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| To amend sections 4929.01 and 4929.02 and to enact | 1 |
| sections 4929.021 and 4929.022 of the Revised Code | 2 |
| to change state policy regarding natural gas | 3 |
| competition, to require assessments on retail | 4 |
| natural gas suppliers for subsidies granted in | 5 |
| retail auctions, and to require the assessments to | 6 |
| be distributed to nonmercantile customers. | 7 |
| Section 1. That sections 4929.01 and 4929.02 be amended and | 8 |
| sections 4929.021 and 4929.022 of the Revised Code be enacted to | 9 |
| read as follows: | 10 |
| Sec. 4929.01. As used in this chapter: | 11 |
| (A) "Alternative rate plan" means a method, alternate to the | 12 |
| method of section 4909.15 of the Revised Code, for establishing | 13 |
| rates and charges, under which rates and charges may be | 14 |
| established for a commodity sales service or ancillary service | 15 |
| that is not exempt pursuant to section 4929.04 of the Revised Code | 16 |
| or for a distribution service. Alternative rate plans may include, | 17 |
| but are not limited to, methods that provide adequate and reliable | 18 |
| natural gas services and goods in this state; minimize the costs | 19 |
| and time expended in the regulatory process; tend to assess the | 20 |
| costs of any natural gas service or goods to the entity, service, | 21 |
| or goods that cause such costs to be incurred; afford rate | 22 |
| stability; promote and reward efficiency, quality of service, or | 23 |
| cost containment by a natural gas company; provide sufficient | 24 |
| flexibility and incentives to the natural gas industry to achieve | 25 |
| high quality, technologically advanced, and readily available | 26 |
| natural gas services and goods at just and reasonable rates and | 27 |
| charges; or establish revenue decoupling mechanisms. Alternative | 28 |
| rate plans also may include, but are not limited to, automatic | 29 |
| adjustments based on a specified index or changes in a specified | 30 |
| cost or costs. | 31 |
| (B) "Ancillary service" means a service that is ancillary to | 32 |
| the receipt or delivery of natural gas to consumers, including, | 33 |
| but not limited to, storage, pooling, balancing, and transmission. | 34 |
| (C) "Commodity sales service" means the sale of natural gas | 35 |
| to consumers, exclusive of any distribution or ancillary service. | 36 |
| (D) "Comparable service" means any regulated service or goods | 37 |
| whose availability, quality, price, terms, and conditions are the | 38 |
| same as or better than those of the services or goods that the | 39 |
| natural gas company provides to a person with which it is | 40 |
| affiliated or which it controls, or, as to any consumer, that the | 41 |
| natural gas company offers to that consumer as part of a bundled | 42 |
| service that includes both regulated and exempt services or goods. | 43 |
| (E) "Consumer" means any person or association of persons | 44 |
| purchasing, delivering, storing, or transporting, or seeking to | 45 |
| purchase, deliver, store, or transport, natural gas, including | 46 |
| industrial consumers, commercial consumers, and residential | 47 |
| consumers, but not including natural gas companies. | 48 |
| (F) "Distribution service" means the delivery of natural gas | 49 |
| to a consumer at the consumer's facilities, by and through the | 50 |
| instrumentalities and facilities of a natural gas company, | 51 |
| regardless of the party having title to the natural gas. | 52 |
| (G) "Natural gas company" means a natural gas company, as | 53 |
| defined in section 4905.03 of the Revised Code, that is a public | 54 |
| utility as defined in section 4905.02 of the Revised Code and | 55 |
| excludes a retail natural gas supplier. | 56 |
| (H) "Person," except as provided in division (N) of this | 57 |
| section, has the same meaning as in section 1.59 of the Revised | 58 |
| Code, and includes this state and any political subdivision, | 59 |
| agency, or other instrumentality of this state and includes the | 60 |
| United States and any agency or other instrumentality of the | 61 |
| United States. | 62 |
| (I) "Billing or collection agent" means a fully independent | 63 |
| agent, not affiliated with or otherwise controlled by a retail | 64 |
| natural gas supplier or governmental aggregator subject to | 65 |
| certification under section 4929.20 of the Revised Code, to the | 66 |
| extent that the agent is under contract with such supplier or | 67 |
| aggregator solely to provide billing and collection for | 68 |
| competitive retail natural gas service on behalf of the supplier | 69 |
| or aggregator. | 70 |
| (J) "Competitive retail natural gas service" means any retail | 71 |
| natural gas service that may be competitively offered to consumers | 72 |
| in this state as a result of revised schedules approved under | 73 |
| division (C) of section 4929.29 of the Revised Code, a rule or | 74 |
| order adopted or issued by the public utilities commission under | 75 |
