Testimony from suppliers opposing Kinder Morgan's administration of the Choice Gas program and the continuation of the regulated rate option dominated the final hours of the Public Service Commission's public hearing on the program's future.

Representatives from Wyoming Community Gas, Midwest United Energy and Public Alliance for Community Gas (ACE) presented testimony Tuesday and Wednesday saying the program should continue with some modifications.

Bobbe Fitzhugh, chairwoman of Wyoming Community Gas, said that one of the chief problems with the existing Choice Gas program is Kinder Morgan's dominance of program education, its selection process and billing.

She said that Kinder Morgan's control over these aspects makes the program appear to be biased in favor of the company in the eyes of customers.

To alleviate this concern, a third party must be put in place to fulfill these vital roles, Fitzhugh said at the end of Tuesday's session.

The Public Service Commission (PSC) is holding the hearings in order to determine whether the Choice Gas program, spearheaded by Kinder Morgan, should continue, and if so, what changes should be made, PSC Chairman Steve Ellenbecker said Monday.

Gary Lay, ACE's chief operating officer, agreed with Fitzhugh that Kinder Morgan should relinquish its role as chief educator in the Choice Gas program and that a third party should take over the role. He suggested that the PSC should play this part.

Currently, Kinder Morgan charges a $1 administrative fee each month to every Choice Gas customer in order to run the Choice Gas program.

Under Lay's plan, the PSC would be given 75 cents of every administrative dollar that Kinder Morgan collects. The money would be used for customer education. The remaining 25 cents would be kept by the company for such other administrative duties as billing.

This administrative charge was one of several problems that James Krebs, chief executive officer for Midwest United Energy, had with the way Kinder Morgan runs the program.

Krebs fears the $1 fee could be used by the company for potential profit, rather than education, and he suggested the PSC audit Kinder Morgan to determine the cost of administering the Choice Gas program and compare it to the administration charge collected.

But Daniel Watson, president of Kinder Morgan Retail, said Krebs has nothing to fear in this regard.

Kinder Morgan has been spending around $1.98 on program administration for every dollar taken in to pay for it, Watson said.

The company is not planning to ask the commission for a hike on this administrative fee and Kinder Morgan will work to cut administrative costs internally, he said.

Watson added that if the education, billing and selection process of the Choice Gas program fell into the hands of a third party , it would be an administrative nightmare, since these processes are deeply intertwined with the distribution and other utility functions Kinder Morgan carries out.

Administrative costs would also skyrocket if a third party took over these functions, and that would lead to an increase in the $1 fee, Watson warned.

Lay and Krebs also said they had a problem with the way Kinder Morgan presented itself on the program's selection forms and in educational material.

Both men testified that customers could easily be confused and influenced to choose Kinder Morgan's service because the same company runs the Choice Gas program and is one of the competing suppliers for the program.

"There needs to be a significant differentiation between Kinder Morgan the utility and Kinder Morgan the supplier," Lay said.

The continuation of having a regulated rate in the program was another point of contention for both Lay and Krebs.

The inclusion of the regulated rate has been endorsed by Kinder Morgan for an indefinite period. With a regulated rate, the customer's gas is provided in a manner much like it was before the days of Choice Gas

The addition of a regulated rate option is not conducive to open-market competition because Kinder Morgan is the only entity that can offer the rate, Krebs said.

"If Kinder Morgan can offer both unregulated Choice Gas rates and the regulated rate, it is possible that the company can 'game the system' by offering lower-priced gas to Choice Gas …customers while charging higher-priced gas to the regulated-rate customers. This would allow Kinder Morgan to under-bid competing Choice Gas suppliers and recoup the costs of the higher regulated rate through the purchased gas adjustment mechanism that is part of the regulated rate," Krebs' pre-filed direct testimony said.

Wyoming Community Gas was the only one of the three competing suppliers that wanted to keep a regulated-rate option in the program.

However, Fitzhugh's endorsement of the regulated rate's continuation was far from ringing, as the group supported its inclusion only if it allowed for the continuation of the Choice Gas program as a whole.

At the close of the hearing, Ellenbecker set Feb. 21 as the deadline for parties to file briefs on the case. He said that the commission would then work to get their decision out as quickly as possible.