A Federal Energy Regulatory Commission action to begin a lengthyinvestigation at the last minute into the unbundling of Georgia’smain distributor, Atlanta Gas Light (AGL), could delay operation ofthe landmark state restructuring plan which is scheduled to beannounced in its final form this week.

By Friday, June 26 the Georgia Public Utility Commission isslated to approve a revised AGL plan, the product of more than twoyears’ work by the utility, the state legislature, the PUC, andshippers, marketers and consumer representatives seeking to open upthe residential market to competition. All were continuing tohammer out final details last week.

The plan, however, cannot be fully implemented without a waiverfrom FERC, allowing assignment of a small amount of upstreampipeline capacity to the marketers taking over AGL’s customers. Most of Atlanta’s upstream pipeline capacity can be released underthe Commission’s self-implementing capacity release regulationswithout a waiver, but the company said the allocation scheme mightbe delayed or additional costs might be incurred if it cannotrelease its total capacity.

AGL had requested approval of the waiver (RP98-206-000) by June15 to allow its unbundling program to proceed on schedule towarddeliveries beginning Nov. 1. The item had been slated for a vote atthe Federal Energy Regulatory Commission’s open meeting June 10,and according to some sources had the support of a majority ofcommissioners, but at the last minute it was sticken from theagenda.

The spur for that action, according to a fact sheet supplied byAGL, was a protest and request for a technical conference filedJune 5 by Scana Energy Marketing. FERC subsequently “sent a lengthyset of questions to AGL requesting additional information about theGeorgia unbundling process and indicating that it may call atechnical conference on the petition. The questions can be fairlyread as being hostile to S.B. 215 (the Georgia law) and AGL’sunbundling application pending before the GPSC,” the AGL statementsaid. It noted that a technical conference at the Commission candelay a proceeding for six to eight months.

One state source blamed the action on the ever-presentfederal-state jurisdictional battle, commenting that “FERC staffjust couldn’t stand it that the Georgia unbundling could beaccomplished without their input. They were looking for a wedge toget into it and Scana handed it to them.” Another source suggestedthat FERC soon will be revealing its own plans for dealing withinterstate capacity that is no longer needed by distributors whogive up their merchant role. In keeping with the Commission’scompetitive bent, some have suggested an auction for such strandedcapacity, as opposed to the allocation plan proposed by AGL.

Scana’s protest suggests a waiver of the federal agency’s Order636 rules on assignment of upstream capacity could affectunbundling plans in other states and the Commission’s goal of acompetitive and efficient market for natural gas.

The marketer, an affiliate of South Carolina Electric &amp Gasand currently serving large IT customers on AGL’s system, madeclear it is not a fan of AGL’s proposal to allocate and assign allits upstream capacity to marketers taking over the LDC’s firmresidential customers. The proposal “essentially takes AGL’supstream rights out of the competitive market,” and thwarts thedevelopment of a secondary market.

Scana claims the upstream capacity assignment is aimed atassuring the LDC will not be stuck with stranded capacity andcosts. But the marketer believes the stranded costs issue should bedealt with separately. A Scana attorney suggested it would bebetter to wait for the Georgia Public Service Commission ruling toaddress any pipeline capacity problems, rather than act in advanceon a blanket waiver.

The Georgia restructuring plan calls for allocation of smallresidential and commercial customers to marketers according totheir volume share of the rest of the retail market. Scana alreadyhas over 100 industrial and commercial transportation customers onthe AGL system. It also has been noted that Scana’s utility parentwas part of a successful campaign to keep its own state legislaturefrom ordering a restructuring of the South Carolina market.

Ellen Beswick

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