November 28, 2000

Home gas suppliers put heat on buyers By Chris Baker THE WASHINGTON TIMES

At least six of the 14 companies authorized to supply natural gas to homes in central Maryland have quit the residential market, leaving many customers scrambling to find new providers in the newly deregulated market.

Most customers did not lose gas service when their supplier left the market, according to the Maryland Public Service Commission, which regulates utilities. In most cases, their contracts were automatically picked up by one of the incumbent suppliers in the state, Washington Gas Light Co. and Baltimore Gas and Electric Co., the agency said.

Two years after the state reduced its regulation of the industry, five companies have stopped offering residential gas service: Conectiv Energy, GasMark, Metromedia Energy, Perry Energy Services and Total Gas & Electric, the agency said.

A sixth company, AGF Direct, declared bankruptcy and ended contracts with an estimated 1,000 customers without warning, according to the commission. The companies quit the market at a time when the price of natural gas is rising and the winter is expected to be colder than last year's warmer-than-normal temperatures. Washington Gas Light Co., the gas supplier to 820,000 customers in the Washington area, including 340,000 in the District of Columbia's Maryland suburbs, said its customers should expect their heating bills to increase about 27 percent this winter.

In most instances, the suppliers terminated what were supposed to be yearlong, fixed-price contracts with customers who now must search for new contracts as choices dwindle and the cost of home heating rises. Tim Brown, spokesman for Conectiv, a Newark, Del.-based company that stopped supplying natural gas to roughly 4,000 Maryland homes this fall, said its decision to pull out of the market was due to a "change in business strategy." Since most Conectiv customers live in Delaware and Pennsylvania, it decided to focus its resources there, Mr. Brown said. Washington Gas picked up the contracts that Conectiv dropped, Mr. Brown said. Calvin Timmerman, director of rate research and economics for the Maryland Public Service Commission, said the market "is evolving. . . . It isn't a shock that there are some suppliers that have chosen to abandon the market rather than continuing to struggle in the face of losing money." The commission does not know exactly how many customers have been abandoned. But it has received complaints from about 2,000 Maryland residents who signed contracts with alternative suppliers, then were referred to their original utility when the supplier left the market.

In Maryland's D.C. suburbs, about 86,000 of Washington Gas's 340,000 residential customers had signed up to buy gas from an alternative supplier, the commission said. In the Baltimore area, about 105,600 of Baltimore Gas and Electric Co.'s 590,000 gas customers purchase gas from other companies. Mr. Timmerman said if a supplier leaves the market, a customer's service is protected, but it will lose whatever terms of the contract it had with the previous supplier. "Even if the gas supplier drops you, the gas truck is not going to stop coming to your house," Mr. Timmerman said. The natural gas market was opened to the entire state last year after two years of pilot programs.

Unlike electricity deregulation, gas suppliers are not licensed and monitored by the the commission and will not be until the it adopts new licensing procedures and rules for gas suppliers, expected early next year.

Mr. Timmerman said the commission is not rethinking its decision to deregulate the natural gas industry, stressing that the market is simply switching to a free-market system. Catherine I. Riley, the commission's chairman, said the loss of the suppliers is not unexpected. "That's part of the free market. To go to competition, you are trading off protection and regulation. It's too early to make a judgment about whether deregulation is working or not working, but we've been encouraged by the competition," she said. • This article is based in part on wire service reports.

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-- Martin Thompson (mthom1927@aol.com), November 28, 2000