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.