Public Service Commission
PSC Examines Retail Competition in Natural Gas

      As it considers whether Kentucky’s natural gas markets should be opened to broader retail competition, the Kentucky Public Service Commission (PSC) is seeking comment from those who would be affected by such a change, including residential and small-volume commercial customers.
       A measure enacted by the 2010 Kentucky General Assembly directed the PSC to study whether retail competition in natural gas markets would benefit Kentucky’s small-volume natural gas consumers. The PSC initiated the study earlier this year.
       “We are now at a point in the process at which public comment is appropriate,” PSC Chairman David Armstrong said. “We encourage natural gas users to familiarize themselves with the issues and let us know their opinions.”
        Retail natural gas service in Kentucky is provided by companies that own and operate local distribution systems. The companies purchase natural gas on the wholesale market and resell and distribute it to their customers.
       The local distribution companies, or LDCs, charge delivery and other fees that are regulated by the PSC. The wholesale cost of natural gas is unregulated, but must be passed on to consumers by the LDC on a dollar-for-dollar basis.
       Under retail competition, customers purchase natural gas from a third-party marketer. The LDC delivers the gas and the customers continue to pay the associated costs to the local company.
       Kentucky law neither requires nor forbids retail competition for small-volume customers. Federal law requires that large-volume customers have open access to gas suppliers.
      Thus far, only one LDC – Columbia Gas of Kentucky – has implemented a voluntary retail competition program for residential and small commercial customers. The program, known as Columbia Customer Choice, began in 2000 and has been approved on an ongoing basis by the PSC.
       The PSC has examined retail competition twice in the past, in 1987 and in 1998. More recently, it has responded to inquiries from the General Assembly regarding retail competition with information regarding how further studies might be structured.
       Earlier this year, the General Assembly incorporated much of that information into House Joint Resolution 141, which led to the current study.
       On April 19, the PSC issued an order establishing the current study. The five largest LDCs were made parties to the case. A number of other entities requested and were granted status as intervening parties.
       A list of all parties in the case accompanies this news release.
       Testimony from the parties was due yesterday and will be available on the PSC website, psc.ky.gov. The case number is 2010-00146.
       “We hope that anyone wishing to comment on this matter will read and respond to the testimony that has been submitted,” Chairman Armstrong said. “The most helpful comments are those that directly address the issues raised by the parties.”
       Written comments may be mailed to the PSC at P.O. Box 615, Frankfort, Ky. 40602, faxed to 502-564-9625 or e-mailed via the PSC website.
       A hearing in the case has been scheduled for October 19 at the PSC offices at 211 Sower Boulevard in Frankfort. It will be open to the public and will be broadcast on the PSC website. Written comments also will be accepted at the hearing.
       The PSC is an independent agency attached for administrative purposes to the Energy and Environment Cabinet. It regulates more than 1,500 gas, water, sewer, electric and telecommunication utilities operating in Kentucky and has approximately 100 employees.