Vectren Energy Delivery of Ohio's Standard Choice Offer
Each year, Vectren Energy Delivery of Ohio conducts an auction to secure natural gas supplies for customers who do not participate in the gas choice program. The auction establishes a standard choice offer (SCO) rate for choice-eligible customers and a direct sales service (DSS) rate for Percentage of Income Payment Plan Plus (PIPP Plus) customers and other choice-ineligible customers.
How are the SCO and DSS rates set?
The SCO and DSS rates are identical and change 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 Vectren’s service area. SCO customers pay county sales tax on the supply portion of their gas bill and DSS customers pay an excise tax.
What are the current rates?
Until April 31, 2014, Vectren’s retail price adjustment is set at $1.05 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 SCO and DSS rates.
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.
Do the auctions result in SCO customers having a different gas supplier?
Each SCO customer is assigned to a supplier based on the auction results, and that supplier’s name will appear on their bill. The supplier may or may not be different than the supplier that previously appeared on their bill. However, each customer will pay the same monthly rate as other SCO customers no matter whom their SCO supplier is.
Can customers still participate in choice?
SCO customers are assigned to suppliers based on the auction results, but remain free to enroll with an energy choice supplier, or join a government aggregation buying group. DSS customers cannot participate in Energy Choice.
Are current choice customers affected by the auction?
Choice customers who are currently enrolled with an alternative supplier will not be affected; their contracts will remain the same. If a choice customer’s contract expires or their supplier goes out of business, and the customer does not choose a new supplier, the customer will be assigned to a supplier at that supplier’s Monthly Variable Rate or may choose to be put on the SCO. Customers 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.
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. Vectren continues to deliver natural gas to all customers, offer payment plans, such as budget billing and handle all emergency and customer service calls.
What happens next?
Vectren will conduct another auction in the winter of 2014 to establish the retail price adjustment for April 2014-March 2015.