Retail Unbundling

Retail Unbundling - Nebraska
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Status: The State has one unbundling program for residential gas customers.

Overview: Almost all of the residential and commercial customers in Source Gas LLC's (SourceGas, formerly Kinder Morgan, Inc.) Nebraska service areas are participating in the State's only customer choice program. Kinder Morgan, which sold its natural gas utility assets in 2007 to SourceGas, initiated its Nebraska Choice Gas Program in April 1998 as a proactive step to unbundling natural gas services in the State. In the 11th year of the program, residential and small commercial customers in virtually all of the 180 Nebraska communities served by the company were eligible to choose among three suppliers for their natural gas, one of which is the company's gas marketing division, SourceGas Energy Services. The other participating suppliers are ONEOK Energy Marketing Company and Public Alliance for Community Energy (known as ACE), a municipally owned, not-for-profit organization. Customers were required to make their natural gas supplier selection by May 1, 2008, for service from June 1, 2008, through May 31, 2009. Most customers in the program (56 percent) chose to purchase gas from SourceGas Energy Services.

Until passage of the State Natural Gas Regulation Act in May 2003, Nebraska had a somewhat unique situation in which individual communities and municipalities, rather than a statewide regulatory body, regulated retail natural gas service. Since January 2004, the Nebraska Public Service Commission has the responsibility for overseeing the rates charged for natural gas service and the terms and conditions of service. The commission opened a docket in June 2005 to investigate and adopt policies for administration of Kinder Morgan's consumer choice program and any other choice programs that might be offered by jurisdictional utilities for natural gas service in the State. In 2006, new rules were drafted regarding meter errors, consumer choice programs, aggregators and suppliers, and emergency curtailment plans. The commission adopted the third set of proposed rules on October 7, 2008. The rules clarified the commission's role regarding service area changes, clarified supplier and aggregator certification procedures, and specified procedures related to billing adjustments for slow or fast meters and other meter errors.

EIA State Data: In 2007, Nebraska had 494,005 residential and 55,761 commercial customers. They consumed approximately 36 and 30 billion cubic feet of natural gas, respectively. The average prices residential and commercial customers paid for natural gas from local distribution companies were $11.15 and $9.16 per thousand cubic feet, respectively.

Eligibility and Participation in Retail Choice Programs:

Eligibility and Participation by Customer Class, December 2008

Customer Type	2007 Customer Total	Eligible December 2008		Participating December 2008
Customer Type	2007 Customer Total	Total	Percent of 2007 Customer Total	Total	Percent of Eligible	Percent of 2007 Customer Total
Residential	494,005	70,378	14.2	70,378	100	14.2
Commercial	55,761	12,420	22.3	12,420	100	22.3
Total	549,766	82,798	15.1	82,798	100	15.1
Sources: 2007 Customer Total: Energy Information Administration, Natural Gas Annual 2007 (January 2009). Eligibility and Participation: •Total–Source Gas LLC (December 2008). •Residential and Commercial–SourceGas estimates and 2007 data reported on Form EIA-176, "Annual Report of Natural and Supplemental Gas Supply and Disposition" (primary data source for the Natural Gas Annual), which indicate that residential customers account for about 85 percent of the total.

Regulatory and Legislative Actions on Retail Unbundling

Summary: Individual communities and municipalities, rather than a statewide regulatory body, regulated retail natural gas service in Nebraska until passage of the State Natural Gas Regulation Act, effective as of January 1, 2004. In setting up its Nebraska Choice Gas Program, Kinder Morgan, Inc. (formerly known as KN Energy) reached an agreement with each municipality. The company agreed to fund formation of a Municipal Oversight Committee, which would recommend any changes needed in the program and serve as a mediator in any disputes. Nearly all the communities in the company's service territory voted to participate in the choice program.

The State Natural Gas Regulation Act is modeled after laws governing natural gas regulation in Kansas and repeals the Municipal Natural Gas Regulation Act, which had given regulatory authority of natural gas utilities to local governments. The act includes an option for municipalities and LDCs to negotiate rates for natural gas, but otherwise the Nebraska Public Service Commission (PSC) has the responsibility for overseeing the rates charged for natural gas service and also oversight of the terms and conditions of service. Utilities operating in the State must obtain a certificate of public convenience from the PSC. The PSC also has authority to insure that gas marketers operating in the State are properly qualified and capable of providing service. The law also creates a 5-member citizen's utility ratepayer board to represent consumers in rate proceedings.

