from: http://tonto.eia.doe.gov/energy_in_brief/natural_gas_customer_choice.cfm
Source: Energy Information Administration, Natural Gas Residential Choice Programs (2009)
Did You Know?
Large commercial and industrial consumers have had the option of purchasing the natural gas commodity separately from other natural gas services for many years.
Natural gas customer choice programs let households and small commercial establishments purchase natural gas from someone other than their traditional utility company. However, utility companies still deliver the natural gas to consumers.
How Choice Programs Work
Customer choice programs give consumers the option of purchasing natural gas from an unregulated supplier (marketer) rather than a local utility company. If a consumer chooses to buy from a marketer, the marketer purchases the natural gas and arranges for its delivery to the local utility. The local natural gas utility, generally referred to as a local distribution company or LDC, continues to provide local transportation and distribution services. Local distribution companies are regulated by State utility commissions and cannot earn a profit on natural gas sales, whereas sales by marketers are unregulated.
Most natural gas customer choice programs began in the 1990s in an effort to introduce more competition into local energy markets. Traditionally, local distribution companies provide natural gas to their customers as part of a bundled service that includes both the price of the natural gas (sometimes called sales service) and the price of distributing the gas. In customer choice programs, gas sales are unbundled from distribution and other delivery-related services.
The characteristics and availability of existing choice programs vary markedly. Some States allow all customers to choose, while some limit choice to specific service areas or a specific number of customers. In some cases, even though choice is allowed statewide, no programs are being offered or no marketers are participating.
Choice Enrollment Reached a New High in 2008
Overall, more than 13%, or about 4.7 million, of the approximately 35 million residential natural gas customers with access to choice (55% of U.S. residential customers) were buying natural gas from marketers in 2008, up from 4.4 million in 2007. Enrollment totaled 6% more than in 2007 and 12% more than in 2006, although the number of States allowing choice has remained the same since 2002.
The State of Georgia has by far the most comprehensive choice program, in that all residential customers in Atlanta Gas Light Company’s service territory (more than 80% of Georgia’s residential gas customers) purchase their natural gas from marketers. Atlanta Gas Light still delivers the gas but no longer provides sales service. Ohio has the second largest program with about 48% of all eligible households participating and enrollment levels of nearly 1.4 million. Together Georgia and Ohio accounted for nearly 60% of the residential customer enrollment total in 2008.
Customer participation is determined by a variety of factors, such as the customer’s potential to save money and the terms of service. In the same way, marketers’ participation is influenced by the potential to earn a profit on natural gas sales. In 2008, 133 marketers were authorized to serve residential customers, of which 99 were actively serving customers. Many marketers have expanded their price offerings to attract customers. Besides month-to-month variable rates or fixed rates for longer terms, some marketers offer introductory rates, rebates, budget plans, or capped rates.