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PUCO Accepts Results of Vectren’s Standard Choice Offer Auction

January 21, 2016 By Cheryl Kaften

The Public Utilities Commission of Ohio (PUCO) announced on January 13 that it had approved (Case No. 07-1285-GA-EXM) the results of Vectren Energy Delivery of Ohio’s auction for its standard choice offer (SCO).

The auction for the standard choice offer secured natural gas supplies for Vectren’s customers for one year – from April 1 through March 31, 2017 – and established a retail price adjustment of $0.12 per hundred cubic feet (ccf).

Vectren distributes natural gas to about one million business and residential customers in Indiana and Ohio. Under the SCO mechanism auction, participants bid on the right to serve specific end-use customers; thus, winning bidders establish a direct retail relationship with SCO customers.

The SCO is available to Vectren’s choice-eligible customers who have not selected an alternative supplier. Choice-eligible customers will continue to have three options: (1) to enroll with an energy choice supplier of their own selection, (2) to join a government aggregation buying group, or (3) to remain on the SCO.

Vectren’s SCO rate changes monthly and is calculated as the sum of the retail price adjustment, plus the New York Mercantile Exchange (NYMEX) month-end settlement price. The retail price adjustment is a fixed-dollar amount over the term of the SCO phase that reflects the bidders’ estimates of their incremental costs to deliver the required amount of gas from the Henry Hub, which is priced at NYMEX, to Vectren’s city gate.

On January 12, EnerNoc, Vectren’s auction manager, conducted a descending clock auction for the SCO rate. During a descending clock auction, an auctioneer calls outs prices in descending order and the first bidder to jump in gets the goods at the price at which he or she bids.

Bids were submitted by six natural gas suppliers based on fixed adjustments to the NYMEX settlement price. The names of the four winning bidders will remain confidential for 15 days, PUCO said, to protect the suppliers’ positions in contract negotiations with pipeline companies.

Each SCO customer’s bill will prominently display the name of the certified retail natural gas supplier that is responsible for providing the customer’s natural gas. Vectren will continue to deliver natural gas to all customers, offer payment plans, and handle all emergency and customer service calls.

Under the PUCO approval, Vectren has been mandated to notify all affected customers of the change to the SCO pricing methodology via a bill message or insert, within 30 days of the effective date of the tariffs.

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