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ECO 436

ECO 436. Natural Gas. Natural Gas Unbundling in IL for Small Customers. What are benefits to unbundling? What are the costs? How is it done?. Why Small Customers?. All Large Commercial and Industrial customers have the option of purchasing natural gas from suppliers other than LDCs.

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ECO 436

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  1. ECO 436 Natural Gas

  2. Natural Gas Unbundling in IL for Small Customers • What are benefits to unbundling? • What are the costs? • How is it done? ECO 436 David Loomis 309-438-7979

  3. Why Small Customers? • All Large Commercial and Industrial customers have the option of purchasing natural gas from suppliers other than LDCs. • Small volume commercial customers and residential customers do not have choice. ECO 436 David Loomis 309-438-7979

  4. What are the Benefits? • Lower prices • consumer choice • new products and services • more responsiveness to consumer preferences • greater cost efficiency initiatives ECO 436 David Loomis 309-438-7979

  5. What are the Benefits? (cont’d) • reduced regulatory oversight • less cost shifting • more innovation • more accurate price signals • LDCs - questioned if cost savings significant because of competitive gas supply ECO 436 David Loomis 309-438-7979

  6. What are the costs? • potentially greater price volatility • add’l supply risk (less reliability) • new billing system costs • add’l “supplier of last resort” costs • potentially higher prices ECO 436 David Loomis 309-438-7979

  7. What are the costs? (cont’d) • consumer exploitation • new admin. & transactions costs • potential stranded costs • higher consumer risk • public information and education costs • loss of consumer protections • marketer-questioned significance of these ECO 436 David Loomis 309-438-7979

  8. Features of unbundling: • most fundamental principle of small customer unbundling is “aggregation” concept • marketer buys gas for many customers within a group w/ no separate accounting for utility provided daily balancing or storage services. ECO 436 David Loomis 309-438-7979

  9. Possible Unbundling • transportation • balancing • standby • storage • metering • emergency services • gas supply ECO 436 David Loomis 309-438-7979

  10. Remaining Questions • Should local utility retain the option of providing fully bundled service? • Can reliability be maintained? • Do marketers have to use “firm” capacity? • Should ICC regulate or license marketers? • Should LDC be required to release customer information? ECO 436 David Loomis 309-438-7979

  11. Remaining Questions (cont’d) • What will be the impact of electric restructuring on gas industry? • Should LDCs be required to release capacity to marketers? • Is PBR preferable to residential unbundling? ECO 436 David Loomis 309-438-7979

  12. Residential Pilot Programs • ThermQuest – CILCO – 5 year program started in 1996 • Customer Select – NICOR Gas – 3 year pilot started in 1997 • Peoples Gas program – 2 year program started in November 1997and extended through June 30, 2000 ECO 436 David Loomis 309-438-7979

  13. Eligible in IL Pilot Programs ECO 436 David Loomis 309-438-7979

  14. Participation in IL Pilot Programs ECO 436 David Loomis 309-438-7979

  15. Customer Select in Bloomington/Normal • Started Jan. 6, 2000 • Enrollment ended March 31, 2000 • NICOR expanded program to all customers effective 3/1/02 ECO 436 David Loomis 309-438-7979

  16. Customer Select in Bloomington-Normal ECO 436 David Loomis 309-438-7979

  17. Other States (March 2000) ECO 436 David Loomis 309-438-7979

  18. Participation in Other States ECO 436 David Loomis 309-438-7979

  19. Participation in Other States ECO 436 David Loomis 309-438-7979

  20. Participation in Other States ECO 436 David Loomis 309-438-7979

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