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					 Retail Unbundling - U.S. Summary
Enrollment in customer choice programs declined in 2005 for the second year in a row, with about 107,900
fewer households purchasing natural gas from third-party suppliers than in 2004 and about 298,600 fewer
than in 2003 (Tables 1 and 2). Still, about 11 percent or 3.9 million of the approximately 34 million
residential gas customers with access to choice were buying gas from marketers as of December 2005.
Georgia has the most comprehensive program in that all 1.4 million residential customers in Atlanta Gas
Light Company’s service territory (more than 80 percent of the State’s residential gas customers) purchase
their natural gas directly from marketers. Atlanta Gas Light still delivers the gas but no longer provides any
sales service. Ohio has the next largest residential choice market, with more than one-third of all
households participating and enrollment levels of nearly 1.1 million. Together Georgia and Ohio accounted
for nearly two-thirds of the customer enrollment total in 2005.

Participation percentages declined in all States but New York and Indiana in 2005, as concerns about high
and variable natural gas prices apparently reduced interest and confidence in marketer pricing options. The
largest percentage decline in participation (5.2 percent to 1.3 percent), however, occurred in New Jersey as
a result of a marketer’s decision to return about 80,000 choice customers to utility service before the start
of the heating season as natural gas commodity prices surged to record highs. Overall, the number of
marketers offering services to residential customers in 2005 (Marketer Summary Table) remained about
the same as in 2004 (81 vs. 83), but considerably less than the 159 marketers participating in 2001 (Table
3). Some States, such as New Mexico and West Virginia, have had virtually no marketer participation, even
though legislation is in place that allows all customers to purchase natural gas from third-party suppliers.

Despite the overall enrollment decline, pilot programs in Indiana and Kentucky were extended and State
regulatory agencies continued to refine and evaluate existing programs. In New York, which has the third
largest choice enrollment, the Public Service Commission in May 2005 approved a plan by Central Hudson
Gas and Electric Company, modeled after Orange and Rockland Company’s successful Power Switch
program, in which the utility purchases marketers’ accounts receivable without recourse, which simplifies
marketers’ operations and eliminates their need to perform credit checks. In return marketers offer a
guaranteed discount to participating customers for a 2-month period and agree to take all residential and
small commercial customers referred by the utility. Customers are assigned randomly to participating
marketers. In Nebraska, the Public Service Commission opened a docket to investigate and adopt policies
for administration of Kinder Morgan Inc.’s choice program, which serves about 73,000 customers. In Ohio,
the public utility commission (PUC) is considering a request by Dominion East Ohio (with 49 percent of the
State’s choice market) to exit the commodity market and become a distribution-only company in the near
future. As part of this plan, the company filed a formal application with the PUC in April 2005 for a two-
phase pilot program. In phase one, the gas cost recovery mechanism would be eliminated for its non-choice
(sales) customers and replaced by a monthly market price determined through a bidding process. The
winning bidders would become wholesale suppliers to Dominion for firm service re-delivery to the end-use
customers. Under phase two of the plan, remaining sales customers would be assigned to participating
marketers on a pro rata basis. At that point Dominion would become a distribution-only company, but
continue its role as the provider of last resort. Hearings on phase one of the proposal are currently
underway.

In Pennsylvania, the PUC has scheduled a stakeholders’ meeting to consider further strategies that would
encourage competition on a statewide level. The PUC submitted a report to the legislature in October 2005,
which was mandated after 5 years of deregulation, that concluded that the number of suppliers and buyers
in choice programs across the State was insufficient for effective competition and that the marketplace
“lacks accurate and timely price signals.” The report noted that suppliers felt that substantial barriers to
market entry exist because of the local distribution companies’ (LDCs) differing and high security
requirements, excessive and varying penalties for non-delivery, differing nomination and delivery
requirements, and misleading price comparisons.

In Massachusetts, in a report issued in June 2005, the Department of Telecommunications and Energy
(DTE) restated its commitment to an eventual transition to a competitive natural gas market in the State.
The report concluded that retail markets are not competitive enough to allow LDCs to assign interstate
pipeline capacity voluntarily rather than on the currently mandated basis. It determined that the number of
alternative contract holders with firm rights to interstate pipeline capacity serving the State is still limited,
marketer participation has not increased, and the number of customers moving to transportation service is
stagnant or declining, with essentially no participation by residential customers. The DTE directed LDCs to
improve performance or implement procedures on: (1) the monthly recall and release of assigned capacity;
(2) marketer access to consumption algorithms; and (3) trueups between forecast usage and billed usage.

No significant changes occurred in the States that allow consumer choice but have virtually no participation.
Massachusetts, New Mexico, and West Virginia had fewer than 300 residential customers participating. The
customer aggregation program continues in California, but accounts for only 0.4 percent of deliveries to
residential customers (based on most recent EIA data). Only about 0.5 percent of residential and
commercial customers in Montana have chosen alternative suppliers, and only 0.2 percent of South Dakota
gas consumers (all sectors) use transportation service. Colorado allows utilities to offer customer choice
programs if approved by the PUC, but no utilities have submitted unbundling plans.

