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Regulators Advised to Assess GA Unbundling

Regulators Advised to Assess GA Unbundling

Georgia broke all records in unbundling 95% or 900,000 customers from Atlanta Gas Light's merchant service in just nine months. Now it's up to the policy-makers "to justify the amounts of savings, determining if consumers are really better off," AGL President Paula Rosput told state regulators Tuesday.

"We liken the program to WalMart and assume that the competition among multiple suppliers will drive down costs through innovation," Rosput said in a presentation at the National Association of Regulatory Commissioners' (NARUC) summer meetings in San Francisco. Georgia's accelerated time frame was mandated by state law requiring the unbundling to be completed by the time AGL's ongoing rate case was completed in mid-1998.

Was it too fast? "Absolutely. [There was] too much compression from the time of the law until the time the commission had to issue its orders....just too many things being done, too quickly. Considering the time frame, it is a real credit that things have gone as well as they have," Rosput responded to questions.

It's the "eleventh hour" before the Georgia Public Utility Commission's Aug. 11 date for customers to choose new suppliers. After that date, the remaining customers will be assigned to marketers. "In Georgia, we basically created a specter of 'unless you want Big Brother to make a choice for you', you really ought to get into the market," Rosput said. "More than 900,000 customers (out of 1.5 million) have moved to marketers in nine months. No other deregulation initiative comes close to this pace."

Partly the speed and partly the requirement that marketers accept expensive upstream pipeline capacity that had been dedicated to AGL has narrowed the field of marketers to those with enough capital to play the game. Six marketers have picked up most of the customers so far, with the two leaders, Scana Energy, an unregulated affiliate of South Carolina Electric and Gas, and AGL affiliate Georgia Natural Gas Services, holding the lion's share or about 70% of those who have chosen. Peachtree Natural Gas, Shell Energy Services, Columbia Energy Services, and United Gas Management of Georgia are the other surviving marketers.

Meanwhile, AGL has experienced what Rosput calls two "challenging quarters" financially since the customer choice program began last fall, wrestling with growth of 2.5% annually and growing productivity as its customer base is turned over to the marketers.

"Having deregulated natural gas in Georgia, we obviously embrace a deregulation agenda that is done more broadly with a simpler, standardized framework around it," Rosput said. Similar programs in other states will make it easier for the consumer. Customer education programs have been extensive, but they never get the full resources they deserve, Rosput said. For example, in Georgia there was not enough attention to non-English-speaking customers.

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