With 42,000 Georgia retail gas customers still disconnected from service (down from 200,000 eligible for disconnection last spring) mainly because of unpaid bills, Georgia Gov. Roy Barnes has asked the state’s Consumers’ Utility Counsel to file a request that the state Public Service Commission (PSC) designate a provider of last resort (POLR) before the winter begins. Barnes also has appointed a task force to look into problems in Georgia’s gas market.

“Record numbers of Georgians are without natural gas service today, and tens of thousands more consumers face the imminent threat of service termination for failure to pay high past-due bills,” the governor told Kristy R. Holley, director of the Consumers’ Utility Counsel Division. “The winter heating season is here. Unless some immediate, meaningful measures are implemented now, many Georgians could face severe consequences in the weeks to come, even while our task force is hard at work.

“To that end, I direct you to take action and urge the [PSC] to designate a [POLR]. The commission should order an appropriate company to provide all components of last resort service at rates designated by the commission. [N]o company presently has an obligation to serve customers turned away from existing marketers. We must act now to provide for their needs in the winter months. While overdue bills and bad debts must be addressed as well, those matters should be taken up in a reasoned fashion, without the threat of a winter emergency.”

The PSC already is undertaking an investigation of its own into the customer disconnects and high retail gas rates. At the urging of Commissioner Stan Wise, the PSC voted last Tuesday to adopt a motion that directs PSC staff to begin a review of whether uncollectible revenue (or a large number of customers’ failure to pay their bills) is the reason that retail natural gas rates are not tracking wholesale prices. The commission has asked retail marketers to comment on the matter within 20 days.

When wholesale gas prices rose dramatically last winter, state regulators imposed a moratorium on customer disconnects through April. Once that moratorium was lifted, however, a flood of disconnects followed. In addition, retail rates charged by unregulated retail marketers did not fall in tandem with declining wholesale prices. That prompted Wise to call for the review. The commission also voted last week to have the National Regulatory Research Institute conduct a study of the impact of deregulation and compare Georgia’s retail rates for other states.

However, the governor’s request for a supplier of last resort came as a surprise, according PSC spokesman Bill Edge. “The governor didn’t give us any warning about this,” he said. “Most of us are going to be out of the office until next Wednesday, so nothing is going to happen on this for the time being.”

Edge said retail gas commodity rates are still about 45 cents per therm higher than wholesale rates. “When wholesale rates went up to $10 last winter, some of the marketers were only charging a $1/therm at that time. They now say [their rates have remained high] because they are trying to recover bad debt. The marketers said because they couldn’t shut people off during the moratorium they had this huge back log of disconnections. They started disconnecting in April and 42,000 remain off the system.

“Some of the commissioners and staff have the viewpoint that marketers were signing up customers before last winter without any credit checks or deposits. They weren’t disconnecting people at all for two years since deregulation began. A lot of the concern is over how much of this bad debt is really attributable to the moratorium and how much is attributable to bad business practices,” said Edge.

He also noted that the commissioners at the PSC are elected public servants who do not report to the governor. As a result, they will pursue their own course of action on these matters, with the governor’s recommendations taken under advisement, he said.

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