NGI The Weekly Gas Market Report / NGI All News Access

Georgians Give Deregulation Negative Review

Georgians Give Deregulation Negative Review

In an American Public Gas Association (APGA) report released last week, a majority of Georgia residential customers gave gas deregulation in the state a failing mark, with many reporting that their bills actually increased or that there was no noticeable effect. Half of the Georgia commercial customers polled also said they were paying higher bills, and gave deregulation a thumbs-down for that reason.

The study, titled "The Impact of Retail Gas Deregulation in Georgia, from the Customers' Perspective," was conducted by Navigant Consulting for the APGA to determine the effects of gas deregulation on customer's bills in Georgia, to poll customer perceptions on deregulation and to develop implications for APGA members with respect to deregulation in their jurisdictions.

"Most residential and small commercial customers we interviewed would not recommend deregulation to others," said Mark Pocino, managing director for Navigant Consulting. The study results revealed that 52% of residential and 62% of commercial customers said they would not recommend deregulation. "In other areas where retail deregulation has taken place, the gas utility continues to provide customers with commodity service. This allows customers to choose the utility if they prefer, thus providing a smoother transition for retail deregulation," Pocino added.

"I believe that it is premature to declare whether or not deregulation in Georgia has been a success, there are still some unanswered questions, said Bert Kalisch, legislative and regulatory manager for APGA. "This is preliminary information, deregulation is still fairly new. The consumers' perception of deregulation is certainly very important to our members, especially when the communities our members serve have the same types of questions about [whether] deregulation is good for us?"

The report showed "higher-use customers had the greatest opportunity for bill savings in 1999," but even these customers experienced a wide range of results, from a maximum savings of 2% to a 13% increase on their bill. Fixed price contracts for high-use customers were found to produce up to 8% in savings, but at the other end of the scale some high-use customers wound up with a 35% increase on their bills. The study allowed that "more significant savings, are not likely in the near future" because gas prices are high, and are expected to stay high in the near future.

According to the study, more than 60% of residential and commercial customers could not think of any benefits from deregulation, and even more of the sample could not see any benefits arising after one more year.

Customers were asked to rate their experience with gas deregulation on a scale in which 1-3 was "worse off," 4-7 signified "neutral," and 8-10 meant "better off." Residential customers posted an average of 4.7, while commercial customers averaged 4.5.

APGA President Ken Craig said, "When our members ask themselves and their state legislators whether retail deregulation is in their customers' or constituents' best interests, this study will be an extremely valuable resource." For a copy of the study, contact APGA's Sheila Martel at (703) 352-3890. The cost to non-APGA members is $950.

Alex Steis

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.