NGI The Weekly Gas Market Report
The bitter atmosphere existing in Georgia since the GeorgiaPublic Service Commission (GPSC) accused Atlanta Gas Light (AGL) ofovercharging its customers last month intensified last week as theGPSC filed biting pre-testimony for a Feb. 3 hearing, only to haveAGL respond in a public outcry. If the hearing occurs, thecommission expects a decision on the case by Feb. 9.
Members of the GPSC staff presented their side of the case in apre-hearing filing last Tuesday, saying AGL’s billing practices arenot constrained by market forces and, by the deregulation laws, theGPSC has the right to step in. They accused AGL of employing a planthat would accrue $300 million in overcharges by September. For thebilling period between October and December alone, the staffaccused the utility of receiving $25 million in overcharges. “It isStaff’s position is that the commodity sales service prices chargedby Atlanta Gas Light Co. are not constrained by market forces andare significantly higher than they would be if they were soconstrained,” the members said in the testimony. “The staffrecommends that the commission exercise its authority and takeaction to protect consumers.”
As evidence, the staff pointed to the commodity sales servicerate that appears on customers’ bills. The rate is made up of ademand charge, which reflects the fixed costs associated with gasdelivery from the wellhead to the company’s citygate, and acommodity charge, which reflects the cost of gas varying withvolume. They pointed to the demand charge rise in the average billfrom $5.16/Dth per designated design day capacity in November 1998to $23.19/Dth in December. The commodity charge rose from $2.28/Dthin November 1998 to a range of $2.33-$2.55/Dth in December. “I haveestimated that AGL could make hundreds of millions of dollars (upto $376 million) in excess revenues, were its current rates tocontinue through September 1999,” Dr. William Foster, executivevice president of Foster Associates, testified. “These higherprices have detrimental effects on the Georgia gas market andcreate excess profits for AGL and marketers tying their prices toAGL.”
The utility responded to the charges with vehemence. “I don’tknow where they got that from,” said Ross Willis, an AGL spokesman.”We just don’t do that. There is something inherently wrong in thisworld when people can accuse us of such things. We’ve already toldthem what is going on. We would never hike up the prices on ourcustomers.”
In a written statement, Paula Rosput called the claimsunfounded. “Little is accomplished by unsupported accusationsconcerning overcharges. Atlanta Gas Light has not profited from thederegulation of its natural gas sales and has voluntarily openedits books and records to the Commission so that the public can beassured of this fact.”
The company said the accusations are a result of amisunderstanding. Willis said the rates were pushed higher torecover costs related to reserving gas for Georgia customers, and”people are crazy to think that we would have sustained them [thehigher commodity sales service rate] for as long as they are sayingwe intend to sustain them.”
The GPSC staff recommended re-regulation of the commodity salesservice rates for the time between February 1999 and July 2000. Italso recommended that AGL should refund over $25 million to allcustomers who contributed to the over-collection. It said thedemand charge rate should fall to $8.26/Dth and commodity chargerate should fall to $2.161/Dth for the time between February andSeptember, and a more comprehensive customer education program beinstalled by AGL.
AGL said it wants to work this problem out with the GPSC andrevise its bills by Feb. 1. Willis said the company is at the table”with their sleeves rolled up,” trying to figure out a compromisewith the GPSC. “It will probably be a return to a morevolumetric-like system,” he said. “That seems to be what everybodywants. I think it will happen because a demand-based bill hascreated so much confusion.” The company admitted it did notcommunicate billing changes well to customers, and as part of thesolution, it has offered to refund some customers who were mosthurt by the new billing structure. It could not verify when anagreement would be reached, if at all.
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