Status: The State has two pilot unbundling
programs for residential gas customers. |
Overview: Two local distribution companies
(LDCs) in Montana, serving about 70 percent of the State's residential
customers, have initiated customer choice pilot programs. Montana Power
Company (doing business as Northwestern Corporation since March 2002)
began its program in November 1998 and offered natural gas supplier choice
to approximately 11,000 of its residential and small commercial customers.
Energy West, Inc., began its program in October 1999, which is open to
all of its residential and small commercial customers.
According to
the Montana Public Service Commission, only about 0.3
percent of residential and small commercial customers have signed up for
alternative suppliers. The Natural Gas Restructuring and Customers Choice
Act was passed in 1997. Under this act, gas utilities may voluntarily
offer their customers a choice of supplier. Customers served by LDCs that
have implemented customer choice programs were to choose a nonutility gas
supplier by 2002, but the date has been extended to at least mid-2007. Currently,
there are four marketers licensed as gas suppliers in the State. |
EIA State Data: In 2005, Montana had 240,554
residential and 31,304 commercial customers. They consumed 20 and 13
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 $10.70 and $10.72 per thousand cubic feet,
respectively. |
Regulatory and Legislative Actions on
Retail Unbundling
Summary: The Natural Gas Restructuring
and Customers Choice Act was passed in 1997, which allows natural gas utilities
voluntarily to offer their customers a choice of supplier and provide open
access to their transmission, storage, or distribution facilities. All
utilities providing customer choice must unbundle services and remove
natural gas production and gathering from the rate base. The Montana
Public Service Commission (PSC) has adopted several rules to implement the
legislation and guide the transition to a competitive retail natural gas
market. In December 2004, the PSC approved Energy West Montana's request
to remove the limitation that allowed customers to move to open access
only during a specified “open season.” Instead, Energy West customers will
be allowed to move to a supplier or return to utility service at the
beginning of any billing cycle. |
Eligibility and Participation in Retail Choice
Programs: |
Eligibility and Participation by Customer Class, December 2006
Customer Type |
2005 Customer Total |
Eligible 2006 |
Participating
2006 |
Total |
Percent
of 2005 Customer Total |
Total |
Percent
of Eligible |
Percent
of 2005 Customer Total |
Residential |
240,554 |
170,841 |
71.0 |
*480 |
0.3 |
0.2 |
Commercial |
31,304 |
22,202 |
70.9 |
63 |
0.3 |
0.2 |
Total |
271,858 |
193,043 |
71.0 |
543 |
0.3 |
0.2 |
*Nearly all customers enrolled are part of one contract with the local housing authority.
Sources: 2005 Customer Total: Energy
Information Administration, Natural Gas Annual 2005 (November 2006).
Eligibility and Participation: Montana Public Service Commission. | |
Regulatory and Legislative Actions
Legislation |
05/97 |
Natural Gas Utility Restructuring and
Customer Choice Act, SB396. The 1997 Montana Legislature
enacted the "Natural Gas Utility Restructuring and Customer Choice
Act," which became effective 5/22/97 (Ch. 506, L. 1997). The law
allows competition for the supply of natural gas and electric
service and permits regulated utilities to file restructuring plans.
The Montana Public Service Commission (PSC) is to adopt rules to
implement the new laws. |
Regulatory
Action |
12/04 |
Approval of Energy West Montana's Interim
Rates, Gas Cost Tracking Procedures, and Elimination of Restriction
on When Customers Could Move to Choice (Docket
D2003.6.75, Order 6552a). PSC approved Energy West's request to
separate its Great Falls and West Yellowstone areas for cost
tracking purposes and to remove restriction that customers can
select alternative suppliers only during an open season period.
