Parties will meet in an Atlanta courtroom today to decide whichcompany will win the right to supply the 50,000 customers of gasmarketerTitan Energy of Georgia, which filed for Chapter 11 overthe Fourth of July weekend. Titan became the second marketer toseek bankruptcy protection in Georgia in less than a year.

Titan and AGL Resources, parent of Atlanta Gas Light, and otherparties met in an emergency bankruptcy session Friday in a Newnan,GA, court, but Bankruptcy Court Judge W. Homer Drake postponedmaking a decision until today (Monday) while Titan Energy tries towork out a deal to transfer its customers to marketer Shell EnergyServices. The judge, who is a shareholder in SCANA Energy and DukeEnergy (both of which are parties in the case), said he might beforced to recuse himself if a dispute should arise.

If Titan Energy and Shell Energy fail to come to an agreement bytoday, AGL spokesman Nick Gold said AGL Resources will push toinvoke an “interim pooler” agreement under which Titan’s customerswould be assigned equally to Georgia Natural Gas Services (an AGLaffiliate) and SCANA Energy to serve as suppliers-of-last-resort.

Titan Energy said it sought Chapter 11 after its wholesalenatural gas supplier, DukeSolutions, filed a lawsuit against theRoswell, GA, marketer in federal court in Houston, accusing it ofbreach of contract. DukeSolutions, a subsidiary of Duke Energy,contends Titan Energy owes it more than $10 million.

AGL Resources told the bankruptcy court that Titan owes it $2.8million in gas distribution costs, and that the amount is growingwith each passing day. Titan Energy gave AGL a letter of creditlast Thursday for $1.75 million, but spokeswoman Millicent Huntersaid AGL can’t draw on it for 30 days.

Titan Energy’s case closely parallels that of Peachtree NaturalGas, which last year became the first marketer serving thederegulated Georgia natural gas market to file for bankruptcy. Inthat case, Peachtree also sold its customers to Shell Energy.

“We started out with 20-22 gas marketers, and now we’re down to13. We’ve had a pretty serious winnowing out here,” said ChairmanBob Durden of the Georgia Public Service Commission, who concededthat he hasn’t been a “big fan” of gas deregulation from the start.”Every aspect of the business has gone kaflooey” since Georgiaunbundled its natural gas market, he noted. But, “you can’t puttoothpaste back in the tube.”

In the past year, the Georgia PSC has had to deal with slamming,delinquent billing and bankruptcy cases involving gas marketersserving the state. “Two bankruptcies in one year is not a goodrecord…..It’s just been a nightmare, and every time I think it’sover here comes something else.” One of the slamming cases wasagainst Titan Energy.

Georgia was “at the cutting edge” of gas deregulation in thenation, Durden said. “Now [you have to question] how much of thisis due to a flaw in the design.” Some states “are holding out basedon the problems we’ve had,” he noted.

“From an economic standpoint, there are some industries that donot lend themselves well to deregulation,” Durden said, adding thatutilities are one of them. “I think something is wrong withderegulation [period], not just in the Georgia system.”

If he could turn back the clock, Durden said he would prefer tosee a modified regulatory framework in Georgia where marketers inthe state would have to file rate structures with state regulators.He also noted he would prefer a modified fixed variable ratedesign, giving customers low bills in the summer and higher ones inthe winter.

A key mistake that Georgia made was allowing a shift in rateburden from industrial customers to residential customers in termsof who pays the fixed costs, Durden noted.

Susan Parker

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