Regulatory and Legislative Actions

Legislation	04/06	Governor Signs Law Amending Natural Gas Pipeline Dispute Statutes and Issues Regarding Service Territories (Bill 1249). The legislation becomes effective on July 14, 2006, and will require new PSC rules.
	05/03	Governor Signs State Natural Gas Regulation Act (Bill 790). The act repeals the Municipal Natural Gas Regulation Act and creates a new regulatory structure whereby the Nebraska Public Service Commission will regulate natural gas utilities, assuming responsibility for rates charged for gas service and also the terms and conditions of service. The act includes an option for municipalities and LDCs to negotiate rates; otherwise the PSC will do so. Public utilities doing business in the State must obtain a certificate of public convenience from the PSC. The act becomes effective on January 1, 2004.
Regulatory Action	10/08	Third Set of Proposed Rules Adopted. The rules clarified the commission's role regarding service area changes, clarified supplier and aggregator certification procedures, and specified procedures related to billing adjustments for slow or fast meters and other meter errors.
	04/08	Third Set of Proposed Rules Released. The PSC requests comments by May 21, 2008, on the third set of proposed rules regarding meter errors, consumer choice programs, aggregators and suppliers, and emergency curtailment plans. A hearing is set for May 28, 2008.
	11/07	New Supplier Certified. The PSC certifies Coral Energy Resources, L.P., as a competitive gas supplier.
	10/07	New Supplier Certified. The PSC certifies Tenaska Marketing Ventures, Omaha, as a competitive gas supplier.
	08/07	PSC Sets October Deadline for Comments on Proposed Rules. The PSC asks for comments on proposed rules for Legislative Bill 1249 and rules regarding meter errors, consumer choice programs, aggregators and suppliers, and emergency curtailment plans. A hearing date was set for October 16, 2007.
	07/07	New Supplier Certified. The PSC certifies CenterPoint Energy Services, Inc., as a competitive gas supplier.
	05/07	New Supplier Certified. The PSC certifies Constellation NewEnergy-Gas Division LLC as a competitive gas supplier.
	02/07	PSC Approves Kinder Morgan Sale. The PSC approves transfer of Kinder Morgan, Inc.'s Nebraska Certificate of Convenience and utility assets to Source Gas Distribution LLC and change of control of Source Gas Distribution LLC from Kinder Morgan, Inc., to Source Gas LLC.
	12/06	PSC Approves Kinder Morgan Rate Increase and Settlement with the Public Advocate. The PSC authorized Kinder Morgan to continue collecting a Choice Gas Program supplier fee that will be adjusted annually beginning May 31, 2007. The PSC approved an annual base rate increase that phases in higher customer charges while lowering volumetric charges. All 11 rate areas are merged into one. New rates take effect Jan. 1, 2007, and will be adjusted on April 1 of 2008 and 2009. The PSC also authorized a new small commercial customer class.
	10/06	PSC Opens Docket to Adopt Rules for Legislative Bill 1249 and Add Rules Regarding Meter Errors, Consumer Choice Programs, Aggregators and Suppliers, and Emergency Curtailment Plans. Comments on the proposed amendments are due by November 15, 2006, and a public hearing will be scheduled at a later date.
	08/06	PSC Investigates Interaction Among Aggregators, Suppliers, and Utilities Offering Customer Choice Programs. PSC determined that utilities should include an aggregator code of conduct in their tariffs and all aggregators must be certified by the PSC. Also choice customers who choose to use an aggregator should be treated no differently than those making a choice personally.
	03/06	PSC Rejects Ace's Application to Become Competitive Gas Supplier for Entire State. The Public Alliance for Community Energy (ACE) is a collection of 66 communities and one public power district formed through interlocal agreements. Although ACE wanted to expand its supplier services beyond the Kinder Morgan service area, the PSC ruled that as a political subdivision ACE does not have the power to function outside its area.
	06/05	PSC Opens Docket for Administration of Consumer Choice Programs. PSC began an investigation into setting rules for administering consumer choice programs in the State. The investigation will explore the following issues: adoption of a standard code of conduct for utilities offering consumer choice programs; educational information about choice for consumers; annual reporting requirements for utilities offering choice and for participating marketers; and whether and how to calculate cost comparisons among suppliers for the benefit of consumers.
	07/04	PSC Proposes Affiliate Rules. ACE submits comments supporting rules, and notes abuses when consumers are unable to differentiate between parent and affiliate.
Municipality/ Community Action	05/07	Customers Select Suppliers for 2007-2008 Choice Program. Enrollment ended on May 1, 2007. Selections were as follows: SourceGas Energy Services: 46,523; Public Alliance for Community Energy: 28,200; and ONEOK Energy Marketing Company: 7,586.
	05/06	Customers Select Suppliers for 2006-2007 Choice Program. Enrollment ended on May 1, 2006. Selections were as follows: Kinder Morgan Choice Gas Supply: 49,829; Public Alliance for Community Energy: 26,714; and ONEOK Energy Marketing Company: 7,662.
	05/05	Customers Select Suppliers for 2005-2006 Choice Program. Balloting to select a supplier for the 2005 choice program occurred in April 2005. Selections were as follows: Kinder Morgan Choice Gas Supply: 55,153; Public Alliance for Community Energy: 23,882; and ONEOK Energy Marketing: 6,683.
	05/04	Customers Select Suppliers for 2004-2005 Choice Program. Balloting to select a supplier for the 2004 choice program occurred in April 2004. Selections were as follows: Kinder Morgan Choice Gas Supply: 60,004; Public Alliance for Community Energy: 22,340; and ONEOK Gas Marketing: 4,984.