Upon urgings from its staff, the Georgia Public Service Commission (GPSC) voted unanimously on Tuesday to establish a schedule of hearings regarding an earnings review for Atlanta Gas Light Co. (AGLC), which the Commission staff said is earning between 4% and 7% more than its authorized return on equity (ROE).

The hearing dates will be Nov. 5-9 and Dec. 17-21 in 2001 and Feb. 11-15, 2002, with a Commission decision scheduled for March 14, 2002.

Two separate projects submitted by the GPSC staff indicate that AGLC is earning an ROE of 15% to 17%, in excess of “an appropriate ROE” in the range of 10% to 11%. The staff report was based on reviews of AGLC’s Grey Book earnings information, which showed a ROE of 13% for the 12-month period through April 1, 2001, combined with an over-allocation of costs from its unregulated affiliates to the regulated utility. Correcting the cost allocation would increase the utility’s ROE by 2% to 4%. Combining the excess ROE with the amounts generated from re-allocation of costs mean “the company is over-earning between 4% and 7%,” the staff said. “This level of earnings justifies the initiation of an earnings review.”

Atlanta Gas said its own analysis showed that its assessments were correct and in line with the company’s current ROE of 11%. Spokesman Russ Williams said the company had pointed out 88 discrepancies in the report prepared for the PSC by an outside consultant, but the “vast majority were either ignored or disagreed with and were not included in the final report submitted to the PSC.” Williams said the company is analyzing its options and may file for reconsideration. The company’s attorneys have issues with the time frame in the PSC’s investigation. Meanwhile,”we are confident our reporting practices have been accurate and our financials will be found to have been within the authorized rates.”

During the last winter season, or the six months ending March 31, 2001, parent AGL Resources reported core earnings were $67.7 million, or $1.25 per share, excluding one-time items, a 70% increase over the $39.8 million, or $0.71 per share, the company earned for the same period in the previous fiscal year. The returns were on operating revenues for the six months of $645.4 million, compared with $342.4 million for the same period in the previous fiscal year.

The results for the six months ending March 31 reflect the acquisition of Virginia Natural Gas on Oct. 1, 2000. AGL’s operating income for the six months was $119.9 million, compared to $71 million for the six months ending March 31, 2000. The company’s utility segment collected operating income during the recent period of $134.1 million, compared to a minus $14.2 million for its non-utility segment, according to the company’s consolidated balance sheet.

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