NGI The Weekly Gas Market Report
In an effort to ease the pain of deregulation for residentialconsumers, the Georgia Public Service Commission (GPSC) voted 5-0last week to approve an estimated $40 million residential refundplan that would help ease what are sure to be high gas bills thiscoming winter. The commission also voted to approve a newsculptured tariff for distribution charges instead of the currentflat rate by a vote of four-to-one, with Commissioner Robert Bakerdissenting.
The measures, which go into effect on Feb. 1, 2001, are actuallycompanion plans engineered by GPSC Commissioner Bubba McDonald. Thesculptured tariff plan is supposed to return billing to nearpre-deregulation form by eliminating Atlanta Gas Light’s flat ratedistribution charge, and replacing it with a charge that is morereflective of the residential consumer’s gas usage. Delivery basecharges, including customer service and Dedicated Design DayCapacity Charges (DDDC), make up almost 40% of a residentialGeorgia customer’s annual gas bill. DDDC covers the common costs ofdelivering gas based on a customer’s demand on the system on thecoldest day of the year. Under the new plan, this delivery basecharge will be collected primarily from December through March whengas is in peak use.
“We see this as a real win for the customers in Georgia,” saidNick Gold, Atlanta Gas Light’s spokesman. “We really applaud whatthe commission is trying to do to be more customer focused. We weresupportive of this move, and we worked with Commissioner McDonaldand the four other commissioners at the public service commissionto help them arrive at this plan.”
Atlanta Gas Light will lower its distribution charge when gasusage is lower during the summer months and raise it when gas usageis highest in the winter. Over a 12-month period, delivery stillwill cost the same, but bills will be balanced with usage.
Commissioner Baker, who disagreed with the sculptured tariffplan, said, “I voted against that [plan] because of the fact that Ifelt that what we were doing did not reduce the cost, or thecharges associated with the DDDC at all. All we were doing wasfront loading those charges during the high cost winter heatingseason months. To me it was basically just trying to make a veryunpalatable charge more palatable by shifting it, kind ofregulatory smoke and mirrors.”
The refund plan was designed to offset the immediate harsheffects of the sculptured tariff plan. As Georgia customers enterwinter, their delivery charges will rise above the current flatrate due to the new tariff plan. To ease the blow, the refund planwill give some 1.35 million residential consumers approximately $13a month in refunds on their bills during February and March of nextyear. McDonald said the money will come from a near $40 millionsurplus in a consumer-financed Universal Service Fund used toinstall gas line extensions to institutions such as schools andneighborhoods that might not be able to otherwise afford it. Therealso is a provision in the fund that allows marketers to requestreimbursement for uncollectable amounts, though no marketer as ofyet has made any such request.
“It has been very difficult for the consumer when he or shelooks at their bills in June, July and August and they are $30 whenthey have used no gas,” said McDonald. “Prior to deregulation, allof these were in volumetric billing, and all of it reflected inwhat looked like the amount of gas that you used. Now it will moreclosely appear like the bills prior to deregulation.”
“Under the straight-fixed variable pricing the DDDC is dividedby 12 presently, and [the consumer] pays X amount a month for 12months. My proposal is revenue neutral, the only thing it reflectsis that in the summer time you will be paying lower DDDC, and inthe winter times when you are using gas you will be paying higherDDDC,” McDonald explained.
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