As of December 2005, 21 States and the District of Columbia have legislation or programs in place that
allow residential consumers and other small-volume gas users to purchase natural gas from someone other
than their traditional utility company. Seven States and the District of Columbia allow all residential
consumers to choose their natural gas suppliers, but a lack of marketer participation has precluded the
development of competitive retail markets in three of these States. Six States are in the process of
implementing choice statewide with programs available to more than half their residential customers, and
five States have pilot or partial unbundling programs in place. An additional 8 States are considering action
on customer choice, while 19 States have thus far taken no action and 2 States have discontinued their
pilot programs.

Large commercial and industrial consumers have had the option of purchasing the natural gas commodity
separately from natural gas services for many years. State regulators and lawmakers, who are responsible
for designing and implementing retail restructuring programs, have moved more slowly in implementing
choice programs for residential and small-volume commercial customers until they could ensure reliable
service.
EIA State Data: In 2004, the United States had 62,469,142 residential and 5,135,985 commercial
customers. They consumed 4,885 and 3,142 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 $10.75 and $9.41 per thousand cubic feet, respectively.
Table 1. Eligibility and Participation in Residential Retail Choice Programs, December 2005




Category/State


 Total 2004            Eligible in 2005    Participating in 2005

                                           Total             Percent of 2004 Total      Total     Percent of
 Eligible              Percent of 2004 Total

 Statewide Unbundling: 100-Percent Eligibility



 Active Programs

 D.C.                  138,134             138,134           100              12,850    9.3       9.3

 New Jersey            2,582,714           2,582,714         100              33,327    1.3       1.3

 New York              4,199,302           4,199,302         100              328,552   7.8       7.8

 Pennsylvania          2,591,458           2,591,458         100              164,668   6.4       6.4

   Subtotal            9,511,608           9,511,608         100              539,397   5.7       5.7
Inactive/Limited Programs

California*             9,957,417              9,957,417        100                36,086                  0.4        0.4

Massachusetts           1,306,142              1,306,142        100                293                (*)             (*)

New Mexico              505,973                505,973          100                0                  0               0

West Virginia           358,027                358,027          100                100                (*)             (*)

 Subtotal               12,127,559             12,127,559       100                36,479             0.3             0.3


Total (100% Elig)       21,639,167             21,639,167       100                575,876            2.7             2.7

Statewide Unbundling: Implementation Phase - Greater than 50-Percent Eligibility

Georgia                 1,750,745              1,433,706        81.9               1,433,706          100             81.9

Illinois                3,754,132              2,766,210        73.7               172,470            6.2             4.6

Maryland                1,000,159              990,727          99.1               128,951            13.0            12.9

Michigan                3,161,370              3,123,279        98.8               209,429            6.7             6.6

Ohio                    3,248,821              3,003,531        92.4               1,090,968          36.3            33.6

Virginia                1,029,389              603,725          58.6               60,565             10.0             5.9

 Subtotal               13,944,616             11,921,178       85.5               3,096,089          26.0            22.2

Pilot Programs/Partial Unbundling

Florida                 638,357                12,647           2.0                12,647             100             2.0

Indiana                 1,588,738              150,000          9.4                51,051             34.0            3.2

Kentucky                766,729                127,072          16.6               26,674             21.0            3.5

Nebraska                497,391                73,400           14.8               73,400             100             14.8

Wyoming                 137,434                62,229           45.3               25,292             40.6            18.4

Subtotal                3,628,649              425,348          11.7               189,064            44.4            5.2

Total                   39,212,432             33,985,693       86.7               3,861,029          11.4             9.8

U.S. 2004 Total          62,469,142            --               --                 --                 --              --


 -- = Not applicable. (*) = Less than 0.05 percent.

 * Based on Energy Information Administration, Natural Gas Annual 2004 (December 2005).

  Note: Colorado law permits unbundling if approved by the State Public Utilities Commission, but no utilities have submitted
unbundling plans. Also, two other States (Montana and South Dakota) have pilot programs or partial unbundling but residential data
are not available (see State information pages).
 Sources: Total 2004: Energy Information Administration, Natural Gas Annual 2004 (December 2005). Eligibility and
Participation: State public utility commissions, utility company web sites, and Energy Information Administration estimates.



Table 2. Residential Customers in Customer Choice Programs, 2000-2005


 State      Residential Participation Levels as of:                                      Percent of Eligible

            Mar 2000     Dec 2001 Dec 2002           Dec 2003 Dec 2004 Dec 2005 2000             2001   2002   2003   2004     2005

 CA         --           --           (R)21,119      25,319      38,030      36,086      --      --     0.2    0.3    0.4      0.4

 DE*        6,076        --           --             --          --          --          40.5    --     --     --     --       --

 DC         11,014       15,807       26,438         21,673      16,405      12,850      8.3     11.4   19.5   15.1   12.0     9.3

 FL         --           --           10,187         10,388      12,635      12,647      --      --     100    100    100      100

 GA         1,370,421    1,375,556    1,430,323      1,419,131   1,427,661   1,433,706   100     100    100    100    100      100

