Wyoming Choice
Program Information
Nebraska Choice Program Information
Michigan Choice Program Information |
History
Sources: GAO report, titled Energy Deregulation – Status
of Natural Gas Customer Choice Programs; An Overview and History of Gas Deregulation
compiled by the LIHEAP Clearinghouse, April 1990-
http://www.liheap.ncat.org/dereg/gasoview.htm
Prior
to 1978, gas producers sold gas to interstate pipeline companies, which in turn
sold it to local gas utilities, which then sold the gas to end users, such as residential
customers and small businesses. A series of federal government initiatives, beginning
with the 1978 Natural Gas Policy Act, changed all that.
Natural gas deregulation allows certain gas consumers to save money by purchasing
gas commodity supplies directly from third parties
The
price at which producers could sell their gas to interstate pipelines and the price
at which interstate pipelines could sell their gas to local gas utilities were regulated
by the federal government. State authorities regulated the price that gas utilities
charged to their end users. Gas utilities held long-term contracts with the
interstate pipeline companies, while the latter held long-term contracts with producers.
Both types of contracts were typically for 20 years
or longer and were based on
regulated prices.
Under
the Natural Gas Policy Act of 1978, Congress began a process that ended federal
control over the price of gas at the wellhead. This process also set
in motion a series of public policy changes by the Federal Energy Regulatory Commission
and state regulators that has culminated in “customer choice” programs for residential
and small commercial natural gas users.
Under
these programs, homes and small businesses can choose their supplier of natural
gas, much as they now choose their long-distance telephone provider.
Under a customer choice program, non-utility gas suppliers, called gas marketers,
purchase gas and arrange for its transportation to the local gas utility.
Local gas utilities, while no longer purchasing gas directly for their customers,
continue to deliver it to homes and businesses.
Large
commercial and industrial users in many states were the first to buy natural gas
directly from a supplier of their choice, rather than as part of a bundled supply
and delivery service provided by a regulated utility. Now residential and small
business consumers are beginning to enjoy the same freedom of choice, which in most
cases means lower prices.
Seminole's pricing allows
the customer to choose from a variety of competitive pricing options based upon
each customer's desired level of market price risk
Savings are defined as the difference between what the gas utility would
charge and what the gas marketer charges for gas delivered to a utility’s city gate.
Customer savings come from a combination of gas marketers’ savings on upstream transportation
and storage costs and on the cost of gas. In some states, customers are also achieving
savings because natural gas sold by marketers is subject to fewer state and local
taxes than gas sold by local gas utilities. The costs of natural gas, its transportation
and storage, and subsequent local delivery are incorporated into monthly gas bills.
Seminole currently offers customer choice programs in Michigan, Nebraska and
Wyoming.
Click the following link for additional information on choice programs in your area:
http://www.eia.doe.gov/oil_gas/natural_gas/restructure/restructure.html
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