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19 Marketers Struggle to Prepare for Georgia Competition

19 Marketers Struggle to Prepare for Georgia Competition

Scana Energy Marketing could have the early lead in Georgia's retail gas market. Its mass marketing campaign and generous incentives for residential customers to switch suppliers seem to have caught many competitors by surprise.

Along with a free burger and a Coke at any one of the numerous cookouts Scana is holding around the state during the month of October, the company is offering residential customers $50 in the first month they switch, with no obligation to sign a long-term contract. And if you're lucky enough to win the raffle drawing, Scana will set up a new Broilmaster gas grill on your sun deck.

Scana's marketing department said the generous up-front offers are accompanied by a modest decrease in gas rates: 0.4427 cents/therm or nearly 1.5% less than AGL's current commodity rate of 0.449 cents. Scana also plans to offer other services, including phone, power, home security and Internet service, at a later date.

The home town entry in the Georgia marketing sweepstakes, AGL's own Georgia Natural Gas Services, kicked off its own campaign Friday, launching a statewide advertising campaign featuring "The Gas Guy (TM)" spokescharacter. Described as a "whimsical blue flame" the Gas Guy will star in humorous print ads and television and radio commercials introducing the marketer. Georgia Natural Gas Services also has pledged to donate money to Special Olympics Georgia based on the number of households that sign up with CNGS for gas service through the Law Enforcement Officer Torch Run, which takes place in May, 1999.

On Friday the Georgia Public Service Commission officially concluded Atlanta Gas Light's historic rate case, approving a customer education program for one year and procedures for AGL to follow when sharing information with gas marketers about the company's nearly 1.5 million customers. The PSC also ordered Atlanta Gas Light to cut rates by $6 million. The reduction is in addition to a $7 million rate cut ordered in June.

Earlier last week, 19 marketers were certified to begin crash advertising campaigns. Georgia kicks off retail competition Nov. 1. So far, Scana and Georgia Natural Gas Services have been the most aggressive marketers.

"It's a damn joke," Brent Phelts said of Scana's $50 check offer. Phelts is owner of one of the smaller marketing firms participating, Phelts Natural Gas Associates, and is a partner in Valdosta Natural Gas Services, another small firm that will focus solely on the Valdosta supply pool. "Those are the kind of gimmicks I would tell people to avoid," said Phelts. "I tell people I'll offer them the lowest price possible. I promise to get the gas to them at cost.

"I think that's not really $50. I'd want to see it happen before I sign. I mean there's nobody that can sell gas to residential customers and give them $50 without making that $50 back somehow or over some time," he said in disbelief. "They've already claimed they don't have to have a contract. You can see the potential for misleading information. If Scana really is offering that I'll assign my customers to them."

Scana could be sticking its neck out too far because without a contract customers could jump ship, Phelts noted. Phelts plans to offer residential customers three simple rate packages: a flat rate with a rebate at the end of the year, a long-term fixed price agreement tied to the futures market and a floating price tied to the spot market.

But Phelts said he expects most marketers to focus on commercial and industrial customers until the 33% threshold is reached in one of the nine AGL supply pools and the remaining residential customers in the pool are randomly assigned to marketers. "On Nov. 1, I don't think anyone is going to be prepared to handle the residential market. There are some logistical problems. You have to make sure the EBB interfaces work. You have to have all the customer information, which isn't out yet. You have to see how it's going to be priced."

Gainesville, FL-based Infinite Energy said it will be selling gas to all firm customers but will focus on commercial and industrial customers. "We don't plan to try to buy customers [like Scana is doing]. We're going to be in it for the long haul," said Vincent Vesuvio, Georgia operations director. "Certainly we're going to be matching those 5-10% savings that customers are going to expect to be seeing. We'll be offering them a competitive discount. But our focus is not going to be residential. Maybe you could say we're more reactive than proactive on the residential side, but we're very proactive on our key [large] accounts."

Rebecca Killough, senior energy services representative at NorAm Energy Management said NorAm also isn't going to "pour millions of dollars" in advertising into the market to go after residential customers either because "we really don't feel that the return on investment is there." She wouldn't reveal the rate options NorAm will be offering. "We really can't say that much right now about specific price [offers] and pricing models. We feel like our pricing is going to be extremely competitive."

NorAm is in the process of forming a Georgia partnership with PanCanadian Energy Services. According to the agreement, PanCanadian would act as the industrial supply end, while NorAm would serve any residential or commercial customers to two companies sign up. Several other retail partnerships have been formed, including South Star Energy Services, a partnership of Piedmont Natural Gas, Dynegy and AGL affiliate Georgia Natural Gas, and Scana has joined Cobb, Snapping Shoals and Central Georgia electric cooperatives in a retail marketing arrangement.

Few of the 19 marketing firms have formed marketing strategies, however. Some plan to wait a few months to better prepare and get some idea of what they're up against. Sempra Energy subsidiary Energy America won't participate until after Jan.1. And a spokeswoman for Florida Power &amp Light unit FPL Energy Services said it was "premature" to even discuss whether FPL would be participating. "We're still evaluating our plans," said FPL's Janice Brady. "That's all I can say about it right now."

An FPL marketer said the company may eventually serve a select group of commercial and industrial customers but currently isn't prepared to participate. "At the present time, we have no plans to provide residential services," he said.

Columbia Energy Services said it would be active in all sectors of the retail market, but it's still crafting its marketing strategy and devising its rate packages. Shell Energy Services refused to disclose any of its strategies or competitive rates. In fact, most retail marketers are waiting for AGL and the PSC to release customer data before they design their rate offerings.

The Georgia Public Service Commission reviewed some of the privacy issues involved in the release of customer data on Friday and decided to allow customers a two-month window during which they can choose to have their consumption and related information removed from the database. AGL is obligated to provide marketers with the database on compact disc by Oct. 22.

Rocco Canonica

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