Atlanta Gas Light, the distribution utility for more than 1.5million customers in Georgia, said last week that through a ratecase settlement with Southern Natural Gas Pipeline (Sonat) and anew agreement with Transco’s SouthCoast project, its customersstand to save anywhere from $10 million to $32 million annually.

The Sonat rate settlement was reached between the pipeline andall its customers earlier this month (see NGI, March 20). Thepipeline is AGL’s largest interstate delivery supplier,representing approximately 70% of interstate delivery service toGeorgia. AGL and Georgia Public Service Commission (PSC) stafffiled joint testimony at the PSC earlier this week in support of anamendment approving the three-year term extension for Sonatdelivery and storage service. A decision from the PSC is expectedin mid-April.

AGL said it also filed comments with the FERC yesterday insupport of the settlement. Virtually all of Sonat’s customers andthe FERC staff have expressed support of the settlement. Sonat hasimplemented the settlement rates on an interim basis effectiveMarch 1. Based on these facts, AGL said it fully expects FERCapproval soon.

Jim Scabareti, AGL vice president, gas services, attributed partof the ability to reduce customer rates to AGL’s recentderegulation program. “We’ve seen competition at the retail level.Now competition is reaching the interstate pipelines servingGeorgia. We anticipate the marketers will pass these savings on tothe retail customers.”

Bobby Baker, a commissioner for the PSC, was not so sure. “Thereis no guarantee that the marketers won’t just take the savingsthemselves. We’ll have to wait and see. Because this is the firsttime marketers will have the option, we don’t know how they willreact.”

Since AGL’s service territory opened to retail customer choicelast year, all 1.5 million customers in the region have switched toan alternative supplier. There are more than 15 active marketerscurrently. Georgia Natural Gas Services (GNGS), an AGL affiliate,and Scana Corp. have the largest market share with over 30% each.Shell Energy Services is third with over 20%.

Savings from the rate case will show up on GNGS’ customers billsstarting April 1, said Steve Gunther, a company spokesman. He saidthe company expects that both the PSC and FERC will approve of thetree-year extension. “We recently announced that our price of gas,which is included in the gas charge section of a customer’s billwill be reduced 6% starting April 1. A large part of this reductionwas made possible because of the Sonat settlement

In the SouthCoast deal, AGL signed up for 10 years and 61,160Dth/d beginning Nov. 1, when the pipeline is scheduled to comeonline. With the addition of these volumes, Transco will increaseits percentage of firm delivery service to AGL from 25% to 30%.

The $108 million project will add 204,099 Dth/d of firmtransportation capacity to serve new markets in Georgia andAlabama. The facilities will increase mainline capacity betweenStation 85 in Butler, AL, to delivery points in Zone 4.

AGL said the project meets a number of AGL’s criticaloperational objectives, including increased operationalflexibility, added reliability and lower customer costs by up to $2million/ year. “SouthCoast is an obvious choice for enhanceddelivery service into AGL’s fastest growing market areas,” saidScabareti. “Further, SouthCoast offers lower costs than currentservice from other interstate suppliers.”

If all the savings were to be realized and passed directly tothe customer, bill reductions could be as high as $20 annually overthe length of the three-year deal, said Nick Gold, an AGLspokesman. He too, however, warned that the marketers are the oneswho will ultimately decide if the customers will see any savings.

A recent study by PHB Hagler Bailly Inc. agreed with Scabareti’sassessment that deregulation has helped the Georgia gas customer.The AGL-commissioned report, titled “Consumer Benefits fromDeregulation of Retail Natural Gas Markets/Lessons from the GeorgiaExperience,” indicated that through AGL’s unbundling efforts,residential gas bills will be lower, innovative new suppliers havearrived on the scene and gas service has been enhanced.

John Norris

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