 IL         25,800       65,833       132,577        153,897     161,082     172,470     9.1     23.1   6.8    7.4    7.7      6.2

 IN         14,120       10,001       40,488         43,014      47,789      51,051      2.3     1.6    27.0   28.7   31.9     34.0

 KY         --           NA           45,570         41,095      41,121      26,674      --      NA     36.2   32.0   32.1     21.0

 MD         161,129      166,800      162,889        151,233     142,917     128,951     21.7    17.9   17.1   15.6   14.5     13.0

 MA         17,024       NA           255            208         83          293         20.5    --     (*)    (*)    (*)      (*)

 MI         207,863      199,218      332,244        241,710     203,866     209,429     NA      24.7   23.2   10.3   7.1      6.7

 NE         74,194       73,669       73,228         73,842      74,848      73,400      100     100    100    100    100      100

 NJ         67,635       57,040       105,576        126,519     133,226     33,327      3.0     2.4    4.3    5.2    5.2      1.3

 NM         0            0            0              2           0           0           0       0      0      (*)    0        0

 NY         75,787       244,823      318,670        295,322     304,626     328,552     1.8     5.9    7.5    6.9    7.8      7.8

 OH         572,099      825,148      1,082,073      1,253,596   1,085,423   1,090,968   33.3    30.1   40.1   42.9   37.0     36.3

 PA         NA           253,734      215,614        194,890     180,863     164,668     --      10.0   8.5    7.6    7.0      6.4

 VA         45,736       45,630       81,042         73,996      70,826      60,565      52.5    24.8   14.9   12.9   12.2     10.0

 WI*        1,869        --           --             --          --          --          7.5     --     --     --     --       --

 WV         40           21           12             10          0           100         (*)     (*)    (*)    (*)    0        (*)

 WY         9,169        9,185        48,339         33,760      27,502      25,292      100     100    100    56.0   44.9     40.6

 Total      2,659,976    3,342,465    ®)4,126,644   4,159,605   3,968,903   3,861,029   21.6    19.6   13.5   13.0   12.1     11.4



      -- = Not applicable. (R) = Revised. NA= Not available.

      *Pilot program was discontinued.

      (*) = Less than 0.05 percent.
    Note: Colorado law permits unbundling if approved by the State Public Utilities Commission, but no utilities have submitted
 unbundling plans. Also, two other States (Montana and South Dakota) have pilot programs or partial unbundling but residential data
 are not available (see State information pages).

    Sources: 2005: State public utility commissions, local distribution companies, marketers, and Energy Information Administration,
 Natural Gas Annual 2004 (December 2005). 2000-2004: Energy Information Administration, Historical files.
 http://www.eia.doe.gov/oil_gas/natural_gas/restructure/restructure.html



Table 3. Marketers Serving Residential Customers, 2001-2005



State/District
December 2001
December 2002
December 2003      December 2004
 December 2005

                  *Total     **Active     *Total     **Active      *Total      **Active     *Total    **Active    *Total    **Active

 CA               --         --           3          3             2           2            1         1           1         1

 DC               3          3            5          5             4           4            4         4           3         3

 FL***            --         --           0          0             (R)1        (R)1         1         1           1         1

 GA               8          8            10         10            10          10           10        10          10        10

 IL               2          2            6          6             8           6            10        9           10        9

 IN               4          1            4          2             7           7            7         7           7         7

 KY               --         --           5          3             3           3            2         2           2         2

 MD               12         12           13         10            13          9            14        9           14        9

 MA               4          1            3          3             0           0            0         0           0         0

 MI               3          3            6          6             8           8            7         4           6         4

 MT               4          4            11         11            4           4            4         4           4         4

 NE               6          6            4          4             3           3            3         3           3         3

 NJ               6          3            8          6             6           5            5         5           4         4

 NY               52         50           50         44            45          42           38        37          38        38

 OH               10         8            22         10            24          10           27        8           32        9

 PA               35         10           (R)29      4             29          4            29        4           28        4

 VA               13         4            8          6             4           4            6         6           6         6

 WY               3          3            4          4             5           5            5         5           4         4
Total****         165        159           (R)131      104           (R)122       (R)93         115       83          114        81


   -- = Not applicable. (R) = Revised.

   *Total Marketers: Number of companies that have been authorized by the public service commission to provide gas service in the
State, even if not actively serving customers.

   **Active Marketers: Supplier has been authorized by the public service commission to provide gas service in the State and is
actively serving customers in the State.

  ***Florida marketer data were not included in previous years.

   ****Totals do not equal sum of State totals because some companies are licensed and operate in multiple States. Also note that the
December 2002 Total differs from data in the historical file in that the number of PA active marketers (4) was inadvertently listed as
total marketers for the State, rather than 29 (estimated). The revision results in an additional 12 marketers in the United States in 2002.

   Sources: 2005: State public utility commissions and utility company web sites. Energy Information Administration, Natural Gas
Annual 2004 (December 2005). 2001-2004: Energy Information Administration, Historical files.
http://www.eia.doe.gov/oil_gas/natural_gas/restructure/restructure.html

				
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