Preparing to say farewell to the retail side of its business,Atlanta Gas Light (AGL) announced yesterday it will refund $34million to its former retail customers. The $26 per customer refundwill be issued by the 13 marketers in AGL’s service territoryduring the May/June billing cycle. It will be noted on customers’bills as a “GA PSC Ordered Credit,” which will be deducted from thetotal amount owed for service for the particular billing period.

The money being refunded is the surplus in AGL’s purchased gascost account as of October 1999. The Georgia Public ServiceCommission (GPSC) approved the refund earlier this year.

There are two requirements for refund eligibility: 1) thecustomer had to be receiving gas service from AGL or a marketer onMay 25, 1999 and 2) the customer had to be a customer of a marketeron April 3, 2000. Customers who are not in good credit standingwith AGL will have their refund used first to reimburse theutility.

Nick Gold, an AGL spokesman, said the surplus was a result of anover-collection in AGL’s purchased gas cost (PGC) for 1999. The PGCis the price AGL was allowed by the GPSC to charge customers fornatural gas. It includes the commodity cost of gas plus the costsfor pipeline transportation, storage services, fuel loss andpipeline surcharges. The company based the rate on its estimates ofhow much gas it would use during the year. Because of the unknowneffects of deregulation and the unusually warm winter, theutility’s estimates were too high.

“Normally, you’d like the PGC and the actual amount of gas usedto be in the same neighborhood. And normally they are. Yet, becauseof a host of factors, last year AGL over-collected way too much,”said Robert Baker, a GPSC commissioner.

The state commission was very involved with setting up therefund, Baker said. “We helped audit AGL’s books and determine theamount of the over-collection. The funds were put in an escrowaccount that we held on to. Also, we decided what form the refundwould take. Many people wanted it weighted so that the customerswho use more gas get a larger refund, but in the end we decidedthat the simplest course of action was the best, and ordered thatthe payments be flat for everyone.”

The company was “very pleased with the level of cooperation [it]received from the GPSC and their staff throughout the process ofdetermining how to facilitate the refund,” said Hank Linginfelter,AGL’s vice president, rates and regulations.

This refund closes out AGL’s role in buying and selling naturalgas in the state. “This activity is now managed by the various gasmarketers,” said Linginfelter.

While the refund represents the final act for AGL’s retailoperations, Gold said the company has been effectively removed fromthe retail side since last October. Now, Gold said AGL is out toenlarge the size of its distribution system through an aggressiveM&A strategy. “We’re going to aggressively look at increasingthe size and scope of our system as we attempt to be the bestdistribution company in the country,” he said. He would not saywhen or what the company’s next move would be.

Last June, AGL CEO Walter Higgins predicted that the companywould merge after its exit from retail operation was complete. “I’dsay we won’t look like we do in two years. That doesn’t mean we’regoing to announce a merger tomorrow,” he told NGI, following aspeech at the Natural Gas Roundtable in Washington, D.C. “But Iwouldn’t be surprised if we’re not in some sort of alliance,whether strategic or not, or some sort of a merger, or somebodyjust plain acquires us within the next couple years.”

Thirteen marketers now operate in AGL’s service territory.Georgia Natural Gas Services (GNGS), an AGL affiliate, and ScanaCorp. have the largest market share with over 30% each. ShellEnergy Services is third with over 20%.

The transition of supply responsibility from AGL to the marketershas not been smooth. Late last year, Peachtree Natural Gas fell in tobankruptcy and was forced to sell its supply contracts to Shell (seeDaily GPI, Nov. 17, 1999).

Recently, Energy America, a Sempra Energy affiliated marketer,has come under fire for slamming violations. Yesterday during anadministrative session, the GPSC commissioners unanimously voted tolaunch an investigation into Energy America’s practices in thestate. If found guilty, Energy America could have its marketerstatus revoked.

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