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AGL Refunds $14.5 Million, Retreats to Old Pricing Method

AGL Refunds $14.5 Million, Retreats to Old Pricing Method

Atlanta Gas Light Co. (AGL) reached an agreement with the Georgia Public Service Commission (GPSC) last week to return to its pre-deregulation billing methods, avoiding a Feb. 3 Commission hearing intended to charge the utility with disregarding market constraints in its rate-charging practices. The utility also agreed to refund $14.5 million to overcharged customers. The reformed bills and the refunds will be sent out in February.

The agreement protects AGL from a more strict punishment from the GPSC, which was searching for a $25 million refund and re-regulation of rates. Along with the switch back to volumetric rates and the refund, the bill also requires the utility to charge $.40/therm in February and to use bill inserts, letters, and other media to educate customers about the rate changes.

"This billing fiasco has accelerated the customer switching process," said Commissioner Stan Wise. "This is the best way for customers to benefit from the unbundling. Re-regulating the [rates] would not have allowed for any refunds." Wise added despite this incident, the relationship between the GPSC and AGL is improving.

Ross Willis, an AGL spokesman, said $8 million of the refund was headed to customers as part of the money left over from costs associated 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. The other $6.5 million is to be spread over 263,000 customers AGL has identified as the most damaged by the increase in rates. AGL still has 80% of the gas market in Georgia, despite 284,000 customers switching to other marketers since November.

"This agreement accomplishes two of our main goals," said Willis. "Number one on our priority list was to eliminate customer confusion. Now people will only be charged for what they use. Number two on our list was to demonstrate to the customers who were most hurt by our rate changes that we did not mean any harm. The high bills were caused by warm weather, but the customers still got hurt."

The change is the result of a public uproar concerning AGL's decision to switch from actual-usage billing to demand-based billing when the GPSC deregulated rates last November. Unfortunately for the company, it switched to the demand-based system at a time when warm temperatures caused people to use very little gas. AGL also included reservation fees in the billing adjustment. "People were getting charged more and using less gas," Willis said.

Responding to a public outcry which left phone lines to both the GPSC 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 by September. "There was so much confusion, and communication was so bad, that going back to the old system is probably a good thing." Willis added.

Although this agreement settles the issue, AGL will still have to show up at the GPSC on Feb. 3, the company said. All the issues of the original hearing have been resolved, but the GPSC will hold an open forum to educate the public on AGL's billing methods. The hearing is scheduled for 10 a.m.

John Norris

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