Shell Named GA's Supplier of Last Resort as Peachtree Stays Afloat
The maelstrom in Atlanta Gas Light's deregulated gas pool
continued last week as regulators scrambled to find a replacement
supplier of last resort when the utility concluded it was unable to
handle the role. After an urgent 24-hour RFP, the state's Public
Service Commission (GPSC) selected Shell Energy Services to perform
the function through April 1.
The matter was undertaken with some urgency because 170,000
retail gas customers are hanging by a thread. Their marketer,
Peachtree Natural Gas, filed for Chapter 11 bankruptcy earlier this
month (see NGI, Nov. 1) as a result of what it described as
"unexpected costs" and problems with Utilipro, a utility billing
company. The day after the filing, AGL asked for bankruptcy court
permission to petition the GPSC for a random assignment of all of
Peachtree's customers to more "creditworthy" suppliers.
The court, headed by Hon. Robert Brizendine, has met twice since
late October and each time has allowed Peachtree to continue
serving its customers by paying a fee to AGL. In total, the
Roswell, GA-based marketer has agreed to over $2.7 million worth of
payments due by Nov. 15, which is the date the court will
"Although we do not want to make a practice of this, we're
basically operating in a pay as you go fashion," said Millicent
Hunter, a spokeswoman for AGL. "Our priorities are the reliability
of service for the customers and the integrity of the system. As
the situation currently stands, these interim solutions in which
Peachtree basically puts up the money to continue doing business
are the best way to maintain reliability at this point."
Regarding the need for a supplier of last resort, which the
state's deregulation law calls an "interim pooler," Hunter said the
LDC's role has changed and it no longer has the ability to perform
"The tariff states that AGL will be the interim pooler unless
the commission assigns another marketer to perform the task. We
fully supported the commission in its desire to designate another
company for that role.
"We don't want to be the interim pooler because we're already
out of the retail function. The utility no longer has its own
billing or remittance mechanisms, so getting back into retail would
be extremely arduous. We have nobody buying gas and nominating it
to the system."
Bobby Baker, a GPSC commissioner said "AGL has made it clear
that it does not want to be the interim pooler. If AGL isn't
interested and there is another marketer willing to step up to the
plate, then that is fine," he said. "Our interest is making sure
that we have a reliable supplier that can handle the addition of
extra customers. In our view, Shell was it."
While four other marketers (Scana, Energy America, Reliant
Energy Services and SouthStar) applied for the role along with
Shell, none fit the bill as well as Shell did. "Shell answered all
the questions in the RFP to the satisfaction of the commission
whereas the others didn't," Baker said.
"This probably should have been done during the make-up of the
deregulation legislation, but this whole process has been a
learning experience," said Bubba McDonald, a GPSC Commissioner. "We
didn't think about it until a situation came up that brought it to
The commissioner pointed out that the interim pooler process was
undertaken as a preparatory measure and in no way is specific to
Peachtree's customers. Shell will now have the responsibility of
taking on the customers of any supplier that is deemed unable to
reliably serve gas by the GPSC.
Last week's developments have come at the tail end of a process
in which more than 1.4 million customers have switched suppliers
from AGL to one of 16 marketers in a 12-month period.