Georgia's Problems Cause Tempers to Flare at PSC
Georgia regulators have become bitter following the third
settlement of a slamming case involving a retail gas marketer and
the second retail marketer bankruptcy. Simmering tempers have
reached the boiling point with some public service commissioners
concluding the deregulation process has been a total failure.
Others remain hopeful that the many lessons learned in the process
will help the PSC proceed with electric deregulation when it
becomes the next order of business.
Regardless of their conclusions, however, both sides are moving
toward tougher restrictions on retail marketers, particularly in
the areas of billing, customer relations and price reporting.
The latest lesson concluded last Tuesday with a resolution of
pending allegations of unfair business practices by retail marketer
Energy America. The marketer, a partnership of Sempra Energy and
Direct Energy Marketing, agreed to pay $100,000, including $75,000
to an energy assistance fund for elderly and low income customers
and $25,000 to the state treasury.
The company also agreed to change its marketing practices. It
must comply with Federal Trade Commission regulations on
door-to-door sales and for a six month period must provide the
Georgia commission with advance notice of the area in which it will
be conducting its door-to-door marketing. During that period and
for an addition six months the third party verification company
used by Energy America to confirm its new customer enrollments must
use a script that has been approved by the commission.
The conclusion of the slamming case came only a week after the
auction of 50,000 retail gas customers, which were previously
served by bankrupt marketer Titan Energy (see related story this
issue). Titan was the second retail marketer in the state to file
for Chapter 11.
Billing problems, meanwhile, continue more than a year and a
half into the program. One PSC staff member said four of the 13
marketers still participating in the retail market continue to have
billing problems and up to 20% of their customers still get their
bills late. Some customers haven't received bills in six months and
have been calling the PSC, begging to simply pay what they owe.
Many are afraid that once they get a bill it will be enormous and
will be due in 20 days. The commission at times has been virtually
shut down by customer calls.
In addition, the marketers have been reluctant to file their
prices with the PSC as required. July was the first month of
mandatory filing, but only two out of the 13 marketers submitted
complete information. The others filed under "trade secrets" and
had to be asked by the PSC to re-file.
Deregulation in 'Deep Trouble'
Georgia gas deregulation is "in deep, deep trouble," Georgia PSC
Chairman Bob Durden said in an interview with NGI last week. "We've
shaken down now to what looks like five major [retail marketing]
companies after starting out with 22 because of the purchases,
those that have just decided to quit and the bankruptcies we've
had. There's no doubt in my mind that there are some major
"I know that view is not a majority view on the commission, but
I think it's the right view. I don't think we can go back to the
old system because people have sunk too much money into this
system. But we may be able to assert some regulatory authority that
would prevent residential consumers from taking it on the chin like
Although he has little support from the other PSC commissioners,
Durden believes some significant changes toward reregulation are
needed. He vowed to make a lobbying effort during the next
legislative session to win the PSC any additional authority
required to regulate billing and force marketers to use volumetric
rates which would give residential customers greater rate relief
during periods of low demand.
"Residential consumers deserve better than this," Durden said.
"Let's quit pretending everything is going to be all right if we
just wait awhile, and start paying attention to fixing the thing.
That's all I'm saying. There's been no acknowledgment that it is a
mess. I don't know what more we can do. We have companies going
bankrupt. We have slamming problems. Bills can't even get out. The
whole gamut, it's all there. But I think a lot of it is pride and
ego and egg on their face," he said. "A lot [of the PSC
commissioners] bragged and pushed this as a major thing. 'Georgia
is in the lead; other states will follow us,' [they said]. Well I
don't think so."
Durden also said there is no way he would ever be in favor of
electric restructuring now in light of what has happened in the
state's gas industry. "As far as I'm concerned you can't have
electric deregulation. I said the other day you can forget electric
deregulation because I will raise hell from beginning to end about
that. If we haven't learned a lesson from our experience in gas, we
will never learn. Somebody said you ought to go out to San Diego
and see what is happening in California where they deregulated
electricity. I understand their rates have gone through the roof
"I told Georgia Power 'you all do whatever you have to do;
you'll have 100% support from me.' We have some of the lowest
electric rates in the country right now, and I wrote the rate case
decisions in every major electric rate case we've had since I came
on the commission almost 10 years ago. I'm proud of what we've done
[with electric regulation] in Georgia. If they think they are going
to come through here with electric deregulation and start screwing
electric customers, I'm going to tell it like it is from the
The other commissioners squirm when Durden says things like
that. While they may share his disappointment with the situation,
Durden's bitterness definitely is not shared.
