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Atlanta Utility Proposes CNG Fueling Network

With regulatory and legislative encouragement, Atlanta Gas Light Inc. (AGL) has filed a plan with Georgia state regulators asking for approval to establish over the next five years a network of public and home-based compressed natural gas (CNG) fueling stations. AGL envisions a network throughout the greater Atlanta area and along major transportation corridors in the state.

Following months of market studies and with the support of Commissioner Doug Everett, AGL filed a conceptual plan with the Georgia Public Service Commission (PSC) last September. The PSC then held public hearings to refine the concept last November and January. In March the Georgia General Assembly authorized the use of a statewide fund supported by an industrial utility customers' surcharge.

Under a plan that the PSC is expected to rule on this summer, the utility would invest up to $12 million to stimulate private investment in the construction of approximately 10-15 stations, depending on the size of the station and level of investment. Private retailers willing to invest at least 50% of the costs of the CNG station would be the owner/operator.

Natural gas would be purchased by the retailers from state-certificated marketers and resell it as CNG to the public. Initial station locations will be largely determined based on proximity to commercial fleet customers who contract for service.

"Atlanta Gas Light will not sell CNG to the public nor participate in the commercial operation of the stations as part of this program," a utility spokesperson said. AGL will own and maintain the CNG equipment connected to its traditional natural gas distribution system.

"The plan also includes low-cost equipment leasing options for home fueling [by individual consumers]," said the spokesperson, who noted that current CNG retail prices are the equivalent of $2.19/gal gasoline, based on postings from Georgia retailers.

Capital for the proposed buildout program would come from Georgia's Universal Service Fund (USF), which is a combination of utility industrial customer rates and proceeds shared by energy asset management firms. AGL regularly taps into this source to help pay for line extensions to serve new customers and regions in the state. The current recession has curbed the amount of line extensions so USF has a current surplus, the utility spokesperson said.

USF funds would be used to construct the CNG facilities, and AGL will collect transportation delivery charges and actual operations/maintenance costs from retailers. "Revenue collected from a separate equipment utilization fee will be placed in a reserve account to fund a portion of the cost of leasing home refueling stations, erecting additional CNG facilities, and making repairs and replacing CNG equipment," the AGL spokesperson said.

Part of the qualifications for retailer applicants will be to have the financial resources to secure the real estate for the stations, develop the sites consistent with local zoning, and fund at least half of the total CNG station costs. They also will have to produce contracts with fleet operators and other end-use customers that use at least 15,000 gasoline-equivalent gallons annually for five years.

"Demand for CNG is growing in the United States, and Atlanta Gas Light is committed to attracting interest in the important new investment opportunity to Georgia," said Ian Skelton, director of AGL's natural gas vehicle program. "Fleet owners and vehicle manufacturers are beginning to recognize the significant price advantage CNG holds over petroleum at the pump."

The AGL utility has been involved in the construction and maintenance of CNG facilities for more than 20 years, installing the first CNG pumps in Atlanta in the early 1990s and helping the Metropolitan Atlanta Rapid Transit Authority convert its buses to CNG in advance of the 1996 Olympic Games, which were held in Atlanta.

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