Retail Unbundling - Georgia


Status: The state has implemented a comprehensive unbundling program for 82 percent of its residential gas customers.


Overview: Since October 1, 1999, all residential natural gas customers (approximately 1.4 million) in Atlanta Gas Light Company's (AGL) service territory must purchase their supply directly from marketers certified by the Georgia Public Service Commission (PSC). This represents more than 80 percent of the residential gas customers in the state. AGL no longer sells natural gas but continues to provide distribution and transportation services. Legislation was passed in 1997 that allowed the state's two investor-owned utilities (AGL and United Cities Gas Company) to unbundle services. Accordingly, AGL offered supplier choice to its customers in November 1998. By May 1999, enough consumers had chosen service from marketers that the PSC determined that sufficient competition existed in AGL's market area to allow the company to exit the merchant function. United Cities Gas Company has chosen not to unbundle gas services.


Concerns about the billing practices of some marketers and the high prices to residential customers in the winter of 2000-2001 led to passage of the Natural Gas Consumers' Relief Act in April 2002, which revises the Natural Gas Competition and Deregulation Act enacted in 1997. The new legislation gives the PSC authority to issue emergency orders, such as price regulations, if it determines that market conditions are no longer competitive (specifically, if 90 percent of customers are served by three or fewer marketers). It also includes a consumer bill of rights, provides for a regulated gas provider, and removes legal restrictions that prohibited electric companies from selling natural gas.


At one time, 19 companies were on the PSC's list of approved marketers. However, several of these companies declared bankruptcy and others exited the market because of poor performance. As of December 2002, 10 companies were participating, including two electric companies. Customers of the New Power Company, which declared bankruptcy in June 2002, are now being served by Southern Company. In June 2002, Scana Energy was selected as the regulated provider to serve low income customers and “high risk” customers who are unable to receive service from a marketer. The PSC approved a lowest-cost pricing plan and a special rate for senior citizens. Scana’s reimbursement for nonpaying low-income customers will come from the state’s universal service fund, which is funded by surcharges on large industrial gas users. Scana is expected to serve as the regulated provider for a 2-year period.


EIA State Data: In 2001, Georgia had 1,737,850 residential and 130,341 commercial natural gas customers. They consumed 120 and 51 billion cubic feet of natural gas, respectively. The average prices paid for natural gas purchased from local distribution companies by residential and commercial customers were $10.58 and $9.19 per thousand cubic feet, respectively. The average city gate price in the state was $6.02 per thousand cubic feet.


Eligibility/Participation in Retail Choice Programs:


Status as of December 2002: Number of Customers

Customer Type

Total 2001

Eligible

Participating

Total

Percent of 2001 Total

Total

Percent of Eligible

Percent of 2001 Total

Residential

1,737,850

1,430,323

82.3

1,430,323

100

82.3

Commercial

130,341

100,692

77.2

100,692

100

77.2

Total

1,868,191

1,531,015

82.0

1,531,015

100

82.0


Sources: Total 2001: Energy Information Administration, Natural Gas Annual 2001 (February 2003). Eligibility Rate: Based on customer totals for Atlanta Gas Light reported on Form EIA-176, "Annual Report of Natural and Supplemental Gas Supply and Disposition," which is the primary data source for EIA's Natural Gas Annual. Participation Rates: Georgia Public Service Commission.



Georgia: Regulatory and Legislative Actions on Retail Unbundling


Summary: The Georgia General Assembly enacted the Natural Gas Competition and Deregulation Act and Alternative Form of Regulation Act in April 1997, which allows companies other than utilities to sell natural gas to residential consumers and alters the regulatory framework of the state's natural gas industry. Beginning November 1, 1998, all customers of Atlanta Gas Light (AGL), the state's largest investor-owned utility (1.4 million customers), could purchase gas from marketers rather than from AGL. By May 1999, the Georgia Public Service Commission (PSC) determined that sufficient competition existed in AGL's market area to allow the company to exit the merchant function. Since October 1, 1999, AGL has provided distribution services only and all customers in its delivery area purchase gas directly from marketers. The PSC has set rules to protect consumers from unauthorized switching and designated a default provider (to be selected each year) in case a marketer is unable to continue service. The PSC also posts a monthly "scorecard" on its web site showing the number of complaints received about marketers as to billing, service, and deceptive marketing practices.