Commissioner Bobby Baker isn't willing to write it off as a
failure. He said last week other states need to realize that
business-related matters rather than regulatory and legislative
snafus were primarily to blame for the difficulties. And
Commissioner Lauren (Bubba) McDonald agreed. Both commissioners
blasted Durden for "grandstanding" in front of the press.
"According to Chairman Durden and the comments he has made, it
is a disaster. But he never let the General Assembly know when they
were passing it in 1997," said McDonald. "He never offered. As a
veteran public service commissioner, he never exposed any of his
wisdom to that body on deregulation. Since we have been involved in
the managing of deregulation in Georgia, he has never offered one
statement in regards to how to deal with a particular issue as we
have plowed this field of responsibility that we have. So to be
able to call it a disaster but yet never offer anything or any fix,
[leads me to] question the credibility of the statement."
McDonald said commissioners need to get busy working hard to fix
the problems that have occurred instead of sitting around
complaining about them.
"With nothing to measure it by I think we have made a tremendous
amount of progress in the state of Georgia and in gas
deregulation," said McDonald. "On the nonregulated side, those
consumers, the 1.4-plus million, are all in a marketer's
possession. There is no other state that has done that."
McDonald said he is disappointed primarily in the companies that
came in unprepared to do business. Strong companies with deep
pockets simply were not prepared to handle the logistical problems
of getting simple bills out to customers. "Some marketers you think
would be most efficient because of the most experience in these
programs in other areas...have been some of the worst that we've
One of McDonald's recommendations to other state regulators is
to question marketers in the certification process about their
business practices: their billing methods and customer relations
methods in particular. "We looked at finances and those things that
seemed to be very important and should be very important, but we
didn't look at just the day-to-day business practices which have
caused us as much a problem as anything out there."
The legislature and the commission could have done more had they
foreseen the pitfalls ahead, both McDonald and Commissioner Bobby
"I think deregulation of the gas market can work even for small
consumers, but there has to be some safeguards put into the
legislation by regulatory agencies to protect customers from
slamming, from being hit with price increases or bearing a
disproportionate share of the cost of gas service," said Baker.
"Those are good lessons to be learned. Our experience here is going
to help us when we initiate electric deregulation."
While distancing himself significantly from Chairman Durden's
comments, Baker said he is disgusted with the track record and the
current situation in Georgia. He agrees with Durden that some
significant changes are required, particularly in the areas of
billing and rate comparisons for customers. But he said he is not
calling for "reregulation" and doesn't plan to fight electric
restructuring when it comes down the pike.
"I think the major lesson other state regulators and businesses
throughout the country ought to focus on is that you had better
have the fundamentals in place and operational before you decide to
jump into this business and start serving gas customers in your
deregulated marketplace because the business end of it is the
Achilles heel," he said.
Business Basics Lacking
"There were some problems that were caused by the legislation
and by our rules, but the killer fatal errors that occurred that
have driven companies into bankruptcy and out of the marketplace
have been basic business issues: not having the financial
resources, the warm winter weather and cash shortfalls, not having
adequate billing systems in place to accurately and timely bill
customers, not having trained customer service representatives who
can respond to consumer inquiries and complaints and satisfactorily
address those consumer complaints."
Baker noted that there are some immediate issues that have to be
dealt with in Georgia, including the continuing billing problems.
"At some point you have to tell the marketers [who have had billing
problems] that 'Hey you've had a fair amount of time. You've had
adequate opportunities, and if you still can't do it, then you are
going to waive those charges to those customers and you are going
to start taking it in the pocketbook. That ought to get your
attention and focus your folks on straightening out the problem.'
Our staff attorney is working on drafting proposed language for
that right now," said Baker.
McDonald said he thinks language will be drawn up that requires
marketers to get bills out on time or else they will lose their
marketing privileges in the state of Georgia.
The other remaining thorn in the commission's side is in the
area of marketer rates. Only two marketers, Scana and Infinite
Energy, have filed complete pricing data. The rest have filed under
"trade secret" and have been asked by the commission to re-file in
the public record.
"It doesn't do the public any good if you are sending us the
pricing information under trade secrets," said Baker, adding that
the marketers are starting to re-file full information. "The
problem that we're seeing now is that everybody has a different
method of charging customers for their service so we're trying to
get them all to provide information that is uniform that can be
provided via our web site or to the newspaper."
While most of the major pitfalls now appear to be behind Georgia
regulators, the battle over the little things continues, he said.