NGI The Weekly Gas Market Report
Retail marketers have been dropping like flies in Georgia, andbilling problems have been mainly to blame. As the Georgia PublicService Commission was putting the finishing touches on a notice ofproposed rulemaking (NOPR) this week that would punish retailmarketers for not getting accurate bills out on time, anothermarketer filed for Chapter 11 bankruptcy protection apparentlyrelated to billing problems in the Atlanta gas market.
Southeastern States Energy became the third retail marketer to filefor bankruptcy protection since deregulation began nearly two yearsago. The others include Peachtree Natural Gas, which filed for Chapter11 protection last October, and Titan Energy, which filed in July (seeDaily GPI, Oct. 29, 1999; July 10, 2000). Southeastern’s nearly10,000 retail customers in the state are far fewer than the 50,000Titan was serving and the 170,000 served by Peachtree at the time oftheir bankruptcy filings.
Southeastern’s parent company, Perry Gas, also filed forbankruptcy protection in a federal bankruptcy court in Houston, TX,Monday, primarily because of its subsidiary’s financial problems inGeorgia. However, Perry’s attorney said the subsidiary’s situationis not nearly as dire as that of Titan or Peachtree when they filedfor Chapter 11 protection.
“We are current on all our obligations,” said Tom Dickinson,Perry Gas’ attorney. “Southeastern States is current on all of itsobligations to the pipeline and to AGL. It is not in arrears withanyone and it has no secured creditors. It is not late on payingany bills. This is not going to be a chaotic reorganization, or anattempt at a reorganization like Georgia experienced with Peachtreeand Titan. It is a completely different situation. It’s muchsimpler, much less dire. We have some cash flow problems that weneed to work out and we have some billing and data issues we needto get the answers to.
“Going forward we hope to be able to figure out what happened tomake sure it doesn’t happen in the future, but we are not taking aPollyannaish view of anything. We understand that issues may arise,and we are trying to be prepared for those. I know it sounds reallystrange that we don’t know what has happened, but we really don’tknow,” said Dickinson. “We do not have access to all of thecustomer invoice data because that is managed by Powertrust.com.”
He said Powertrust, a marketing and billing company based inNorthern Virginia, is in the process of providing the informationPerry needs for its analysis. “We think that is going to answer alot of our questions, but it is so voluminous and we’ve obviouslyhad so much going on in the last week that we haven’t really had anopportunity to dive into it and analyze it and figure out whetherit answers all of our questions or not.”
PowerTrust.com CEO Rick Rumbarger said his company supportsPerry and has “offered to be helpful in any way that we can duringthis difficult process. PowerTrust.com will make every effort toassure that our customers experience no disruption of service orother difficulties as a result of Perry’s reorganization. We standby the customers we serve.”
Dickinson acknowledged, however, that Perry Gas filed a lawsuitagainst Powertrust last week He said the suit has been dismissedbecause it was an effort to obtain the information Perry needed todetermine the cause of its financial woes. “The lawsuit was reallyjust a request for an accounting… There was no allegation ofwrongdoing or impropriety or incompetence. When we got what wasrepresented to be that accounting, we decided that since theyappeared to be acting in good faith it was prudent on our part todismiss the lawsuit.”
Dickinson also noted, however, that he only recently found outthat Powertrust is about to become a certificated marketer in theGeorgia gas market. “They had not been shy in letting us know thatthey had an interest in taking a full role in Georgia so we werenot totally surprised by that — a little bit surprised but notterribly.” He said he wasn’t sure that Perry would continue usingPowertrust as a billing agent once it became a competing marketer.
He said Southeastern intends to tell the PSC it is “going to bebusiness as usual. This is not going to affect Georgia customers.There aren’t going to be any interruptions in service. Obviouslybusiness as usual needs to improve a little bit and that is what weare working on now.”
Another source who requested anonymity noted that if this werean isolated incident and Southeastern was the only retail marketerwith a problem, there would be an argument that the situation wasunique to Southeastern. “But if everybody is having these kinds ofproblems and they are so widespread, what is the commondenominator? Atlanta Gas Light is.”
Dickinson noted that Perry Gas has been active in other retailmarkets and has encountered no billing or financial problems. “Wedon’t handle residential customers elsewhere but we have thousandsof retail customers (commercial and industrial) elsewhere and don’thave any of these kinds of problems. It is a mystery.”
During a commission meeting with marketers earlier this month,several marketers indicated that Atlanta Gas Light “did contributeto some of the overall billing issues,” which have triggered anenormous number of complaints by customers to the Commission. ButAGL “was not seen as the major cause of the problems,” saidCommissioner Robert Baker in an interview with NGI yesterday.
AGL spokesman Nick Gold said the company intends to review itsinternal processes to determine if it contributed to Southeastern’sproblems in any way. “We are certainly looking into it.”
The PSC’s Energy Committee tomorrow is expected to put a noticeof proposed rulemaking (NOPR) on the agenda for next Tuesday’sadministrative session. The NOPR is designed to encourage marketersto make their bills accurate and get them out on time.
“This NOPR is offered as something to provide some relief toconsumers who are not getting billed. The critical provision isthat the bill shall be deemed timely only if it is sent by themarketer or a designated agent to a customer within 90 days afterthe marketer has received a meter read from the distributioncompany,” said Baker. If the marketer fails to get the bill out,the customer is no longer under any obligation to pay the billunless there was a signed agreement between the marketer and thecustomer that allows the marketer to send bills out late. There’salso a provision for accuracy. The bill has to be at least 90%accurate or there is a payment waiver. “One of the good parts thatstaff has included,” said Baker, “is a consumer bill of rightsregarding untimely bills.”
Baker said he is “very disappointed” about the third marketerbankruptcy. “We’re doing everything we can to make the gas marketunder deregulation succeed, but that is out of our hands.”
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