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Georgia Regulators Approve Gas Rate Restructuring, Refund

Georgia Regulators Approve Gas Rate Restructuring, Refund

In an effort to ease the pain of deregulation for residential consumers, the Georgia Public Service Commission (GPSC) voted 5-0 last week to approve an estimated $40 million residential refund plan that would help ease what are sure to be high gas bills this coming winter. The commission also voted to approve a new sculptured tariff for distribution charges instead of the current flat rate by a vote of four-to-one, with Commissioner Robert Baker dissenting.

The measures, which go into effect on Feb. 1, 2001, are actually companion plans engineered by GPSC Commissioner Bubba McDonald. The sculptured tariff plan is supposed to return billing to near pre-deregulation form by eliminating Atlanta Gas Light's flat rate distribution charge, and replacing it with a charge that is more reflective of the residential consumer's gas usage. Delivery base charges, including customer service and Dedicated Design Day Capacity Charges (DDDC), make up almost 40% of a residential Georgia customer's annual gas bill. DDDC covers the common costs of delivering gas based on a customer's demand on the system on the coldest day of the year. Under the new plan, this delivery base charge will be collected primarily from December through March when gas is in peak use.

"We see this as a real win for the customers in Georgia," said Nick Gold, Atlanta Gas Light's spokesman. "We really applaud what the commission is trying to do to be more customer focused. We were supportive of this move, and we worked with Commissioner McDonald and the four other commissioners at the public service commission to help them arrive at this plan."

Atlanta Gas Light will lower its distribution charge when gas usage is lower during the summer months and raise it when gas usage is highest in the winter. Over a 12-month period, delivery still will cost the same, but bills will be balanced with usage.

Commissioner Baker, who disagreed with the sculptured tariff plan, said, "I voted against that [plan] because of the fact that I felt that what we were doing did not reduce the cost, or the charges associated with the DDDC at all. All we were doing was front loading those charges during the high cost winter heating season months. To me it was basically just trying to make a very unpalatable charge more palatable by shifting it, kind of regulatory smoke and mirrors."

The refund plan was designed to offset the immediate harsh effects of the sculptured tariff plan. As Georgia customers enter winter, their delivery charges will rise above the current flat rate due to the new tariff plan. To ease the blow, the refund plan will give some 1.35 million residential consumers approximately $13 a month in refunds on their bills during February and March of next year. McDonald said the money will come from a near $40 million surplus in a consumer-financed Universal Service Fund used to install gas line extensions to institutions such as schools and neighborhoods that might not be able to otherwise afford it. There also is a provision in the fund that allows marketers to request reimbursement for uncollectable amounts, though no marketer as of yet has made any such request.

"It has been very difficult for the consumer when he or she looks at their bills in June, July and August and they are $30 when they have used no gas," said McDonald. "Prior to deregulation, all of these were in volumetric billing, and all of it reflected in what looked like the amount of gas that you used. Now it will more closely appear like the bills prior to deregulation."

"Under the straight-fixed variable pricing the DDDC is divided by 12 presently, and [the consumer] pays X amount a month for 12 months. My proposal is revenue neutral, the only thing it reflects is that in the summer time you will be paying lower DDDC, and in the winter times when you are using gas you will be paying higher DDDC," McDonald explained.

Alex Steis

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