overview: Colorado law allows utilities to offer customer choice programs if approved by the Public Utilities Commission, but no utilities have submitted unbundling plans. Public Service Company, with 75 percent of the natural gas customers in the State, and Kinder Morgan, Inc., have expressed some interest but have not indicated when they might apply. According to legislation in place since August 1999, once an unbundling plan has been approved and one-third of the utility's customers have chosen an alternative supplier (18 percent of the customers must choose an unaffiliated supplier), the utility will no longer be regulated on the sales portion of its business. Gas delivery services will still be regulated by the Colorado Public Utilities Commission. Issues such as who will bill customers have not been resolved and will be taken up as each utility files its plans.
|
EIA State Data: In 2004, Colorado had 1,495,551 residential and 138,373 commercial customers. They consumed 120 and 62 billion cubic feet of natural gas, respectively. The average prices paid for natural gas purchased from local distribution companies by residential and commercial customers were $8.47 and $7.48 per thousand cubic feet, respectively.
|
Colorado: Regulatory and Legislative Actions on Retail Unbundling
Summary: Legislation became effective on August 4, 1999, that allows natural gas utilities to file voluntary plans for unbundling, subject to approval by the Colorado Public Utilities Commission. These plans must include provisions for service reliability, market power safeguards, consumer education, and affiliate participation requirements. When a plan has been approved, utility delivery service will be provided separately from gas sales and consumers will have the option of purchasing gas from an alternative supplier. All utility services will remain regulated until one-third of the utility's customers have chosen an alternative supplier (18 percent of the customers must choose an unaffiliated supplier) and at least five unaffiliated suppliers are operating within the utility's service area. At that point, the PUC will no longer regulate the utility's supply services but will continue to regulate delivery services.
|
Regulatory and Legislative Actions
Legislation |
8/99 |
1999 Gas Unbundling
Legislation (Senate Bill 99-153), signed on 5/28/99 and
effective on 8/4/99. The act allows gas utilities to file unbundling plans
with the PUC that give consumers the opportunity to choose their own gas
supplier. Plans are to address issues of service reliability, fall-back
supply service, affiliate participation, access to upstream capacity,
market power safeguards, consumer education, standards of conduct, and
marketer certification requirements. If the PUC modifies a utility's plan,
the utility can reject it and continue to operate as before but cannot
file another plan for 2 years. The utility can recover "prudently
incurred" stranded costs, subject to a cap. The PUC is to provide an
unbundling status report to the legislature by 12/31/2000 that includes
recommendations on further implementation. The PUC is responsible for
developing requirements for marketer certification, data reporting, and
penalties. Municipalities can approve unbundling plans for their municipal
utilities. The legislation also approves funds for a PUC study of the
effects of market restructuring on low-income consumers, which is due 2
years after implementation of the first
program. |
|
5/96 |
Legislation
Mandating an Independent Study of Feasibility of Gas
Unbundling (Senate Bill 96-138), signed 5/96. The act
mandates an independent study of the feasibility of restructuring the
state's gas industry, which resulted in the 12/16/96 Hagler Bailly report
"The Feasibility of Allowing Nondiscriminatory Access to Retail Natural
Gas Distribution Systems in Colorado." The study concluded that retail
unbundling in the state is technically feasible but would raise many
complex transitional issues. The Legislative Council directed the PUC to
review the report. |
Regulatory
Action |
12/00 |
PUC Status Report
on Unbundling (required by Senate Bill 99-153). No utilities
have submitted unbundling plans. Public Service Company of Colorado has
stated that it intends to file a proposal after "electricity unbundling is
complete in Texas and NM." Kinder Morgan has expressed interest but not
indicated a possible date. No other utilities are interested at this time.
Those companies cited high costs of implementing program, concerns about
marketer participation, and disinterest by
consumers. |
|
8/97 |
Proposed Framework
for Unbundling (developed by PUC staff). Natural gas delivery is
to continue as a regulated monopoly service, with a single utility
certificated for a service area. Customers can choose their own gas supply
service with unregulated prices and service offerings. A default supplier
will provide service to customers who do not choose one and a "supplier of
last resort" will be established for each utility system. Provisions for
billing, meter reading, and upstream pipeline capacity and storage will be
decided on a case-by-case basis. Utilities are to eliminate fixed charges
for residential and small commercial customers, file plans to replace the
current nomination and balancing requirements for transportation
customers, and to phase in competition for all customers in its service
area. To enable price comparisons, competitive gas suppliers are to offer
customers a 1-year, fixed price option. LDCs can ask for recovery of "net,
verifiable" stranded costs, which if approved would be recovered through a
separate charge to all distribution customers. Utility affiliates are to
be permitted to participate on the same basis as other suppliers, without
benefit of utility customer information etc. Utility filings are to
include a "Supplier Code of Conduct," supplier requirements, and sample
LDC/supplier contract forms. All suppliers are to be registered with the
PUC. |
|
6/97 |
Staff Inquiry into
Unbundling. On 6/11/97, the PUC approved a plan to develop a
framework for moving ahead on unbundling in case an LDC requests
permission to unbundle gas services, the legislature mandates unbundling,
or the PUC opens a rulemaking docket for gas unbundling. The PUC planned
to distribute the framework in 8/99 with written comments due by
9/15/97. |
|
3/97 |
Request for
Statutory Authority (letter to CO Legislative Council). After review
of Hagler Bailly study, the PUC requested that the state legislature grant
the PUC statutory authority to implement customer choice for natural gas
customers, if found to be in the public
interest. |
|
2/97 |
Investigation into
Gas Industry Restructuring, Docket No. 971-033G. As per directive of the CO
Legislative Council, the PUC solicited comments on the Hagler Bailly
report on the feasibility of gas unbundling, with hearings to be held
3/97. The report stated that retail unbundling in the state is technically
feasible but would raise many complex transitional issues, altering
consumers' financial risks and
rewards. |
|