HomeMy WebLinkAboutDave Pearson - NSP
BENEFITS OF NATURAL GAS UTILITY COMPETITION
TO THE PEOPLE OF PRIOR LAKE, MN
While the benefits of free enterprise have been apparent and envied throughout the
world, as the city staff and council, it is your duty to show the permanent, tangible
benefits of utility competition to the constituents you serve.
The following are reasons for allowing customer choice in Prior Lake:
o EXPANDED SERVICE AREA
Prior Lake is a growing city with land areas to develop or preserve, according to
your comprehensive community plan. Those areas being developed will see
a quicker response from two competing utilities than they would from a single utility.
I Specific To Your Community I
As the city expands through development or annexation into the surrounding townships,
the fact that two utilities are competing for customers means a quicker, more
comprehensive approach to getting natural gas into those areas. Business and
homeowners won't have to convert to propane and then back to natural gas when loads
are sufficient to bring the utilities in.
Key Thought: Competition encourages more complete utility service areas.
o BETTER CUSTOMER SERVICE
For years the people of Minnesota and virtually every other state in the nation have had
to accept the existing telephone, cable television, electric and natural gas utilities in a
given area as the only option. These monopolies had a lot to learn about customer
service. Customer satisfaction is a primary reason people shop where they do for
products and services.
I Specific To Your Community I
Northern States Power's Gas Utility participates annually in a peer panel review
with other leading natural gas utilities. The most current results, dated July, 1999, rank
NSP as the number one gas utility among those participating. The ranking is derived
from customer satisfaction, system reliability and operational efficiency measures.
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.U.S. Summary
SStatewide unbundling. active programs
. Statewide ,unbundling. implementation phase
.Pilot, programslpartialun bundlin g
IINo unbundling. cnnsidering action
ONo unbundling
Retail Unbundling - United States Summary
Overview: State programs to allow residential natural gas users to select their gas
suppliers are spreading throughout the country. However, the availability,
characteristics, and participation rates of these "customer choice" programs vary widely
across states. Three states (New Mexico, New York, and West Virginia) allow all
residential consumers to choose their own natural gas suppliers, while eight states have
begun to implement statewide programs. Another nine states and the District of
Columbia have pilot or partial unbundling programs in place, and one state will start its
pilot in November 1999. An additional 11 states are considering action on customer
choice, while 18 states have thus far taken no action.
Consumer reaction to these choice programs has been mixed. In some states, such as
Nebraska, 97 percent of the eligible residential and commercial customers are electing
to choose their own suppliers. In other states, such as Indiana and New York,
participation is 2 percent or less of those eligible. Large commercial and industrial
consumers have had the option of purchasing the natural gas commodity separately
from transportation and other services for many years. State regulators and lawmakers,
who are responsible for designing and implementing retail restructuring programs, have
moved more slowly in implementing choice programs for residential and small-volume
commercial customers, traditionally known as "core" consumers, until they could ensure
reliable service. In several cases, a local distribution company has initiated the
development of a choice program for its customers.
EIA Data: In 1997, the United States had 56,186,958 residential and 5,004,384
commercial customers. They consumed 4,984 and 3,219 billion cubic feet of natural
gas, respectively. The average prices paid for natural gas purchased from local
distribution companies by residential and commercial customers were $6.94 and $5.79
per thousand cubic feet, respectively. The average city gate price in the United States
was $3.66 per thousand cubic feet-.
