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Shell Named GA's Supplier of Last Resort as Peachtree Stays Afloat

November 8, 1999
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Shell Named GA's Supplier of Last Resort as Peachtree Stays Afloat

The maelstrom in Atlanta Gas Light's deregulated gas pool continued last week as regulators scrambled to find a replacement supplier of last resort when the utility concluded it was unable to handle the role. After an urgent 24-hour RFP, the state's Public Service Commission (GPSC) selected Shell Energy Services to perform the function through April 1.

The matter was undertaken with some urgency because 170,000 retail gas customers are hanging by a thread. Their marketer, Peachtree Natural Gas, filed for Chapter 11 bankruptcy earlier this month (see NGI, Nov. 1) as a result of what it described as "unexpected costs" and problems with Utilipro, a utility billing company. The day after the filing, AGL asked for bankruptcy court permission to petition the GPSC for a random assignment of all of Peachtree's customers to more "creditworthy" suppliers.

The court, headed by Hon. Robert Brizendine, has met twice since late October and each time has allowed Peachtree to continue serving its customers by paying a fee to AGL. In total, the Roswell, GA-based marketer has agreed to over $2.7 million worth of payments due by Nov. 15, which is the date the court will reconvene.

"Although we do not want to make a practice of this, we're basically operating in a pay as you go fashion," said Millicent Hunter, a spokeswoman for AGL. "Our priorities are the reliability of service for the customers and the integrity of the system. As the situation currently stands, these interim solutions in which Peachtree basically puts up the money to continue doing business are the best way to maintain reliability at this point."

Regarding the need for a supplier of last resort, which the state's deregulation law calls an "interim pooler," Hunter said the LDC's role has changed and it no longer has the ability to perform the task.

"The tariff states that AGL will be the interim pooler unless the commission assigns another marketer to perform the task. We fully supported the commission in its desire to designate another company for that role.

"We don't want to be the interim pooler because we're already out of the retail function. The utility no longer has its own billing or remittance mechanisms, so getting back into retail would be extremely arduous. We have nobody buying gas and nominating it to the system."

Bobby Baker, a GPSC commissioner said "AGL has made it clear that it does not want to be the interim pooler. If AGL isn't interested and there is another marketer willing to step up to the plate, then that is fine," he said. "Our interest is making sure that we have a reliable supplier that can handle the addition of extra customers. In our view, Shell was it."

While four other marketers (Scana, Energy America, Reliant Energy Services and SouthStar) applied for the role along with Shell, none fit the bill as well as Shell did. "Shell answered all the questions in the RFP to the satisfaction of the commission whereas the others didn't," Baker said.

"This probably should have been done during the make-up of the deregulation legislation, but this whole process has been a learning experience," said Bubba McDonald, a GPSC Commissioner. "We didn't think about it until a situation came up that brought it to our attention."

The commissioner pointed out that the interim pooler process was undertaken as a preparatory measure and in no way is specific to Peachtree's customers. Shell will now have the responsibility of taking on the customers of any supplier that is deemed unable to reliably serve gas by the GPSC.

Last week's developments have come at the tail end of a process in which more than 1.4 million customers have switched suppliers from AGL to one of 16 marketers in a 12-month period.

John Norris

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