Fuel for Thought: Unbundling? Remember Reliability

THE UNBUNDLING of rates and services for local distribution companies (LDCs) is occurring state by state and company by company. Some states have taken a comprehensive, fast track. Others have been more cautious. Our company unbundled supply from distribution for industrial and larger commercial customers years ago. So far we've chosen not to unbundle smaller commercial and residential rates and services because we're not convinced our customers would see real benefits (lower long-term prices), but they might experience decreased reliability.

Reliability can be defined as the extent to which a procedure yields the same results in repeated trials - breeding confidence in a procedure. LDCs have worked hard to overcome the curtailment days of past decades. Customers want our services and products. They want natural gas. And they have great confidence in natural gas and the industry. I'm concerned unbundling could affect the quality of perceived and actual reliability. Bottom line: Customers' needs must be met. Service must not suffer as changes are made.

LDCs have had - and many continue to have - an obligation to serve customers' needs. Some of those obligations have been statutory or regulatory in nature, but I believe we should feel an "obligation" to serve our customers' needs in the best possible way at all times.

Someone must be the supplier of last resort to ensure reliability. If marketers and suppliers fail to deliver, someone else must maintain pipeline and storage capacity, and adequate and available supplies of natural gas, to make sure reliability prevails. It is critical in the small commercial and residential markets to be certain that peak-day needs are met. Natural gas must be provided on subzero days in January when prolonged cold weather has strained systems and supplies.

After unbundling, someone must provide all components formerly provided by the LDC, and such offerings must be seamless and effortless for customers. Three areas of reliability are affected: supply, transmission and distribution. While supply and transmission reliability may fall to marketers to maintain, distribution reliability will remain the responsibility of the LDC.

Let's not forget why we are in business. I played baseball for and coached at Berea College. We learned, and taught others, that you must keep your eye on the ball to succeed. In the natural gas industry, we must do the same. The "ball" is not unbundling, or change for change's sake, or the latest management methods. The ball is customer satisfaction. We must provide outstanding customer service and reliability while always meeting customers' needs and expectations if we are to collectively "fuel the future" with natural gas.

Glenn R. Jennings is president and CEO of Delta Natural Gas Co. Inc., a Kentucky-based, investor-owned LDC.

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