Columbia Gas of Ohio Standard Choice Offer
Each year, Columbia Gas of Ohio conducts an auction to secure natural gas supplies for customers who do not participate in the gas choice program. The suppliers that place the lowest bids in the auction are selected to provide the natural gas that Columbia needs to serve customers. The auction establishes a standard choice offer (SCO) rate for a 12-month period that begins each April.
How is the SCO rate set?
The SCO rate changes monthly based on the NYMEX month-end settlement price for natural gas, plus a “retail price adjustment” that is determined in the annual auction. The retail price adjustment reflects the winning bidders’ estimates of their cost to deliver natural gas from the production area to Columbia’s service area.
SCO customers will see the name of the competitive supplier that supplies their natural gas. The rates will be the same for all SCO customers, regardless of the supplier.
What are the current rates?
Beginning April 1, 2013 through March 31, 2014, the retail price adjustment will be set at $1.29 per thousand cubic feet (Mcf). Customers can take that price and add to it the NYMEX month-end settlement price to get a preview of the following month’s SSO rate.
Does this change the tax rate?
Yes. Since SCO customers will be purchasing natural gas directly from a retail supplier rather than their utility company, state tax law requires that they pay their county sales tax on their natural gas purchased. Like CHOICE® customers already do, SCO customers will be charged sales tax at the prevailing rate in their county.
What are the NYMEX and the month-end settlement price?
The NYMEX, or New York Mercantile Exchange, is a “stock market” for energy 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 including supply and demand and the weather can cause prices to fluctuate. The NYMEX month-end settlement price is set on the third business day from the end of the previous month.
Are choice customers affected by the changes?
Choice customers who are enrolled with an alternative supplier are not affected – their contracts will remain the same. If a choice customer’s contract expires, and the customer does not re-enroll or choose a new supplier, the customer will become a Columbia customer at the SCO rate. If a customer’s choice supplier goes out of business, Columbia will provide service to its customers at the SCO rate. Choice customers will be able to choose to return to Columbia’s SCO at anytime, but should review their contact, if applicable, for any cancellation fees.
Do the supply auctions affect natural gas distribution rates?
No, all customers pay the same distribution rate for the delivery of natural gas supplies to their homes and businesses. Columbia continues to deliver natural gas to all customers, offer payment plans, such as budget billing and handle all emergency and customer service calls.
In February 2014, Columbia will conduct another round of auctions for the period April 1, 2014 to March 31, 2015.