Customers can move to a third-party supplier or return to utility
service at the start of the billing period. |
|
06/99 |
Rules Adopted re Customer Information and
Protection. Suppliers must obtain written authorization
from consumers and provide a contract specifying service terms
before switching suppliers. All contracts must have a "uniform
information label" to allow consumers to compare price and contract
terms. Other rules cover service disconnections, complaint
procedures, billing, and supplier of last resort
provisions. |
|
12/98 |
Approval of Great Falls Gas Co. (now doing
business as Energy West Montana)
Restructuring, Docket
D98.3.68, Order 6064b, Final Order. The PSC approved open access and
customer choice on Great Falls' system. Full choice for residential
and small commercial customers is set to begin on 10/1/99, with open
season starting 5/1/99. By the end of the second year of choice,
Great Falls is to file a plan for assigning customers who have not
chosen a supplier. |
|
09/98 |
Hearing on Great Falls Gas Co. Proposed
Choice Program. In March 1998,
Great Falls Gas Co. filed a restructuring plan that would unbundle
services for its residential and small commercial customers.
Customers would have until October 1999 to choose a new gas supplier
or continue traditional service with the supplier selected by Great
Falls Gas. Great Falls would stop selling gas in October 1999 and
offer only distribution and transportation services. Stranded costs
would be assigned to its affiliate Energy West, which would provide
management services for 5 years. |
|
08/98 |
Approval of Montana Power Company's (MPC)
Pilot Program Application, Docket
D98.2.28, Order 6061a. The PSC approved MPC's plans for a pilot
choice program as specified in PSC's final order on 10/97. The
program will begin November 1998 and offer natural gas supplier
choice to approximately 11,000 residential and small commercial
customers (up to 0.5 billion cubic feet of MPC's annual load). All
MPC customers are to choose gas suppliers by July 1,
2002. |
|
06/98 |
Natural Gas Restructuring Rules.
The PSC adopted rules to implement the
Natural Gas Utility Restructuring and Customer Choice
Act. The rules cover
utility restructuring, provider conduct, supplier licensing, and
universal system benefits programs. Gas suppliers must be licensed
by the PSC, maintain an electronic registration with the PSC, and
submit annual reports on services provided, quality and reliability
of service, and company organizational structure (affiliates,
etc). |
|
10/97 |
Approval of Montana Power Company's (MPC)
Restructuring, Docket
D96.2.22, Order 5898d, Final Order. The PSC approved a settlement
agreement between MPC, the Consumer Counsel, and other parties,
which phases in customer choice for MPC customers. The minimum
threshold for transportation service is reduced from 60,000 to 5,000
dekatherms/year. Residential rates will be frozen for 2 years and
MPC can recover about $60 million of stranded costs in the next 15
years. The company is to submit plans (within 90 days) for a pilot
choice program for residential and small commercial customers for
PSC approval. Six months prior to the end of the 5-year transition
period ending 7-1-02, MPC is to file a plan with the PSC proposing a
method of assigning customers who have not chosen gas suppliers. The
PSC will then determine whether MPC's distribution entity should
continue its merchant function of providing supply for small
commercial and residential customers based on the development of
competition for these customers. |
|
12/96 |
Proceedings Suspended on MPC
Restructuring. The PSC
suspended proceedings on MPC's comprehensive case until action is
completed on proposed restructuring legislation and to allow
settlement negotiations to continue. Several stipulations were
subsequently presented to the PSC as a result of settlement
conferences. |
|
07/96 |
MPC Restructuring
Plan. MPC filed a restructuring plan that would
reduce the threshold to qualify for gas transportation
service, include pilot
choice programs for residential and commercial customers, remove the
company's production assets from the rate base, and provide a
mechanism for recovering stranded costs. Several parties intervened,
including the Montana Consumer Counsel, the Montana Large Customer
Group, certain Montana marketers, the Montana Department of
Environmental Quality, the Northern Montana Oil and Gas Association,
and others. The MPC filing also included a revenue increase request
and a gas tracker update. |
|
02/96 |
"Order Initiating
Proceeding." Order No.
5898 directed Montana Power Company to file a comprehensive case to
resolve cost of service and rate design issues and further unbundle
its
system. | |