SEMCO Choice Program Approved
SEMCO, as of last week, had yet to see any third-party marketer sign up to represent customers who wish to buy their natural gas from an alternative supplier that can offer a better price, said Francis Leider, SEMCO’s manager of corporate communications.
“We’re doing a pretty good job bringing in the gas at a good price, so they may be having a struggle finding a margin to make it worthwhile being in the game,” Leider said.
The permanent customer choice program for SEMCO, approved by the Michigan Public Service Commission on Aug. 20, replaces a limited, three-year pilot initiative that expired last spring and met with limited success.
At its peak, about 12,000 of SEMCO’s 269,000 customers statewide participated in the choice program. Participation had fallen to about 3,000 by the time the program ended in April.
Under the new program, all commercial and up to 78,000 residential customers of SEMCO are eligible to participate in a voluntary choice program beginning Oct. 1. The program expands April 1, 2003, to include up to 117,000 residential customers, and then to all SEMCO customers a year later.
Working through a third-party marketer, customers can choose an alternative supplier of natural gas that would presumably offer a lower price. SEMCO would continue to transmit the natural gas through its distribution and pipeline system, as well as service accounts and handle billing.
The Port Huron-based SEMCO Energy has more than 40,000 customers in the Holland-Zeeland area, the utility’s second-largest market.
The MPSC’s approval makes SEMCO the fourth natural gas utility to begin opening up its exclusive service territory to competition and choice, an option enjoyed now by only the largest industrial and commercial customers. More than 344,000 natural gas customers at utilities statewide have opted into choice programs, according to the MPSC.
Along with the choice program, the commission approved a new maximum natural gas rate for SEMCO of $3.82 per thousand cubic feet (Mcf) through March 2003, a 17.9 percent increase from the previous cap of $3.24 per Mcf.
The rate is based on the aggregate SEMCO believes it will pay for natural gas on the wholesale market during the year. State law allows utilities to charge no more than what they pay for gas on the wholesale level.
Even with the higher rate and the permanent choice program, Leider doubts a large number of SEMCO customer will switch to an alternative supplier, provided a third-party marketer eventually steps forward. Yet there is enough of a demand for choice from customers for SEMCO to join other gas utilities that have opened their service markets to competition.
“We do the best job we can getting the customers the best deal out there,” Leider said. “But there are always going to be some people who will try something new just to try it.”