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Energy Choice Update: Merchant Function Transition Plan for Dominion East Ohio Energy

This document discusses the current state of energy choice enrollment and participation rates in Ohio as of March 4, 2004. With a focus on residential (56%) and non-residential (55%) participation, it outlines the goals for Dominion East Ohio (DEO) in exiting the merchant function while ensuring reliability, acceptable pricing, and appropriate oversight. Key topics include stakeholder meetings, operational and customer issues, default service responsibilities, and managing system reliability post-transition. A comprehensive transition plan is essential for DEO's future role and compliance.

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Energy Choice Update: Merchant Function Transition Plan for Dominion East Ohio Energy

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  1. Dominion East Ohio Energy Choice Update/ Merchant Function Issues March 4, 2004

  2. Energy Choice Enrollment Participation Rates Residential 56% Nonresidential 55%

  3. 1/04 Energy Choice Market Shares (*) Other 11 D A C B The largest Choice pool is 39% as big as DEO’s remaining GCR customer base (*) Includes supplier’s aggregation customers

  4. FRPS Pool 2003 Market Shares A Other 35 B C D D

  5. Merchant Function Exit Discussions Goal • Develop detailed transition plan under which DEO could exit merchant function • Does not have to include proposed date certain by which DEO exits Process • Hold several (2-4) meetings at which stakeholders could voice opinions on key issues • Assume that DEO exits merchant function (i.e., do not debate merits up front) • DEO develops comprehensive plan for further review or filing (with or without timetable)

  6. Fundamental Objectives • Adequate Reliability • System must remain reliable for default service and Energy Choice customers • Acceptable Pricing • Prices for default commodity and related services must be properly set • Appropriate Oversight • Commission must retain sufficient oversight to avoid unacceptable outcomes Any exit of the merchant function must be METHODICAL

  7. Perceived Stakeholder Interests

  8. Provider-of-Last-Resort Timeline Hourly Daily <1 Cycle Monthly >1 Cycle Seasonal (1 Cycle) • Intra-Day Balancing • Daily Balancing • Single-Day Underdelivery • Multi-Day Underdelivery • Supplier Default • Monthly Balancing • Standard Offer Service

  9. Potential Discussion Topics • General Issues • Operational Issues • Customer Issues • Process Issues Should we move forward and, if so, when?

  10. General Issues • What other models are worth reviewing? • What exactly does default service entail? • What are the default supplier’s responsibilities? • What is DEO’s role after exiting the merchant function? • What oversight does the Commission have of the default supplier? • What steps do we take to minimize the possibility of default by a default supplier?

  11. Operational Issues • How do we maintain system reliability with DEO no longer in the GCR business? • What capacity does DEO need to retain in its role as system operator? • Is a reserve margin needed? • How do we deal with buying/selling storage in place and cash-out gas? • How do we respond to end use market changes (i.e., declining baseload usage)? • Does anything change in Energy Choice?

  12. Customer Issues • Who “provides” the default service from the customer’s perspective? • How is the price for default service set and how frequently does it change? • How is the hand-off from GCR to default service handled? • Who is eligible for “standard” default service? • How do we inform customers? • How do we deal with credit and collections?

  13. Process Issues • What is the optimal time of year to make the transition? • Should default service be subjected to an RFP process and, if so, who makes the final selection? • How is default service billed to customers and how does the supplier get paid? • How does DEO recover the costs it incurs as system operator? • Operational balancing capacity, Storage inventory, UFG, Unrecovered gas costs

  14. Suggestions?

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