An AGL Resources subsidiary, Atlanta Gas Light Co., said it will file a motion for reconsideration next week in response to the Georgia Public Service Commission’s vote to launch a rate review earlier this week into AGLC’s earnings. After two separate but related studies, the GPSC staff alleges that AGLC’s earnings are 4-7% more than its authorized return on equity (ROE) (see Daily GPI, Aug. 23).

“It is surprising that AGLC’s rate of return has suddenly become an issue for the Commission,” said Paula Rosput, AGL Resources CEO. “The detailed monthly reporting provided to the Commission, with information dating back to 1998, is meant to prevent this very issue from occurring. Those reports clearly show AGLC is far from overearning.”

The earnings case stems from AGLC’s most recent monthly filing with the commission in which the AGLC reported a return on equity of 9.9% for the 12 months ended May 31, compared with an authorized return on equity of 11% established by the commission in 1998. AGLC contends that the last rate review conducted by the commission established a rate of return for the company that was below the allowed rates for other regulated Georgia companies.

The GPSC said the hearings on the company’s rates were warranted due to two separate projects cited by the GPSC staff, which indicated that AGLC is earning an ROE of 15-17%, in excess of “an appropriate ROE” in the range of 10-11%. The hearing dates will be Nov. 5-9 and Dec. 17-21 in 2001 and Feb. 11-15, 2002.

“We are confident that a full and fair review of the facts will show that the company is underearning relative to its allowed return,” said Rosput. “Ironically, a rate increase — rather than a decrease — is actually warranted. Meanwhile, we have been trying to hold the line and not raise rates by creating operational efficiencies.”

AGL Resources spokesman Russ Williams said the company had originally pointed out 88 discrepancies in the report prepared for the GPSC by an outside consultant, but the “vast majority were either ignored or disagreed with and were not included in the final report submitted to the PSC.”

The staff’s findings are not based on a projected test year, as required by Georgia law, but instead are based on the findings of the consultant hired by the commission, the AGLC said. Additionally, the company said the commission issued its decision before receiving the AGLC’s formal response, which was to be delivered on or before Sept. 1.

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