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Animosity Breaks Out Between AGL, GPSC

January 25, 1999
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Animosity Breaks Out Between AGL, GPSC

The bitter atmosphere existing in Georgia since the Georgia Public Service Commission (GPSC) accused Atlanta Gas Light (AGL) of overcharging its customers last month intensified last week as the GPSC filed biting pre-testimony for a Feb. 3 hearing, only to have AGL respond in a public outcry. If the hearing occurs, the commission expects a decision on the case by Feb. 9.

Members of the GPSC staff presented their side of the case in a pre-hearing filing last Tuesday, saying AGL's billing practices are not constrained by market forces and, by the deregulation laws, the GPSC has the right to step in. They accused AGL of employing a plan that would accrue $300 million in overcharges by September. For the billing period between October and December alone, the staff accused the utility of receiving $25 million in overcharges. "It is Staff's position is that the commodity sales service prices charged by Atlanta Gas Light Co. are not constrained by market forces and are significantly higher than they would be if they were so constrained," the members said in the testimony. "The staff recommends that the commission exercise its authority and take action to protect consumers."

As evidence, the staff pointed to the commodity sales service rate that appears on customers' bills. The rate is made up of a demand charge, which reflects the fixed costs associated with gas delivery from the wellhead to the company's citygate, and a commodity charge, which reflects the cost of gas varying with volume. They pointed to the demand charge rise in the average bill from $5.16/Dth per designated design day capacity in November 1998 to $23.19/Dth in December. The commodity charge rose from $2.28/Dth in November 1998 to a range of $2.33-$2.55/Dth in December. "I have estimated that AGL could make hundreds of millions of dollars (up to $376 million) in excess revenues, were its current rates to continue through September 1999," Dr. William Foster, executive vice president of Foster Associates, testified. "These higher prices have detrimental effects on the Georgia gas market and create excess profits for AGL and marketers tying their prices to AGL."

The utility responded to the charges with vehemence. "I don't know where they got that from," said Ross Willis, an AGL spokesman. "We just don't do that. There is something inherently wrong in this world when people can accuse us of such things. We've already told them what is going on. We would never hike up the prices on our customers."

In a written statement, Paula Rosput called the claims unfounded. "Little is accomplished by unsupported accusations concerning overcharges. Atlanta Gas Light has not profited from the deregulation of its natural gas sales and has voluntarily opened its books and records to the Commission so that the public can be assured of this fact."

The company said the accusations are a result of a misunderstanding. Willis said the rates were pushed higher to recover costs related to reserving gas for Georgia customers, and "people are crazy to think that we would have sustained them [the higher commodity sales service rate] for as long as they are saying we intend to sustain them."

The GPSC staff recommended re-regulation of the commodity sales service rates for the time between February 1999 and July 2000. It also recommended that AGL should refund over $25 million to all customers who contributed to the over-collection. It said the demand charge rate should fall to $8.26/Dth and commodity charge rate should fall to $2.161/Dth for the time between February and September, and a more comprehensive customer education program be installed by AGL.

AGL said it wants to work this problem out with the GPSC and revise its bills by Feb. 1. Willis said the company is at the table "with their sleeves rolled up," trying to figure out a compromise with the GPSC. "It will probably be a return to a more volumetric-like system," he said. "That seems to be what everybody wants. I think it will happen because a demand-based bill has created so much confusion." The company admitted it did not communicate billing changes well to customers, and as part of the solution, it has offered to refund some customers who were most hurt by the new billing structure. It could not verify when an agreement would be reached, if at all.

John Norris

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