| Status: The State has partially implemented
comprehensive unbundling programs for its residential gas customers. |
Overview: Almost all of Maryland's
residential customers may select their gas supplier under comprehensive
programs in place for the State's three largest local distribution
companies (LDCs): Baltimore Gas and Electric Company, Washington Gas Light Company, and
Columbia Gas of Maryland, Inc. Originally the programs had participation caps,
but now all residential customers of these three LDCs may participate. As
of December 31, 2007, the Maryland Public Service Commission (PSC)
estimated that 112,286 residential customers in the State were buying gas
from non-utility suppliers, down about 4 percent from the 116,991 enrolled in September 2006 and 35 percent less than the 173,282
enrolled in September 2001. However, current participation represents
about 10.9 percent of the households that are eligible for choice programs.
All commercial and industrial customers may choose their gas suppliers.
In accordance with the Natural Gas Supplier Licensing and Consumer
Protection Act of 2000, all suppliers must be licensed by the PSC.
Applicants must provide proof of financial integrity, post a bond if they
collect deposits from customers, and establish procedures for billing
practices. The PSC is investigating whether its strict creditworthiness
standards for marketers have limited marketer participation and whether
LDCs should discontinue retail sales service in the future. In August
2002, the PSC stated its support of both regulated gas service and
continued development of the State's existing competitive commodity
market. The PSC directed that utility-specific roundtables report on
specific issues identified by the PSC, including ways to facilitate
fixed-price commodity service by licensed suppliers to low-income
customers. If roundtables are unable to reach resolution, they may file a
formal complaint or request mediation. If requested, the PSC would
establish proceedings to address current customer choice
issues.
According to the PSC, as of December 2007, 10
companies were licensed to sell and/or market natural gas to residential
consumers in the State. Eight suppliers were providing service
to residential customers in Baltimore Gas and Electric’s service
area, two suppliers were
offering services to customers in Columbia Gas of Maryland’s service area, and six
were serving customers in Washington Gas Light’s area. |
| EIA State Data: In 2006,
Maryland
had 1,040,912 residential and 74,584 commercial customers. They consumed
71 and 63 billion cubic feet of natural gas, respectively. The average prices
paid for natural gas purchased from local distribution companies and
marketers by residential and commercial customers were $16.36 and $13.28 per
thousand cubic feet, respectively.
|
| Eligibility and Participation in Retail Choice
Programs: |
Eligibility and Participation by Customer Class, December 2007
|
Customer Type |
2006 Customer Total
|
Eligible December 2007 |
Participating December
2007 |
|
Total |
Percent
of 2006 Customer Total |
Total |
Percent
of Eligible |
Percent
of 2006 Customer Total |
|
Residential |
1,040,912 |
1,032,765 |
99.2 |
112,286 |
10.9 |
10.8 |
|
Commercial |
74,584 |
77,568 |
100 |
20,996 |
27.1 |
28.2 |
|
Total |
1,115,496 |
1,110,333 |
99.5 |
133,282 |
12.0 |
11.9 |
|
Sources: 2006 Customer Total: Energy Information Administration, Natural Gas Annual 2006 (October 2007).
Eligibility and Participation: Maryland Public
Service Commission (March 2008). | |
| |
Eligibility and Participation by Local Distribution Company, December 2007
|
Local
Distribution Company |
Number
of Residential Customers |
Eligible |
Participating |
Percent of Eligible |
|
Baltimore Gas and
Electric |
602,313 |
53,091 |
8.8 |
|
Columbia Gas of
MD |
29,040 |
877 |
3.0 |
|
Washington Gas
Light |
401,412 |
58,318 |
14.5 |
|
Total |
1,032,765 |
112,286 |
10.9 |
|
Source:
Maryland Public Service Commission (March 2008).
