Gas users in 2 counties to be wooed Sign-up period for pilot program has brokers pouncing

Deregulation in Maryland

Prince George's, Montgomery counties face opening salvo

September 03, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

In what is expected to become the opening salvo in the battle of utility deregulation in Maryland, residential customers in Prince George's and Montgomery counties will be barraged beginning later this week with options for purchasing natural gas.

The chance to switch from Washington Gas Light Co. to a bevy of competing gas suppliers stems from a pilot program approved in June by the state's Public Service Commission. Under the two-year program, 6,600 Washington Gas customers will have the opportunity to choose between a dozen qualified gas suppliers for service beginning in November. Washington Gas will continue to provide gas delivery and service.

"The idea is that customers, when given a choice, will be able to find price advantages and options that better suit their needs," said Alan Haymes, director of the state PSC's rate research and economics division.

Although various states are moving toward so-called "unbundling" of utility services -- competition that will eventually crumble the regulated, monopolistic utility system -- Maryland's pilot program represents one of the first in the nation to take solid form.

Thus far, Iowa is the only state to have experimented with a similar program. Massachusetts, Ohio, New Jersey and a raft of others are in various stages of rolling out their own gas unbundling efforts. Although Washington Gas' pilot is the first such program in Maryland, it won't be the only such effort. In Western Maryland, Columbia Gas customers also will be able in November to select alternative suppliers and in November 1997 a similar program involving 25,000 consumers will take place in the Baltimore metropolitan area, Baltimore Gas and Electric Co.'s service territory.

By early in the next decade, the Maryland PSC is expected to expand the pilot program to give all state residents the option to select their gas supplier on a permanent basis. Commercial and industrial customers have had options since last November.

Before long, most industry analysts believe, utilities will vie to capture Maryland residents' electric loyalty as well.

"Two years from now I think you'll see all commercial and industrial customers having a choice in who they buy power from, and residential customers won't be far behind," said Joe Schepis, a Washington Gas senior vice president. "Companies are moving toward being total energy suppliers."

With the sign-up period for the pilot program hitting full stride, regional and national gas brokers alike are pouncing on the Maryland pilot program both as a way to get a foot in the proverbial door and gain an education.

"More important than profit in this process will be the experience we gain," said Patricia M. Lovelady, a vice president of BNG Inc., BGE's gas brokering subsidiary. "Unbundling is snowballing. If we can fine tune our attack here, on our own turf, then it puts us in a better position when we compete in Ohio, Connecticut or other states."

To inform Washington Gas customers of their options, competitors ranging from BNG to Peco Energy Co. affiliate Horizon Energy are establishing Web pages on the Internet, setting up 800 numbers, advertising, preparing community outreach activities and preparing to send out tens of thousands of pages of direct mail.

In the case of Horizon, a subsidiary of a Philadelphia-based utility with $15 billion in assets, its electronic home page has received more than 15,000 "hits" since its creation. The company claims it has received nearly 3,000 consent forms from customers who want to buy gas from Horizon.

One technique that apparently won't be employed to lure customers on a widespread basis is telemarketing. In other words, no annoying phone calls during dinner.

Like the battle for customers' long-distance telephone service, each of the gas suppliers contends they can outdo the competition, and trim the average residential gas bill in the Washington metropolitan area of between $700 and $1,000 annually.

BNG, which hopes to sign up as many as 30 percent of the pilot program's potential customers, is offering a minimum 5 percent savings, and in some cases as much as 15 percent. Additionally, BNG is considering enticing customers with either a $50 U.S. savings bond or a certificate for groceries in the same denomination.

Horizon also is promising $50 up front, with an additional 5 percent in guaranteed savings. Utilicorp United, a $4 billion Kansas City, Mo., power concern that intends to participate in the Maryland pilot, is hoping to sway residents with the larger of $70 in cash or a 5 percent reduction in bills.

Washington Gas, meanwhile, plans to initiate "price protection" by placing a ceiling on gas costs. If metropolitan Washington has a warm winter, customer savings would increase, said Brian Alexander, a Washington Gas Energy Services Inc. official involved in the pilot planning.

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