Additional consumer protection measures were adopted as a result of the Natural Gas Consumers' Relief Act enacted in April 2002, which revises the Natural Gas Competition and Deregulation Act of 1997. The new legislation gives the PSC authority to issue emergency orders, such as price regulations, if it determines that market conditions are no longer competitive (90 percent of customers are served by three or fewer marketers). It also includes a consumer bill of rights, provides for a regulated gas provider, and removes legal restrictions that prohibited electric companies from selling natural gas. The legislation incorporated many of the suggestions contained in a report of the “Blue Ribbon” Task Force established by Governor Barnes in late 2001 to assess the impact of deregulation in the state. Also prior to the legislation, the PSC had authorized (November 2001) a review of marketers' ratesetting methods to determine whether the companies' bad debt was keeping retail rates high. The PSC also authorized a study to assess the impact of deregulation and compare retail gas rates with other states.


Regulatory and Legislative Actions

Legislation

4/02

The Natural Gas Consumers' Relief Act (House Bill 1568, signed into law 4/25/02). Revises the Natural Gas Competition and Deregulation Act. Gives PSC authority to issue emergency orders such as price regulations if market conditions are no longer competitive (90% of customers are served by 3 or fewer marketers). Includes a consumer bill of rights, and provides for a regulated gas provider. Removes legal restrictions that prohibited electric companies from selling natural gas.

 

4/99

Legislative Amendment. HB 822. Amends the Natural Gas Competition and Deregulation Act. Allows the PSC to set more general criteria for determining that adequate market conditions exist in a particular delivery area. Removes requirement that alternative suppliers account for one-third of peak-day market before customers who have not chosen an alternative provider can be randomly assigned a service provider.

 

4/97

The Natural Gas Competition and Deregulation Act, O.C.G.A. § 46-4-150 et seq and Alternative Form of Regulation Act (O.C.G.A. § 46-2-23.1 et seq). The legislation provides guidelines for the unbundling of Georgia's natural gas industry and directs the PSC to set rules accordingly. An LDC may be released from the obligation to provide merchant service when at least five marketers (unaffiliated with the LDC) are operating within a service area and account for at least one-third of the area's peak-day requirements (applies until 9/30/01). It gives the PSC authority to certify marketers and to specify how to deal with issues of stranded costs. The legislation establishes a sharing mechanism for profits from capacity release during the transition and a method for assigning capacity to marketers. It also directs the PSC to establish and administer a universal service fund to help assure natural gas availability and service. The legislation does not affect gas companies owned by municipalities or other governmental entities.

Regulatory Actions

10/02

Walton Energy, Subsidiary of Walton Electric Membership Corp, Approved as Natural Gas Marketer. Walton is the first EMC affiliate to be certified as a natural gas marketer. Company is a consumer-owned utility with 99,000 customers in NE Georgia.

 

10/02

Retail Price Caps Considered. PSC issued NOPR that could establish price caps if marketer prices do not track wholesale prices. PSC is advocating conservative gas purchasing practices by marketers and hedging. NOPR (Docket 15640-U) would create standards for determining whether natural gas prices are constrained by market forces. Workshop on proposed rules scheduled for November 2002 and written comments due November 1.

 

8/02

Rules To Implement Provisions of Natural Gas Consumers' Relief Act (2002). Sets service quality standards for Atlanta Gas Light, natural gas marketers, and the regulated provider re billing and collections, payment processing, meter reading accuracy, customer switching, and service disconnections. minimum standards for marketers' terms of service, requires service terms to be approved by PSC, sets requirements for marketer disclosure statements, gives consumers' 3 days to rescind new contract with marketer, and specifies penalties to marketers for failing to comply with terms of service rules.

 

8/02

New Rules on Natural Gas Marketers' Terms of Service to comply with Natural Gas Consumers' Bill of Rights legislation (2002). Sets minimum standards for marketers' terms of service, requires service terms to be approved by PSC, sets requirements for marketer disclosure statements, gives consumers' 3 days to rescind new contract with marketer, and specifies penalties to marketers for failing to comply with terms of service rules.

