Atlanta Gas Light (AGL) announced last week that it will refund$34 million to its former retail customers. The $26 per customerrefund will be issued by the 13 marketers in AGL’s serviceterritory during the May/June billing cycle.

The money being refunded is the surplus in AGL’s purchased gascost account as of October 1999. The Georgia Public ServiceCommission (GPSC) approved the refund earlier this year.

There are two requirements for refund eligibility: 1) thecustomer had to be receiving gas service from AGL or a marketer onMay 25, 1999 and 2) the customer had to be a customer of a marketeron April 3, 2000. Customers who are not in good credit standingwith AGL will have their refund used first to reimburse theutility.

Nick Gold, an AGL spokesman, said the surplus was a result of anover-collection in AGL’s purchased gas cost (PGC) for 1999. The PGCis the price AGL was allowed by the GPSC to charge customers fornatural gas. It includes the commodity cost of gas plus the costsfor pipeline transportation, storage services, fuel loss andpipeline surcharges. The company based the rate on its estimates ofhow much gas it would use during the year. Because of the unknowneffects of deregulation and the unusually warm winter, theutility’s estimates were too high.

“Normally, you’d like the PGC and the actual amount of gas usedto be in the same neighborhood. And normally they are. Yet, becauseof a host of factors last year, AGL over-collected way too much,”said Robert Baker, a GPSC commissioner.

It will be noted on customers’ bills as a “GA PSC OrderedCredit,” which will be deducted from the total amount owed forservice for the particular billing period. The state commission wasvery involved with setting up the refund, Baker said. “We helpedaudit AGL’s books and determine the amount of the over-collection.The funds were put in an escrow account that we held on to. Also,we decided what form the refund would take. Many people wanted itweighted so that the customers who use more gas get a largerrefund, but in the end we decided that the simplest course ofaction was the best, and ordered that the payments be flat foreveryone.”

The company was “very pleased with the level of cooperation [it]received from the GPSC and its staff throughout the process ofdetermining how to facilitate the refund,” said Hank Linginfelter,AGL’s vice president, rates and regulations.

This refund closes out AGL’s role in buying and selling naturalgas in the state. “This activity is now managed by the various gasmarketers,” said Linginfelter.

While the refund represents the final act for AGL’s retailoperations, Gold said the company has been effectively removed fromthe retail side since last October. Now, Gold said AGL is out toenlarge the size of its distribution system through an aggressiveM&A strategy. “We’re going to aggressively look at increasingthe size and scope of our system as we attempt to be the bestdistribution company in the country,” he said. He would not saywhen or what the company’s next move would be.

Last June, AGL CEO Walter Higgins predicted that the companywould merge after its exit from retail operation was complete. “I’dsay we won’t look like we do in two years. That doesn’t mean we’regoing to announce a merger tomorrow,” he told NGI, following aspeech at the Natural Gas Roundtable in Washington, D.C. “But Iwouldn’t be surprised if we’re not in some sort of alliance,whether strategic or not, or some sort of a merger, or somebodyjust plain acquires us within the next couple years.”

Thirteen marketers now operate in AGL’s service territory.Georgia Natural Gas Services (GNGS), an AGL affiliate, and ScanaCorp. have the largest market share with over 30% each. ShellEnergy Services is third with over 20%.

The transition of supply responsibility from AGL to themarketers has not been smooth. Late last year, Peachtree NaturalGas fell in to bankruptcy and was forced to sell its supplycontracts to Shell (see NGI, Nov. 22, 1999).

Recently, Energy America, a joint venture between Sempra Energyand Direct Energy of Canada, has come under fire for slammingviolations. Last week during an administrative session, the GPSCcommissioners unanimously voted to launch an investigation intoEnergy America’s practices in the state. If found guilty, EnergyAmerica could be fined up to $15,000 per violation and have itsmarketer status revoked. The marketer has signed more than 60,000customers, representing a 4% market share.

John Norris

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