| |
| Regulatory and Legislative
Actions on Retail Unbundling |
| Summary: In February 1995, the Maryland
Public Service Commission (PSC) began a "roundtable" collaborative process
with the State's three largest local distribution companies--Baltimore
Gas and Electric (BGE), Washington Gas Light (WGL), and Columbia Gas of
Maryland (CGMD)--to unbundle natural gas services. Since then, the PSC
has approved several customer choice programs developed by the LDCs. The
first programs extended choice only to commercial and industrial
customers, but now all three LDCs have choice opportunities for
residential customers. The first programs for residential customers had
participation caps, but now all customers of these three LDCs may choose
their own gas supplier. The programs include customer protection
requirements and require that participating marketers be financially sound
and have sufficient upstream capacity to ensure reliable service. The LDC
is the supplier of last resort. Utility-specific roundtables have been
formed to discuss several issues, including ways to facilitate fixed-price
commodity service by licensed suppliers to low-income customers. In August
2002, the PSC determined that LDCs should continue providing retail sales
service and ruled it premature to order otherwise. |
Regulatory and Legislative Actions
| Legislation |
04/02 |
Utility
Standards of Conduct Rules. The Legislature amended HB 135 to allow
PSC to continue to apply standards of conduct rules for gas and
electric companies. The Court of Appeals (4-8-02) had overturned
rules that were part of Order 76292, which implemented, in part, the
restructuring and partial deregulation of the State's electric and
natural gas utilities. |
| |
10/00 |
Natural Gas
Supplier Licensing and Consumer Protection Act of 2000 (Section
7-601 et seq. of the Public Utility Companies Article of the
Maryland Annotated Code). Directs the PSC to adopt licensing
requirements and procedures for natural gas suppliers and to set
consumer protection requirements for suppliers. |
| Regulatory
Actions |
02/05 |
PSC Staff
Analysis of Ring-Fencing Measures for Utilities. The PSC staff
recommended that the Commission adopt an annual ring-fencing
reporting requirement for the State's gas and electric utilities to
ensure financial security and service reliability and insulate the
utilities from potentially riskier activities of an uregulated
affliliate. |
| |
09/04 |
Retail Gas
Market Conference. Staff submitted comments regarding the status
of the Maryland natural gas market, stating that 47 companies have
been issued a license to sell/and or market natural gas to
residential customers in the State. BGE has the greatest number (11)
of active suppliers in its territory, with six enrolling new
customers. Washington Gas Light has five suppliers and Columbia Gas
of MD has one. Service offers range from a variable month-to month
offer to a fixed-price with a 3-year term. |
| |
08/02 |
Retail Gas Sales
Service To Continue. PSC ordered utilities to continue retail
sales service (Order 77987) and stated its support of both regulated
gas service and continued development of the State's existing
competitive commodity market. The PSC directed that utility-specific
roundtables report by December 6, 2002, on specific issues
identified by the PSC, including ways to facilitate fixed-price
commodity service by licensed suppliers to low-income customers. If
roundtables are unable to reach resolution, they may file a formal
complaint or request mediation. If requested, PSC will establish
proceedings to address current customer choice issues. |
| |
09/01 |
Retail Gas
Market Conference. Included discussion on the future of the
State's retail gas market and whether the PSC has authority to
require utilities to discontinue tariffed retail sales service. PSC
will consider comments in future policy decisions. |
| |
06/01 |
Gas Roundtable
Report on Supplier Exits. Best result when supplier notifies all
applicable parties in advance and also arranges shift to alternative
supplier. No notice exits and bankruptcy require further review.
Appendix includes case studies of supplier exits in 2000 and 2001. |
| |
06/01 |
Gas Choice
Enrollment Report. The PSC reported on the status of the State's
three LDC customer choice programs: As of June 2001, about 166,800
residential customers were enrolled, accounting for 19.4 million
decatherms (Dth) in annual volumes (BG&E-- 91,000 customers,
11.1 million Dth; WGL-73,039, 8.0 million Dth; CGMD-1,998, 224,415
Dth). Volumes delivered under choice accounted for nearly one-fourth
of annual volumes to eligible residential customers (82.6 million
Dth). |
| |
12/00 |
Gas Supplier
Licensing (Order No. 76643, Case 8846). The PSC adopted
application and licensing procedures recommended by the gas
roundtable in its 10/00 report. Regulations proposed by the
roundtable will be used by the PSC on an interim basis, pending
review by regulations coordinator and subsequent publication. All
suppliers must be licensed by the PSC. Applicant must provide proof
of financial integrity, post a bond if it collects deposits from
customers, and establish procedures for billing practices. |
| |
09/00 |
Removal of
Participation Cap in CGMD's Customer Choice Program (Order No.
76473, Case 8683). The PSC approved continuation of Columbia's pilot
program until October 31, 2002, with certain changes. The cap on
participation numbers was lifted and marketers can make their own
arrangements to bring gas to CG's city gate. The PSC also approved a
competitive transition cost mechanism and the selling of customer
lists. The company will need further PSC approval to charge and
collect stranded costs and to set the fee for customer list sales. |
| |
10/99 |
Status of
Customer Choice Programs in MD. The PSC reported on the status
of the State's three LDC customer choice programs: As of July 1999,
about 81,500 residential customers were enrolled, accounting for 8.3
million decatherms (Dth) in annual volumes (BG&E-- 45,000
customers, 4.5 million Dth; WGL--34,000, 3.6 million Dth;
CGMD--2,500, 235,000 Dth). Pilot phase of WGL's program ended Oct.