| Chapter 4905. of the Revised Code, or an exemption granted by the | 76 |
| commission under sections 4929.04 to 4929.08 of the Revised Code. | 77 |
| (K) "Governmental aggregator" means either of the following: | 78 |
| (1) A legislative authority of a municipal corporation, a | 79 |
| board of township trustees, or a board of county commissioners | 80 |
| acting exclusively under section 4929.26 or 4929.27 of the Revised | 81 |
| Code as an aggregator for the provision of competitive retail | 82 |
| natural gas service; | 83 |
| (2) A municipal corporation acting exclusively under Section | 84 |
| 4 of Article XVIII, Ohio Constitution, as an aggregator for the | 85 |
| provision of competitive retail natural gas service. | 86 |
| (L)(1) "Mercantile customer" means a customer that consumes, | 87 |
| other than for residential use, more than five hundred thousand | 88 |
| cubic feet of natural gas per year at a single location within | 89 |
| this state or consumes natural gas, other than for residential | 90 |
| use, as part of an undertaking having more than three locations | 91 |
| within or outside of this state. "Mercantile customer" excludes a | 92 |
| customer for which a declaration under division (L)(2) of this | 93 |
| section is in effect pursuant to that division. | 94 |
| (2) A not-for-profit customer that consumes, other than for | 95 |
| residential use, more than five hundred thousand cubic feet of | 96 |
| natural gas per year at a single location within this state or | 97 |
| consumes natural gas, other than for residential use, as part of | 98 |
| an undertaking having more than three locations within or outside | 99 |
| this state may file a declaration under division (L)(2) of this | 100 |
| section with the public utilities commission. The declaration | 101 |
| shall take effect upon the date of filing, and by virtue of the | 102 |
| declaration, the customer is not a mercantile customer for the | 103 |
| purposes of this section and sections 4929.20 to 4929.29 of the | 104 |
| Revised Code or the purposes of a governmental natural gas | 105 |
| aggregation or arrangement or other contract entered into after | 106 |
| the declaration's effective date for the supply or arranging of | 107 |
| the supply of natural gas to the customer to a location within | 108 |
| this state. The customer may file a rescission of the declaration | 109 |
| with the commission at any time. The rescission shall not affect | 110 |
| any governmental natural gas aggregation or arrangement or other | 111 |
| contract entered into by the customer prior to the date of the | 112 |
| filing of the rescission and shall have effect only with respect | 113 |
| to any subsequent such aggregation or arrangement or other | 114 |
| contract. The commission shall prescribe rules under section | 115 |
| 4929.10 of the Revised Code specifying the form of the declaration | 116 |
| or a rescission and procedures by which a declaration or | 117 |
| rescission may be filed. | 118 |
| (M) "Retail natural gas service" means commodity sales | 119 |
| service, ancillary service, natural gas aggregation service, | 120 |
| natural gas marketing service, or natural gas brokerage service. | 121 |
| (N) "Retail natural gas supplier" means any person, as | 122 |
| defined in section 1.59 of the Revised Code, that is engaged on a | 123 |
| for-profit or not-for-profit basis in the business of supplying or | 124 |
| arranging for the supply of a competitive retail natural gas | 125 |
| service to consumers in this state that are not mercantile | 126 |
| customers. "Retail natural gas supplier" includes a marketer, | 127 |
| broker, or aggregator, but excludes a natural gas company, a | 128 |
| governmental aggregator as defined in division (K)(1) or (2) of | 129 |
| this section, an entity described in division (A)(2) or (3) of | 130 |
| section 4905.02 of the Revised Code, or a billing or collection | 131 |
| agent, and excludes a producer or gatherer of gas to the extent | 132 |
| such producer or gatherer is not a natural gas company under | 133 |
| section 4905.03 of the Revised Code. | 134 |
| (O) "Revenue decoupling mechanism" means a rate design or | 135 |
| other cost recovery mechanism that provides recovery of the fixed | 136 |
| costs of service and a fair and reasonable rate of return, | 137 |
| irrespective of system throughput or volumetric sales. | 138 |
| (P) "Standard choice offer" means a default commodity sales | 139 |
| service provided by a retail natural gas supplier. | 140 |
| Sec. 4929.02. (A) It is the policy of this state to, | 141 |
| throughout this state: | 142 |
| (1) Promote the availability to consumers of adequate, | 143 |
| reliable, and reasonably priced natural gas services and goods; | 144 |
| (2) Promote the availability of unbundled and comparable | 145 |
| natural gas services and goods that provide wholesale and retail | 146 |
| consumers with the supplier, price, terms, conditions, and quality | 147 |
