AGL Refunds $14.5 Million, Retreats to Old Pricing Method
Atlanta Gas Light Co. (AGL) reached an agreement with the
Georgia Public Service Commission (GPSC) last week to return to its
pre-deregulation billing methods, avoiding a Feb. 3 Commission
hearing intended to charge the utility with disregarding market
constraints in its rate-charging practices. The utility also
agreed to refund $14.5 million to overcharged customers. The
reformed bills and the refunds will be sent out in February.
The agreement protects AGL from a more strict punishment from
the GPSC, which was searching for a $25 million refund and
re-regulation of rates. Along with the switch back to volumetric
rates and the refund, the bill also requires the utility to charge
$.40/therm in February and to use bill inserts, letters, and other
media to educate customers about the rate changes.
"This billing fiasco has accelerated the customer switching
process," said Commissioner Stan Wise. "This is the best way for
customers to benefit from the unbundling. Re-regulating the [rates]
would not have allowed for any refunds." Wise added despite this
incident, the relationship between the GPSC and AGL is improving.
Ross Willis, an AGL spokesman, said $8 million of the refund was
headed to customers as part of the money left over from costs
associated with converting to a deregulated industry in November.
All 1.4 million gas customers in the state will share this refund,
which will amount to a $3.70 credit on gas bills in February. The
other $6.5 million is to be spread over 263,000 customers AGL has
identified as the most damaged by the increase in rates. AGL still
has 80% of the gas market in Georgia, despite 284,000 customers
switching to other marketers since November.
"This agreement accomplishes two of our main goals," said
Willis. "Number one on our priority list was to eliminate customer
confusion. Now people will only be charged for what they use.
Number two on our list was to demonstrate to the customers who were
most hurt by our rate changes that we did not mean any harm. The
high bills were caused by warm weather, but the customers still got
The change is the result of a public uproar concerning AGL's
decision to switch from actual-usage billing to demand-based
billing when the GPSC deregulated rates last November.
Unfortunately for the company, it switched to the demand-based
system at a time when warm temperatures caused people to use very
little gas. AGL also included reservation fees in the billing
adjustment. "People were getting charged more and using less gas,"
Responding to a public outcry which left phone lines to both the
GPSC and AGL flooded, the Commission scheduled the Feb. 3 hearing.
According to pre-hearing testimony from analysts and GPSC members,
AGL was on track to overcharge its customer base $300 million by
September. "There was so much confusion, and communication was so
bad, that going back to the old system is probably a good thing."
Although this agreement settles the issue, AGL will still have
to show up at the GPSC on Feb. 3, the company said. All the issues
of the original hearing have been resolved, but the GPSC will hold
an open forum to educate the public on AGL's billing methods. The
hearing is scheduled for 10 a.m.
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