Retail Marketers Dropping Like Flies in Georgia

Retail marketers have been dropping like flies in Georgia, and billing problems have been mainly to blame. As the Georgia Public Service Commission was putting the finishing touches on a notice of proposed rulemaking (NOPR) last week that would punish retail marketers for not getting accurate bills out on time, another marketer filed for Chapter 11 bankruptcy protection apparently related to billing problems in the Atlanta gas market.

Southeastern States Energy became the third retail marketer to file for bankruptcy protection since deregulation began nearly two years ago. The others include Peachtree Natural Gas, which filed for Chapter 11 protection last October, and Titan Energy, which filed in July. Southeastern's parent company, Perry Gas, also filed for bankruptcy protection in a federal bankruptcy court in Houston, TX, last Monday, primarily because of its subsidiary's financial problems in Georgia.

However, Southeastern's attorney said the situation is not nearly as dire as that of Titan or Peachtree. For one thing, Southeastern serves only 10,000 retail customers in the state, which is far fewer than Titan's 50,000 and Peachtree's 170,000.

In addition, Southeastern says it is not behind on any of its payments. "Southeastern States is current on all of its obligations to the pipeline and to AGL," said Tom Dickinson, Perry Gas' attorney. "It is not in arrears with anyone, and it has no secured creditors. It is not late on paying any bills.

"This is not going to be a chaotic reorganization, or an attempt at a reorganization like Georgia experienced with Peachtree and Titan," he said. "It is a completely different situation. It's much simpler, much less dire. We have some cash flow problems that we need to work out and we have some billing and data issues we need to get the answers to.

"Going forward we hope to be able to figure out what happened to make sure it doesn't happen in the future, but we are not taking a Pollyannaish view of anything. We understand that issues may arise, and we are trying to be prepared for those. I know it sounds really strange that we don't know what has happened, but we really don't know," said Dickinson. "We do not have access to all of the customer invoice data because that is managed by"

Southeastern uses Powertrust as its billing client and customer contact partner. Powertrust, a marketing and billing company based in Northern Virginia, apparently is in the process of providing the accouning and billing information needed for a complete analysis of Southeastern's marketing operations in Georgia. "We think that is going to answer a lot of our questions, but it is so voluminous and we've obviously had so much going on in the last week that we haven't really had an opportunity to dive into it and analyze it and figure out whether it answers all of our questions or not," said Dickinson. CEO Rick Rumbarger said his company supports Southeastern and its parent company, Perry Gas, and has "offered to be helpful in any way that we can during this difficult process. will make every effort to assure that our customers experience no disruption of service or other difficulties as a result of Perry's reorganization. We stand by the customers we serve."

Dickinson acknowledged, however, that Perry Gas recently filed a lawsuit against Powertrust. Last week, he said, the suit was dismissed because it originally was an effort to obtain the information Perry needed to determine the cause of its financial woes. "The lawsuit was really just a request for an accounting... There was no allegation of wrongdoing or impropriety or incompetence. When we got what was represented to be that accounting, we decided that since they appeared to be acting in good faith it was prudent on our part to dismiss the lawsuit."

Dickinson also noted, however, that he only recently found out that Powertrust is trying to become a fully certificated marketer in the Georgia gas market. "They had not been shy in letting us know that they had an interest in taking a full role in Georgia so we were not totally surprised by that - a little bit surprised, maybe, but not terribly." He said he wasn't sure that Perry would continue using Powertrust as a billing agent once it became a competing marketer.

Southeastern intends to tell the PSC it is "going to be business as usual," said Dickinson. "This is not going to affect Georgia customers. There aren't going to be any interruptions in service. Obviously business as usual needs to improve a little bit and that is what we are working on now."

Another source who requested anonymity noted that if this were an isolated incident and Southeastern was the only retail marketer with a problem, there would be an argument that the situation was unique to Southeastern. "But if everybody is having these kinds of problems and they are so widespread, what is the common denominator? Atlanta Gas Light is."

Dickinson noted that Perry Gas has been active in other retail markets and has encountered no billing or financial problems. "We don't handle residential customers elsewhere, but we have thousands of retail customers (commercial and industrial) elsewhere and don't have any of these kinds of problems. It is a mystery" why the company's problems have been confined to Georgia.

During a commission meeting with marketers late last month, several marketers indicated that Atlanta Gas Light "did contribute to some of the overall billing issues," which have triggered an enormous number of complaints by customers to the Commission. But AGL "was not seen as the major cause of the problems," said Commissioner Robert Baker in an interview with NGI last week.

AGL spokesman Nick Gold said the company intends to review its internal processes to determine if it contributed to Southeastern's problems in any way. "We are certainly looking into it."

The PSC is expected to vote on a notice of proposed rulemaking on billing issues during Tuesday's administrative session. The NOPR is designed to encourage marketers to make their bills accurate and get them out on time.

"This NOPR is offered as something to provide some relief to consumers who are not getting billed. The critical provision is that the bill shall be deemed timely only if it is sent by the marketer or a designated agent to a customer within 90 days after the marketer has received a meter read from the distribution company," said Baker. If the marketer fails to get the bill out, the customer is no longer under any obligation to pay the bill unless there was a signed agreement between the marketer and the customer that allows the marketer to send bills out late. There's also a provision for accuracy. The bill has to be at least 90% accurate or there is a payment waiver. "One of the good parts that staff has included," said Baker, "is a consumer bill of rights regarding untimely bills."

Baker said he is "very disappointed" about the third marketer bankruptcy. "We're doing everything we can to make the gas market under deregulation succeed, but that is out of our hands."

Rocco Canonica

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