31, 1998, and pilot phase of BG&E's on Oct 31, 1999. Effective
11/1/99, all BG&E's residential customers (485,000) can choose
their own supplier. All customers in BG&E's and WGL's choice
programs pay a stranded cost surcharge. All BG&E, WGL, and CGMD
industrial and commercial customers can choose their own supplier.
As of 7/99, 17,135 smaller volume commercial customers were
participating with an annual throughput volume of 22.6 million Dth.
Two other LDCs (Chesapeake Utilities and NUI/Elkton) are in the
process of developing customer choice programs. |
| |
02/98 |
Affiliate
Transactions. Order 74038 Re Affiliate Transactions and
Standards of Conduct, Case 8747. Establishes code of conduct
governing relationships between a utility and its affiliates,
differentiating between standards to be applied to all affiliate
activities and those applicable only to energy-related
("core-service") affiliates. A utility may not give its affiliates
(or affiliates' customers) any preference in providing regulated
services; may not tie regulated service to any other product; and
may not disclose any customer-specific information (unless requested
by customer). Any utility information disclosed to its affiliates
must be simultaneously given to nonaffiliated suppliers. Joint use
of equipment and certain personnel by affiliates and utilities is
allowed as long as costs are allocated on a fully distributed cost
basis. Asset transfers will be governed by asymmetric pricing
principles (asset transfers from parent to affiliate at the greater
of book cost or market value, while those from affiliates to utility
at the lesser of book cost or market value). Asymmetric pricing not
required for the transfer of services between a utility and
affiliates. In a sale or transfer, utility assets are the tangible
property included in a utility's rate base. Utilities can guarantee
the indebtedness of an affiliate but cannot receive a fee for the
service. Utilities must inform the PSC about all new nonutility
activities on a "time-concurrent basis" and indicate the level of
assets involved. Utilities must offer billing services to
nonaffiliated energy marketers (but not to other nonaffiliates) so
that customers can have a one-bill option. Startup costs of
affiliates are supported by stockholders. Affiliates can borrow
funds from the utility at market rates upon review and approval by
the PSC. Promotional materials can identify associations between
utilities and affiliates (including logos) but joint promotions are
prohibited unless offered to other competitors. When an affiliate
uses a utility's name or logo, it must include a disclaimer that the
companies are separate entities. |
| |
07/96 |
Pilot program
for CGMD residential customers. Approved 2-year pilot program
for CGMD residential customers in western Maryland beginning
11/1/96. The program is limited to 10,000 households, on a
first-come, first-serve basis. The program was developed in
cooperation with the Maryland People's Counsel and several gas
marketers. |
| |
06/96 |
Pilot program
for WG&L residential customers. Approved 2-year pilot
program for Washington Gas residential customers beginning 11/1/96.
Program will be limited to 6,000 customers and/or a maximum of 2,000
decatherms per day (dth/d). Marketer pools must have a minimum of
300 customers, or 100 dth/d. |
| Investigative
Studies |
04/96 |
Code of Conduct
for BG&E Affiliate Transactions. Ordered separation of
BG&E utility and marketing operations and detailed 12 standards
of conduct. BG&E cannot give its marketing affiliate any
preference with respect to gas delivery, capacity assignment or
release, contract administration, capacity allocation, customer
information, discounts, etc. |
| |
04/95 |
Cost Allocation
Issues. Investigation into Allocation of Costs Between Regulated
and Unregulated Business Activities of the Baltimore Gas and
Electric Company, Case 8577. Adopts four cost allocation principles:
•Costs must be allocated on a fully distributed basis. •In
transactions in which BG&E provides benefits to its affiliate,
the cost of services are to be based on the full cost, including
direct and indirect.•For services that BG&E could market to the
public, their fair market value is to allocated as the imputed cost
to the affiliate for these services. •Asset transfers will be
governed by asymmetric pricing principles (see2/98 order). |
| |
02/95 |
Roundtable
Collaborative. Directed the formation of a collaborative LDC
roundtable process to develop unbundled services for customers of
the State's three largest LDCs (BG&E, WGL, and CGMD). Consensus
on unbundling issues would allow the LDCs to file unopposed
restructuring plans with the PSC. | |