| options they elect to meet their respective needs; | 148 |
| (3) Promote diversity of natural gas supplies and suppliers, | 149 |
| by giving consumers effective choices over the selection of those | 150 |
| supplies and suppliers; | 151 |
| (4) Encourage innovation and market access for cost-effective | 152 |
| supply- and demand-side natural gas services and goods; | 153 |
| (5) Encourage cost-effective and efficient access to | 154 |
| information regarding the operation of the distribution systems of | 155 |
| natural gas companies in order to promote effective customer | 156 |
| choice of natural gas services and goods; | 157 |
| (6) Recognize the continuing emergence of competitive natural | 158 |
| gas markets through the development and implementation of flexible | 159 |
| regulatory treatment; | 160 |
| (7) Promote an expeditious transition to the provision of | 161 |
| natural gas services and goods in a manner that achieves effective | 162 |
| competition and transactions between willing buyers and willing | 163 |
| sellers to reduce or eliminate the need for regulation of natural | 164 |
| gas services and goods under Chapters 4905. and 4909. of the | 165 |
| Revised Code; | 166 |
| (8) Promote effective competition in the provision of natural | 167 |
| gas services and goods by avoiding subsidies flowing to or from | 168 |
| regulated natural gas services and goods, which includes avoiding | 169 |
| subsidies of standard choice offers provided through retail | 170 |
| auctions; | 171 |
| (9) Ensure that the risks and rewards of a natural gas | 172 |
| company's offering of nonjurisdictional and exempt services and | 173 |
| goods do not affect the rates, prices, terms, or conditions of | 174 |
| nonexempt, regulated services and goods of a natural gas company | 175 |
| and do not affect the financial capability of a natural gas | 176 |
| company to comply with the policy of this state specified in this | 177 |
| section; | 178 |
| (10) Facilitate the state's competitiveness in the global | 179 |
| economy; | 180 |
| (11) Facilitate additional choices for the supply of natural | 181 |
| gas for residential consumers, including aggregation; | 182 |
| (12) Promote an alignment of natural gas company interests | 183 |
| with consumer interest in energy efficiency and energy | 184 |
| conservation. | 185 |
| (B) The public utilities commission and the office of the | 186 |
| consumers' counsel shall follow the policy specified in this | 187 |
| section in exercising their respective authorities relative to | 188 |
| sections 4929.03 to 4929.30 of the Revised Code. | 189 |
| (C) Nothing in Chapter 4929. of the Revised Code shall be | 190 |
| construed to alter the public utilities commission's construction | 191 |
| or application of division (E) of section 4905.03 of the Revised | 192 |
| Code. | 193 |
| Sec. 4929.021. Subsidies of standard choice offers provided | 194 |
| through retail auctions shall be avoided. These subsidies include | 195 |
| the avoidance of costs normally incurred in acquiring retail | 196 |
| natural gas customers and in serving customers as a retail natural | 197 |
| gas supplier under this chapter and rules adopted under it. These | 198 |
| avoided costs include the following: | 199 |
| (A) Regulatory-compliance costs; | 200 |
| (B) Enrollment costs; | 201 |
| (C) Contracting costs; | 202 |
| (D) Costs of notice requirements; | 203 |
| (E) Customer-acquisition costs; | 204 |
| (F) Other costs related to the provision of retail natural | 205 |
| gas service. | 206 |
| Sec. 4929.022. (A) Not later than ninety days after the | 207 |
| effective date of this section, the public utilities commission | 208 |
| shall begin a process to examine in retail auctions conducted | 209 |
| after the effective date of this section any subsidies of standard | 210 |
| choice offers, as those subsidies are described in section | 211 |
| 4929.021 of the Revised Code. If the commission determines that | 212 |
| any such subsidies are granted in a retail auction, the commission | 213 |
| shall quantify those subsidies and make an assessment on each | 214 |
| retail natural gas supplier that is granted those subsidies. Each | 215 |
| assessment shall be based on the subsidies granted to a particular | 216 |
| retail natural gas supplier and shall be made on a per-customer | 217 |
| basis. | 218 |
| (B) Each assessment made under division (A) of this section | 219 |
| shall be paid by the retail natural gas supplier to the natural | 220 |
| gas company that conducted the retail auction in which the | 221 |
| subsidies were granted. Each natural gas company shall distribute | 222 |
| the total of all assessments paid to it under this division to all | 223 |
| of the company's customers who are not mercantile customers. The | 224 |
| distribution shall be made through a commission-determined | 225 |
| mechanism. | 226 |
| Section 2. That existing sections 4929.01 and 4929.02 of the | 227 |
| Revised Code are hereby repealed. | 228 |