Beginning in October 2008, Vectren Energy Delivery of Ohio has changed the way it buys natural gas for customers who have not selected an alternative natural gas supplier. The changes do not affect customers that have enrolled with a supplier under the Energy Choice program.
Under a new pilot program, Vectren buys gas for its non-Energy Choice customers from alternative suppliers and passes the price of that gas on to customers at a monthly rate called the Standard Service Offer (SSO). The SSO rate replaces the Gas Cost Recovery (GCR) rate on all non-Energy Choice customer bills.
Vectren will continue to deliver natural gas to all customers, offer payment plans, such as budget billing, and handle all emergency and customer service calls. Customers are still free to choose an alternative natural gas supplier through the Energy Choice program.
In August 2008, alternative natural gas suppliers placed bids in a PUCO-monitored “auction” held to provide Vectren with natural gas for its non-Energy Choice customers. Several suppliers were selected to provide the amount of natural gas needed to serve Vectren customers who do not already buy natural gas from other suppliers under Energy Choice or municipal aggregation programs.
Each month, Vectren will buy gas from these suppliers and pass the price of that gas on to customers at the SSO rate. The SSO rate for Oct. 1, 2008 through March 31, 2010 will change monthly based on the NYMEX month-end settlement price, plus a “Retail Price Adjustment” of $2.35 per thousand cubic feet (Mcf).
The price that Vectren bills customers for natural gas under the new SSO is identical to what it pays the suppliers. Ohio law prohibits Vectren from earning a profit on the sale of natural gas but does allow the company to recover – on a dollar for dollar basis – the cost of securing those natural gas supplies.
The NYMEX, or New York Mercantile Exchange, is a “stock market” for energy and precious metal commodities. It sets a daily national market price for natural gas. Demand for natural gas is seasonal, and the NYMEX price can change dramatically from one month to the next. Variables, such as the impact of hurricanes Katrina and Rita on the Gulf of Mexico, a major natural gas production region, caused prices to spike higher last year. On the other hand, warmer-than-normal winter weather and milder late summer temperatures this year have caused NYMEX prices to decline.
The NYMEX month-end settlement price is set on the third business day from the end of the previous month. Vectren customers can take that price and add to it the $2.35 per Mcf Retail Price Adjustment to get a preview of the next month’s SSO rate. Customers can learn more about the NYMEX and obtain natural gas market prices online at www.nymex.com.
Energy Choice customers who are enrolled with an alternative supplier are not affected; their contracts remain the same. If an Energy Choice customer’s contract expires, and the customer does not choose a new supplier, the customer will become a Vectren customer under the SSO rate. If an Energy Choice supplier goes out of business, Vectren will provide service to its customers at the SSO rate. Those interested in choosing a competitive supplier can compare rate offers using the PUCO’s Apples to Apples comparison charts available at www.PUCO.ohio.gov.
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