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Scana Protest Sparks FERC Action on Atlanta Restructuring

Scana Protest Sparks FERC Action on Atlanta Restructuring

A Federal Energy Regulatory Commission action to begin a lengthy investigation at the last minute into the unbundling of Georgia's main distributor, Atlanta Gas Light (AGL), could delay operation of the landmark state restructuring plan which is scheduled to be announced in its final form this week.

By Friday, June 26 the Georgia Public Utility Commission is slated to approve a revised AGL plan, the product of more than two years' work by the utility, the state legislature, the PUC, and shippers, marketers and consumer representatives seeking to open up the residential market to competition. All were continuing to hammer out final details last week.

The plan, however, cannot be fully implemented without a waiver from FERC, allowing assignment of a small amount of upstream pipeline capacity to the marketers taking over AGL's customers. Most of Atlanta's upstream pipeline capacity can be released under the Commission's self-implementing capacity release regulations without a waiver, but the company said the allocation scheme might be delayed or additional costs might be incurred if it cannot release its total capacity.

AGL had requested approval of the waiver (RP98-206-000) by June 15 to allow its unbundling program to proceed on schedule toward deliveries beginning Nov. 1. The item had been slated for a vote at the Federal Energy Regulatory Commission's open meeting June 10, and according to some sources had the support of a majority of commissioners, but at the last minute it was sticken from the agenda.

The spur for that action, according to a fact sheet supplied by AGL, was a protest and request for a technical conference filed June 5 by Scana Energy Marketing. FERC subsequently "sent a lengthy set of questions to AGL requesting additional information about the Georgia unbundling process and indicating that it may call a technical conference on the petition. The questions can be fairly read as being hostile to S.B. 215 (the Georgia law) and AGL's unbundling application pending before the GPSC," the AGL statement said. It noted that a technical conference at the Commission can delay a proceeding for six to eight months.

One state source blamed the action on the ever-present federal-state jurisdictional battle, commenting that "FERC staff just couldn't stand it that the Georgia unbundling could be accomplished without their input. They were looking for a wedge to get into it and Scana handed it to them." Another source suggested that FERC soon will be revealing its own plans for dealing with interstate capacity that is no longer needed by distributors who give up their merchant role. In keeping with the Commission's competitive bent, some have suggested an auction for such stranded capacity, as opposed to the allocation plan proposed by AGL.

Scana's protest suggests a waiver of the federal agency's Order 636 rules on assignment of upstream capacity could affect unbundling plans in other states and the Commission's goal of a competitive and efficient market for natural gas.

The marketer, an affiliate of South Carolina Electric &amp Gas and currently serving large IT customers on AGL's system, made clear it is not a fan of AGL's proposal to allocate and assign all its upstream capacity to marketers taking over the LDC's firm residential customers. The proposal "essentially takes AGL's upstream rights out of the competitive market," and thwarts the development of a secondary market.

Scana claims the upstream capacity assignment is aimed at assuring the LDC will not be stuck with stranded capacity and costs. But the marketer believes the stranded costs issue should be dealt with separately. A Scana attorney suggested it would be better to wait for the Georgia Public Service Commission ruling to address any pipeline capacity problems, rather than act in advance on a blanket waiver.

The Georgia restructuring plan calls for allocation of small residential and commercial customers to marketers according to their volume share of the rest of the retail market. Scana already has over 100 industrial and commercial transportation customers on the AGL system. It also has been noted that Scana's utility parent was part of a successful campaign to keep its own state legislature from ordering a restructuring of the South Carolina market.

Ellen Beswick

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