Inefficient customer education, inadequate marketercertification and poorly developed information systems forconsumers led to many of the early problems associated withGeorgia’s 1998 natural gas deregulation efforts, according to PaulaG. Rosput, CEO of AGL Resources.

Rosput spoke on gas deregulation at the National Association ofRegulatory Commissioners (NARUC) Winter Meeting in Washington withRobert S. Tongren of the Ohio Consumers Council (OCC). Tongrennoted Ohio’s move to gas deregulation was handled far differentlythan in Georgia. He pointed out that Georgia forced customers tochoose a new supplier, while Ohio allowed customers to stay withthe utility if they chose to under Ohio’s voluntary program.

“It has not been a dramatic change [in Ohio], it has been agradual change, it has been a gradual educational process,” saidTongren. “I think to a certain extent it lends itself to a sense ofcomfort – when bills are not so high – for our participatingcustomers.”

Ohio’s three choice programs currently have about 2.9 millioneligible consumers and 878,000 are participating. Tongren said theColumbia Gas and Dominion East Ohio programs are the mostsuccessful, while Cincinnati Gas & Electric’s program continuesto have trouble.

One of the biggest problems with the Georgia model, Rosput said,was the decision to leave billing to the marketers rather than theutility. “The biggest story out of the Georgia framework has beenthe number of erroneous bills that have been sent out, or thenumber of bills that were not sent out for long periods of time,which is a direct outgrowth of taking a bundled business andunbundling it in a very short period of time.”

Georgia deregulation’s billing woes have been highlighted in thepast, especially regarding billing provider Utilipro and thebankruptcy of marketer Peachtree Natural Gas (see NGI, Sept. 25,2000). Peachtree’s $50 million lawsuit against Utilipro is stillpending.

Both Rosput and Tongren continually pointed toward customereducation as a major key to the successful implementation of anychoice program. Rosput highlighted Virginia Natural Gas’ (VNG)efforts. VNG plans to spend $30 million over a five-year span toeducate a population of 6.8 million people for gas and electricchoice, while Ohio spent $16 million over two years to educate apopulation of 11.2 million customers. Atlanta Gas Light Co. onlyallotted $5 million over one year to inform 7.8 million people.

“I think if we had it to do over again, we probably would havehad a longer prefatory time in which more information wasdisseminated, because there was a bit of a trial by fire qualitydue to the nature of how customers learn about the experiment,”said Rosput.

“Education, education, education, we can’t say it enough,” saidTongren. “It is the key to making a program work and despite thesignificant efforts by the utilities, the Ohio Public UtilitiesCommission (PUCO) as well as my office… there can never be enougheducation with respect to programs like these.”

Rosput also said certification for marketers was insufficient.Many of Georgia’s marketers were small and underqualified, with toolittle capital on-hand when price spikes hit and times got rough.Certification should ensure that marketers have sufficient gassupply, capacity management and retailing expertise, along withdeep enough pockets to be able to weather volatile periods.

Georgia saw its original 19 gas marketers thinned to nine.Rosput believes the shakeout is over, with four marketers currentlycontrolling a 92% share of the 1.5 million gas customers in thestate. Complaints are declining from the highs reported last Augustand September, she stated, and customer satisfaction with theutility is averaging around 76% in recent months, compared to about70% for the same time period of 1999.

Ohio has also seen its fair share of marketer shakeout, which isstill underway. Over the last year, marketers Energy Max, SummitNatural Gas and The Energy Cooperative all have defaulted (see NGI,Oct. 30, 2000; Feb. 12).

To try to clear up some of the issues revolving around Ohio’schoice programs, the Ohio House passed Bill 9 earlier this week.The bill would allow PUCO to certify marketers instead of leavingit to utilities. The bill also would clarify PUCO and OCCjurisdiction, and set forth a process for complaints. In lateJanuary, the OCC requested that PUCO begin an investigation intothe current state of the natural gas choice programs in Ohio.

Alex Steis

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