Dominion East Ohio Energy Choice Update Merchant Function Issues

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Dominion East Ohio Energy Choice
Update/ Merchant Function Issues

• March 4, 2004

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Energy Choice Enrollment
Participation Rates
Residential 56 Nonresidential 55
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1/04 Energy Choice Market Shares ()
Other 11
D
A
C
B
The largest Choice pool is 39 as big as DEOs
remaining GCR customer base
() Includes suppliers aggregation customers
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FRPS Pool 2003 Market Shares
A
Other 35
B
C
D
D
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Merchant Function Exit Discussions

• Goal
• Develop detailed transition plan under which DEO
  could exit merchant function
• Does not have to include proposed date certain by
  which DEO exits
• Process
• Hold several (2-4) meetings at which stakeholders
  could voice opinions on key issues
• Assume that DEO exits merchant function (i.e., do
  not debate merits up front)
• DEO develops comprehensive plan for further
  review or filing (with or without timetable)

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Fundamental Objectives

• Adequate Reliability
• System must remain reliable for default service
  and Energy Choice customers
• Acceptable Pricing
• Prices for default commodity and related services
  must be properly set
• Appropriate Oversight
• Commission must retain sufficient oversight to
  avoid unacceptable outcomes

Any exit of the merchant function must be
METHODICAL
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Perceived Stakeholder Interests
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Provider-of-Last-Resort Timeline
Hourly
Daily
lt1 Cycle
Monthly
gt1 Cycle
Seasonal
(1 Cycle)

• Intra-Day Balancing

• Daily Balancing

• Single-Day Underdelivery

• Multi-Day Underdelivery

• Supplier Default

• Monthly Balancing

• Standard Offer Service

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Potential Discussion Topics

• General Issues
• Operational Issues
• Customer Issues
• Process Issues
• Should we move forward and, if so, when?

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General Issues

• What other models are worth reviewing?
• What exactly does default service entail?
• What are the default suppliers responsibilities?
• What is DEOs role after exiting the merchant
  function?
• What oversight does the Commission have of the
  default supplier?
• What steps do we take to minimize the possibility
  of default by a default supplier?

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Operational Issues

• How do we maintain system reliability with DEO no
  longer in the GCR business?
• What capacity does DEO need to retain in its role
  as system operator?
• Is a reserve margin needed?
• How do we deal with buying/selling storage in
  place and cash-out gas?
• How do we respond to end use market changes
  (i.e., declining baseload usage)?
• Does anything change in Energy Choice?

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Customer Issues

• Who provides the default service from the
  customers perspective?
• How is the price for default service set and how
  frequently does it change?
• How is the hand-off from GCR to default service
  handled?
• Who is eligible for standard default service?
• How do we inform customers?
• How do we deal with credit and collections?

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Process Issues

• What is the optimal time of year to make the
  transition?
• Should default service be subjected to an RFP
  process and, if so, who makes the final
  selection?
• How is default service billed to customers and
  how does the supplier get paid?
• How does DEO recover the costs it incurs as
  system operator?
• Operational balancing capacity, Storage
  inventory, UFG, Unrecovered gas costs

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Suggestions?