NGI The Weekly Gas Market Report
In an American Public Gas Association (APGA) report releasedlast week, a majority of Georgia residential customers gave gasderegulation in the state a failing mark, with many reporting thattheir bills actually increased or that there was no noticeableeffect. Half of the Georgia commercial customers polled also saidthey were paying higher bills, and gave deregulation a thumbs-downfor that reason.
The study, titled “The Impact of Retail Gas Deregulation inGeorgia, from the Customers’ Perspective,” was conducted byNavigant Consulting for the APGA to determine the effects of gasderegulation on customer’s bills in Georgia, to poll customerperceptions on deregulation and to develop implications for APGAmembers with respect to deregulation in their jurisdictions.
“Most residential and small commercial customers we interviewedwould not recommend deregulation to others,” said Mark Pocino,managing director for Navigant Consulting. The study resultsrevealed that 52% of residential and 62% of commercial customerssaid they would not recommend deregulation. “In other areas whereretail deregulation has taken place, the gas utility continues toprovide customers with commodity service. This allows customers tochoose the utility if they prefer, thus providing a smoothertransition for retail deregulation,” Pocino added.
“I believe that it is premature to declare whether or notderegulation in Georgia has been a success, there are still someunanswered questions, said Bert Kalisch, legislative and regulatorymanager for APGA. “This is preliminary information, deregulation isstill fairly new. The consumers’ perception of deregulation iscertainly very important to our members, especially when thecommunities our members serve have the same types of questionsabout [whether] deregulation is good for us?”
The report showed “higher-use customers had the greatestopportunity for bill savings in 1999,” but even these customersexperienced a wide range of results, from a maximum savings of 2%to a 13% increase on their bill. Fixed price contracts for high-usecustomers were found to produce up to 8% in savings, but at theother end of the scale some high-use customers wound up with a 35%increase on their bills. The study allowed that “more significantsavings, are not likely in the near future” because gas prices arehigh, and are expected to stay high in the near future.
According to the study, more than 60% of residential andcommercial customers could not think of any benefits fromderegulation, and even more of the sample could not see anybenefits arising after one more year.
Customers were asked to rate their experience with gasderegulation on a scale in which 1-3 was “worse off,” 4-7 signified”neutral,” and 8-10 meant “better off.” Residential customersposted an average of 4.7, while commercial customers averaged 4.5.
APGA President Ken Craig said, “When our members ask themselvesand their state legislators whether retail deregulation is in theircustomers’ or constituents’ best interests, this study will be anextremely valuable resource.” For a copy of the study, contactAPGA’s Sheila Martel at (703) 352-3890. The cost to non-APGAmembers is $950.
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