Eligibility/Participation in Retail Choice Programs:
Status as of June 1999: Number of Residential Customers
Eligible Participating
Category/State
T otal1997
1 ~otar;~rcentof1997 ot ercent of ~~rcent of 1997
I otal I Eligible otal
tatewide Unbundling: Active Programs
New Mexico 443,167 443, 100 00 0
167
4,07 58,4
Nft York 4,077,385 7,38 100 1.4 1.4
. 5 88
West Virginia 362,432 1362, 100 58 ~102 10.02
432
14,88 ~8,5
Subtotal 4,882,984 12,98 100 1.2 1.2
4 46
tatewide Unbundling: Implementation Phase
1,26 1a39,
Georgia 1,553,948 2,50 181.2 66.5 54.0
5 000
Maryland 890,195 384, 43.2 83,7 21.8 9.4
362 75
Massachusetts 1,204,494 ~3,0 6.9 18,7 ;22.6 1.6
00 67
New Jersey 2,193,629 154,1 ~.5 54,1 100 12.5
00 00
1,71 1456,
Ohio 3,041,948 6,87 156.4 '6.6 15.0
3 058
~,50 1,45
Subtotal 8,884,214 b,84 139.4 1,70 41.5 16.3
0 0
Pilot Programs/Partial Unbundling
D.C. 135,000 135, 100 7,50 5.6 ~.6
000 0
Illinois 3,521,707 ~7,0 b.8 ~,10 30.0 0.2
00 0
Indiana 1,509,142 ~10, 40.4 16,00 1.0 0.4
000 4
Michigan 2,859,483 NA - 192, '- 6.7
660
Nebraska 444,970 76,7 17.2 740 ~.5 16.6
16 00
~irginia 812,866 53,0 ~.5 16,0 30.2 '.0
00 00
iNisconsin 470,045 ~O,O 4.3 1,52 7.6 0.3
00 6
Subtotal 9,753,213 1"921 "'13.4 305, "'12.3 3.1
,716 790
9,3 1,81
h"otal Programs 23,520,411 ~5,5 '*45.0 16,03 "'17.5 17.7
40 6
U.S. 1997 Total 56,186,958 - I- - l- I-
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*Excludes Michigan.
NA= Not available. - = Not applicable.
Note: Three other states (Califomia, Colorado, and Pennsylvania) are in the implementation phase of
statewide unbundling, but eligibility and participation data are not available. Also, four other states
(Delaware (pilot begins in November 1999), Montana, South Dakota, and Wyoming) have pilot programs
or partial unbundling, but residential data are not available.
Sources: Total 1997: Energy Information Administration, Natural Gas Annual 1997 (October 1998).
Eligibility and Participation: State public utility commissions (June 1999).
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NSP Gas has a long history of service
NSP Gas takes pride in the quantity as
well as the quality of our work. In the most
recent construction season, we installed
nearly 500 miles of new and replacement
gas main and 15,700 new and replacement
service lines. Our distribution system now
consists of 136 miles of high-pressure stee
mains and 8,898 miles of (mostly plastic)
distribution main.
Our superior operations
give us a competitive edge
leaders in gas supply and reliability
Our expertise and unique supply
portfolio give us:
. Experience in planning and
purchasing natural gas supply
and transportation.
. Flexibility in delivering gas.
We're
NSP Gas purchases supplies of natural gas
from major producing basins in North
America -located in mid-continent states
(Texas, Oklahoma and Kansas), the Rocky
Mountains, North Dakota, New Mexico,
and Alberta, Canada - via more than
50 natural gas suppliers.
Northern States Power Company (NSP)
has been supplying natural gas to customers
for 70 years but our history reaches all
the way back to 1856. That's the year
our predecessor, the St. Paul Gas Light
Company, was founded with just 72
customers. In 1926, that company was
purchased by NSP and eventually became
a separate business unit called NSP Gas.
. Reliability during adverse
weather conditions.
lines.
NSP crews keep lawn damage to a minimum when installing natural gas
NSP Gas uses a competitive bidding
process to ensure that gas supplies are
appropriately priced. Index-based pricing
mechanisms ensure that NSP Gas'
products will remain responsive in a
changing market. That translates to
competitive prices and reliable supply
now and into the future.
NSP Gas was one of the fIrst utilities in
the nation to promote and participate in a
one-call notifIcation system for locating
underground facilities. This breakthrough
system, along with aggressive public
awareness advertising, has allowed
us to greatly reducer.. e caused
by excavators.
NSP <Jm<' focus on : _ safety has
allowed us to reduce our OSHA incidents
rate (number of accidents divided by
hours worked) each of the last four years.
.
is
NSP Gas' leak survey program exceeds
U.S. Department of Transportation
requirements and allows NSP Gas to
be proactive in leak repair. This expertise
has led to greater customer satisfaction
through improved scheduling and
communication efforts.
NSP Gas' safety record
second to none
NSP Gas offers low-cost energy
now and into the next century
NSP Gas offers some of the lowest-priced
gas in the country. According to a recent
American Gas Association report, NSP
Gas' commercial gas prices are lower than
70 percent of natural gas utilities in the
United States. On the residential side,
an AGA market survey confirmed that NSP
Gas' price was lower than 90 percent of the
natural gas utilities that reported price data.
Our strong and positive relationship with
local unions has allowed us to develop a
flexible workforce and position ourselves
as the industry leader in low-cost, quality
installation and construction practices.
