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Scana Attempts to Void Marketing Alliance

Scana Attempts to Void Marketing Alliance

Scana Energy Marketing, a subsidiary of Scana Corp., has filed a lawsuit in Cobb County Superior Court in Georgia in an attempt to have the marketing alliance contract which it signed in 1998 with six co-ops nullified.

The 10-year contract Scana engaged in with subsidiaries of Cobb Electric Membership Corp., Snapping Shoals EMC, and four other co-ops, stipulated that Scana would sell natural gas to over 200,000 of the co-ops electricity customers while Cobb and Snapping Shoals would operate the billing service and call center.

"Under current Georgia law, energy marketing corporations, as the co-ops are known, are not allowed to provide any other services for profit basis, or a not for profit basis other than electricity," said Scana spokesman Roger Schrum. "Obviously, they are providing us with billing services that we pay for, which of course would be in conflict with that statutory requirement." Of the six co-ops, Cobb Energy Management Corp. and Snapping Shoals provide the natural gas billing services for Scana.

Schrum pointed to similar cases in which an EMC attempted to sell propane services. The Georgia Supreme Court ruled that Flint Energy, a unit of Flint EMC could not sell anything other than electric services. Schrum said the stance has been reaffirmed recently as Walton EMC was turned down by the Georgia Public Service Commission when it attempted to become a certified natural gas marketer.

Both cases occurred after Scana had already signed the contract he added.

Scana Energy Marketing is also seeking to recover $8.9 million dollars from the co-ops related to damages and out of pocket expenses. "They have not met the performance aspects of our contract to provide billing and call center services," he said. The company is seeking $5.1 million for the damages for billing and customer service problems, and $3.8 million to help retrieve the costs of having to develop their own billing system and call center service to provide the additional services that the co-ops did not meet.

A hearing was held for the case early last week in which the presiding judge said she would decide before the end of the month whether the case should be decided through arbitration or litigation. "It is our intent to proceed with litigation," said Schrum.

Alex Steis

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