Titan Energy's Gas Customers Up for Grabs
Parties will meet in an Atlanta courtroom today to decide which
company will win the right to supply the 50,000 customers of gas
marketerTitan Energy of Georgia, which filed for Chapter 11 over
the Fourth of July weekend. Titan became the second marketer to
seek bankruptcy protection in Georgia in less than a year.
Titan and AGL Resources, parent of Atlanta Gas Light, and other
parties met in an emergency bankruptcy session Friday in a Newnan,
GA, court, but Bankruptcy Court Judge W. Homer Drake postponed
making a decision until today (Monday) while Titan Energy tries to
work out a deal to transfer its customers to marketer Shell Energy
Services. The judge, who is a shareholder in SCANA Energy and Duke
Energy (both of which are parties in the case), said he might be
forced to recuse himself if a dispute should arise.
If Titan Energy and Shell Energy fail to come to an agreement by
today, AGL spokesman Nick Gold said AGL Resources will push to
invoke an "interim pooler" agreement under which Titan's customers
would be assigned equally to Georgia Natural Gas Services (an AGL
affiliate) and SCANA Energy to serve as suppliers-of-last-resort.
Titan Energy said it sought Chapter 11 after its wholesale
natural gas supplier, DukeSolutions, filed a lawsuit against the
Roswell, GA, marketer in federal court in Houston, accusing it of
breach of contract. DukeSolutions, a subsidiary of Duke Energy,
contends Titan Energy owes it more than $10 million.
AGL Resources told the bankruptcy court that Titan owes it $2.8
million in gas distribution costs, and that the amount is growing
with each passing day. Titan Energy gave AGL a letter of credit
last Thursday for $1.75 million, but spokeswoman Millicent Hunter
said AGL can't draw on it for 30 days.
Titan Energy's case closely parallels that of Peachtree Natural
Gas, which last year became the first marketer serving the
deregulated Georgia natural gas market to file for bankruptcy. In
that case, Peachtree also sold its customers to Shell Energy.
"We started out with 20-22 gas marketers, and now we're down to
13. We've had a pretty serious winnowing out here," said Chairman
Bob Durden of the Georgia Public Service Commission, who conceded
that he hasn't been a "big fan" of gas deregulation from the start.
"Every aspect of the business has gone kaflooey" since Georgia
unbundled its natural gas market, he noted. But, "you can't put
toothpaste back in the tube."
In the past year, the Georgia PSC has had to deal with slamming,
delinquent billing and bankruptcy cases involving gas marketers
serving the state. "Two bankruptcies in one year is not a good
record.....It's just been a nightmare, and every time I think it's
over here comes something else." One of the slamming cases was
against Titan Energy.
Georgia was "at the cutting edge" of gas deregulation in the
nation, Durden said. "Now [you have to question] how much of this
is due to a flaw in the design." Some states "are holding out based
on the problems we've had," he noted.
"From an economic standpoint, there are some industries that do
not lend themselves well to deregulation," Durden said, adding that
utilities are one of them. "I think something is wrong with
deregulation [period], not just in the Georgia system."
If he could turn back the clock, Durden said he would prefer to
see a modified regulatory framework in Georgia where marketers in
the state would have to file rate structures with state regulators.
He also noted he would prefer a modified fixed variable rate
design, giving customers low bills in the summer and higher ones in
A key mistake that Georgia made was allowing a shift in rate
burden from industrial customers to residential customers in terms
of who pays the fixed costs, Durden noted.