The Gas Utility Peer Panel, which was
established in 1994 and consists of 30
gas distribution companies from across
the country, has consistently ranked NSP
Gas fIrst or second in low-cost construction
and first in customer satisfaction.
Healthy relationships with contractors
and suppliers is another key component
of providing affordable, reliable services
that continue to result in tremendous
customer satisfaction.
/"\
NSP Gas also requires ongoing training of
all fIeld personnel, including our contractors,
to ensure the highest possible installation
standards. In addition, we conduct random
audits to ensure compliance with our strict
construction criteria.
NSP Gas was selected by the American
Gas Association (AGA) to host the 1998
Best Practice Roundtable on joint trench
installation, a cost- and time-efficient method
of installing cable Tv, telephone, gas and
electric facilities in one trench. We were rated
number one among the 72 companies who
submitted data in the categories of lowest-cost
provider and best construction methods.
The NSP Gas nescott plant
ensures reliable delivery of
natural gas.
By working very closely with the
communities we serve and adhering
to strict construction standards, we've
been able to effectively modernize our
transportation and distribution system
while serving additional customers and
maintaining high levels of customer and
employee satisfaction. For example, by
paying close attention to a city's construction
schedule, NSP Gas is able to greatly reduce
restoration costs and keep construction
inconveniences to a minimum.
Lower costs due to economies
of scale and diversity of supply.
innovative
Opportunities for
new services.
.
.
NSP Gas uses eight different pipelines
and four storage companies to create a grid
that keeps costs low and reliability high.
Underground storage capability and NSP's
Liquefied Natural Gas (LNG) and propane
air plants further ensure that we can reliably
meet our customers' needs, even during
the most extreme weather conditions.
NSP Gas purchases, transports and
distributes clean, reliable, low-cost
natural gas to more than 450,000
industrial, commercial and residential
customers in the Upper Midwest and
Arizona. NSP Gas offers competitively
priced products and services designed
to provide maximum value while meeting
the different needs of thousands of
individual and corporate customers.
Gas Used by NSP Gas
Gulf of Mexico
Sources of Natural
Pipelines
Supply basins
.
NSP distributes law-cost natural
gas to nearly half a million
customers in the Upper Midwest
and Arizona.
NSP Gas is a leader
in developing new
markets and services
Since the early 1980s, our
aggressive approach to
developing new products and
services for emerging markets
has enabled us to expand our
gas system from 276,000
customers in 1981 to over
450,000 today.
Our response to change
is swift and sure
Throughout the 1980s and culminating
in 1993, a national gas market was
created when Federal Energy Regulatory
~ommission (FERC) Order 636 fully
unbundled the interstate pipelines'
monopoly on supply and transmission
functions. This changed the role ofNSP
Gas, which is a Local Distribution
Company (LDC).
In 1994, we expanded into Minnesota's
Brainerd Lakes area. Roughly 9,000
customers in this northern Minnesota region
are now enjoying the benefits of low-cost
natural gas. This $23 million project involved
laying more than 500 miles of gas main
pipeline to serve customers in 19 cities
and townships.
NSP Gas is a business partner
you can depend on
NSP Gas continues to grow through
acquisition and development of new
business opportunities. In 1998, NSP
purchased Black Mountain Gas Company
of Arizona and Natural Gas, Inc. of
Wisconsin, two small LDCs.
This industry restructuring allowed
LDCs the opportunity to make their
own arrangements for gas supply and
transportation services. NSP Gas executed
agreements with its pipeline and natural
gas suppliers to ensure reliable fIrm
deliveries at the most economic prices,
and developed a reliable and flexible
gas resource portfolio that was ( and is)
adaptable to a changing market and
regulatory environment. NSP Gas is well
positioned to respond to further industry
restructuring, which should allow us to
remain the natural gas supplier of choice
for our retail customers.
We're fiercely committed to providing
products and services of the highest
quality at the most competitive prices
possible. What's just as important,
however, is our determination to forge
strong, long-term relationships with our
customers that enable all of us to grow
and succeed through imagination,
innovation and a focus on excellence.
NSP Gas has the energy, the expertise
and the enthusiasm to help your business
meet the challenges that lie ahead in an
ever-changing global marketplace.
Gas '"
NSP Gas conservation programs reduce customers - monthly gas bills.
Naturally the best choice