NGI The Weekly Gas Market Report
Atlanta Gas Light Co. (AGL) reached an agreement with theGeorgia Public Service Commission (GPSC) last week to return to itspre-deregulation billing methods, avoiding a Feb. 3 Commissionhearing intended to charge the utility with disregarding marketconstraints in its rate-charging practices. The utility alsoagreed to refund $14.5 million to overcharged customers. Thereformed bills and the refunds will be sent out in February.
The agreement protects AGL from a more strict punishment fromthe GPSC, which was searching for a $25 million refund andre-regulation of rates. Along with the switch back to volumetricrates and the refund, the bill also requires the utility to charge$.40/therm in February and to use bill inserts, letters, and othermedia to educate customers about the rate changes.
“This billing fiasco has accelerated the customer switchingprocess,” said Commissioner Stan Wise. “This is the best way forcustomers to benefit from the unbundling. Re-regulating the [rates]would not have allowed for any refunds.” Wise added despite thisincident, the relationship between the GPSC and AGL is improving.
Ross Willis, an AGL spokesman, said $8 million of the refund washeaded to customers as part of the money left over from costsassociated with converting to a deregulated industry in November.All 1.4 million gas customers in the state will share this refund,which will amount to a $3.70 credit on gas bills in February. Theother $6.5 million is to be spread over 263,000 customers AGL hasidentified as the most damaged by the increase in rates. AGL stillhas 80% of the gas market in Georgia, despite 284,000 customersswitching to other marketers since November.
“This agreement accomplishes two of our main goals,” saidWillis. “Number one on our priority list was to eliminate customerconfusion. Now people will only be charged for what they use.Number two on our list was to demonstrate to the customers who weremost hurt by our rate changes that we did not mean any harm. Thehigh bills were caused by warm weather, but the customers still gothurt.”
The change is the result of a public uproar concerning AGL’sdecision to switch from actual-usage billing to demand-basedbilling when the GPSC deregulated rates last November.Unfortunately for the company, it switched to the demand-basedsystem at a time when warm temperatures caused people to use verylittle gas. AGL also included reservation fees in the billingadjustment. “People were getting charged more and using less gas,”Willis said.
Responding to a public outcry which left phone lines to both theGPSC and AGL flooded, the Commission scheduled the Feb. 3 hearing.According to pre-hearing testimony from analysts and GPSC members,AGL was on track to overcharge its customer base $300 million bySeptember. “There was so much confusion, and communication was sobad, that going back to the old system is probably a good thing.”Willis added.
Although this agreement settles the issue, AGL will still haveto show up at the GPSC on Feb. 3, the company said. All the issuesof the original hearing have been resolved, but the GPSC will holdan open forum to educate the public on AGL’s billing methods. Thehearing is scheduled for 10 a.m.
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