Scana Protest Sparks FERC Action on Atlanta Restructuring
A Federal Energy Regulatory Commission action to begin a lengthy
investigation at the last minute into the unbundling of Georgia's
main distributor, Atlanta Gas Light (AGL), could delay operation of
the landmark state restructuring plan which is scheduled to be
announced in its final form this week.
By Friday, June 26 the Georgia Public Utility Commission is
slated to approve a revised AGL plan, the product of more than two
years' work by the utility, the state legislature, the PUC, and
shippers, marketers and consumer representatives seeking to open up
the residential market to competition. All were continuing to
hammer out final details last week.
The plan, however, cannot be fully implemented without a waiver
from FERC, allowing assignment of a small amount of upstream
pipeline capacity to the marketers taking over AGL's customers.
Most of Atlanta's upstream pipeline capacity can be released under
the Commission's self-implementing capacity release regulations
without a waiver, but the company said the allocation scheme might
be delayed or additional costs might be incurred if it cannot
release its total capacity.
AGL had requested approval of the waiver (RP98-206-000) by June
15 to allow its unbundling program to proceed on schedule toward
deliveries beginning Nov. 1. The item had been slated for a vote at
the Federal Energy Regulatory Commission's open meeting June 10,
and according to some sources had the support of a majority of
commissioners, but at the last minute it was sticken from the
The spur for that action, according to a fact sheet supplied by
AGL, was a protest and request for a technical conference filed
June 5 by Scana Energy Marketing. FERC subsequently "sent a lengthy
set of questions to AGL requesting additional information about the
Georgia unbundling process and indicating that it may call a
technical conference on the petition. The questions can be fairly
read as being hostile to S.B. 215 (the Georgia law) and AGL's
unbundling application pending before the GPSC," the AGL statement
said. It noted that a technical conference at the Commission can
delay a proceeding for six to eight months.
One state source blamed the action on the ever-present
federal-state jurisdictional battle, commenting that "FERC staff
just couldn't stand it that the Georgia unbundling could be
accomplished without their input. They were looking for a wedge to
get into it and Scana handed it to them." Another source suggested
that FERC soon will be revealing its own plans for dealing with
interstate capacity that is no longer needed by distributors who
give up their merchant role. In keeping with the Commission's
competitive bent, some have suggested an auction for such stranded
capacity, as opposed to the allocation plan proposed by AGL.
Scana's protest suggests a waiver of the federal agency's Order
636 rules on assignment of upstream capacity could affect
unbundling plans in other states and the Commission's goal of a
competitive and efficient market for natural gas.
The marketer, an affiliate of South Carolina Electric & Gas
and currently serving large IT customers on AGL's system, made
clear it is not a fan of AGL's proposal to allocate and assign all
its upstream capacity to marketers taking over the LDC's firm
residential customers. The proposal "essentially takes AGL's
upstream rights out of the competitive market," and thwarts the
development of a secondary market.
Scana claims the upstream capacity assignment is aimed at
assuring the LDC will not be stuck with stranded capacity and
costs. But the marketer believes the stranded costs issue should be
dealt with separately. A Scana attorney suggested it would be
better to wait for the Georgia Public Service Commission ruling to
address any pipeline capacity problems, rather than act in advance
on a blanket waiver.
The Georgia restructuring plan calls for allocation of small
residential and commercial customers to marketers according to
their volume share of the rest of the retail market. Scana already
has over 100 industrial and commercial transportation customers on
the AGL system. It also has been noted that Scana's utility parent
was part of a successful campaign to keep its own state legislature
from ordering a restructuring of the South Carolina market.