 

7/02

Southern Company Gas Approved as Certified Gas Marketer. Company will acquire New Power's customers. New Power had been the designated default provider if a marketer were unable to meet its service obligation..

 

6/02

NOPR on Marketer Terms of Service.

 

6/02

PSC Selects SCANA as Regulated Provider. Natural Gas Consumers' Relief Act (signed April 2001) required PSC to select regulated provider by July 1, 2002. Company will serve low income customers and "high risk" customers who are unable to receive service from a marketer. PSC approved a lowest-cost pricing plan.and a special rate for senior citizens. Service is expected to start Sept. 1, 2002.

 

5/02

Proposed Rules for Certification of Electric Companies as Natural Gas Marketers. Establishes proposed rules regarding electric companies serving as natural gas marketers, as approved in the Natural Gas Consumers' Relief Act.

 

4/02

RFP for Regulated Provider. PSC issued RFP for a regulated provider and an interim pooler. The regulated provider will serve for 2 years unless PSC decides to extend term for third year or terminate service after 1 year.

 

11/01

Independent Audit Considered.

 

10/01

Consumer Protection Task Force. Governor invited PSC members and other experts to serve on a task force to assess deregulation.

 

6/01

New Interim Pooler Selected. New Power Company was designated as sole interim pooler for the Atlanta Gas Light (AGL) market in a one-year contract beginning July 1, 2001. If a marketer in AGL's territory is unable to meet its obligation to residential or small business customers, NewPower becomes the default provider until another marketer is chosen by the customer.

 

12/00

More Uniform Billing Standards. PSC approved a new rule (effective 1-25-01) that addresses service quality standards for billing and consumers' rights and remedies for untimely bills. Goal is to make it easier for consumers to compare marketer price offers.

 

8/00

New Interim Poolers Selected. PSC approved Scana Energy Co. and Georgia Natural Gas Services Co. as interim poolers from July 1, 2000, through June 30, 2001. Selection based on assessment of marketers'overall rates, terms, and conditions most favorable to consumers. Applications will be considered each year.

 

7/00

Unauthorized Switching and Recruiting Complaints Resolved. Energy America agreed to establish a $75,000 fund to assist low income customers, a $25,000 payment to the PSC to cover expenses, implement a third-party verification system, and comply with FTC door-to-door solicitation rules..

 

6/00

Marketer Rules Amended. (effective June 2000). Requires marketers to file pricing information with the PSC and to disclose relevant pricing information when making offers to customers. Include additional standards for certification and additional grounds for revoking or suspending certificates.

 

5/00

AGL Customer Refund. In December 1999, PSC determined that AGL had over-collected in its Purchased Gas Cost Adjustments for 1999. Money was placed in interest-bearing escrow account and then refunded to customers in May 2000..

 

2/00

Anti-Slamming Rules Approved (see 6/99).

 

11/99

Interim Pooler. Shell Energy Services was selected to serve as the interim pooler. The PSC had asked for applications from marketers by 11/3/99 to serve as interim suppliers if a marketer should go out of business.

 

6/99

Anti-Slamming Provisions. The PSC proposed rules to protect gas consumers from unauthorized switching of suppliers ("slamming") or from being charged for unauthorized services ("cramming"). Offenders can be fined up to $15,000 and could lose certification. Marketers are to be required to keep documentation for 1 year that would verify a customer's request to switch.

 

5/99

Competitive Market Determination. The PSC determined that market conditions in the Atlanta Gas Light service area are sufficiently competitive to deregulate sales service in the area, as 33 percent have chosen alternative suppliers. AGL customers will have to select a marketer by August 11, 1999, or the PSC will randomly assign them to one, based on the marketer's market share at that time. AGL will continue to sell gas until October 1, 1999, after which it will provide solely distribution services.

 

1/99

AGL Customer Refund. Docket 10270-U. The PSC approved a settlement between Atlanta Gas Light, the Consumers Utility Counsel, and the PSC staff that revised the utility's rates and required a $14.5 million refund to its customers. Rates will be based solely on the amount of gas actually consumed rather than including any charges for interstate pipeline capacity.

 

11/98

Customer Assignment. Notice of Proposed Rules (NOPR) Concerning Random Customer Assignment, Docket 8053. New Rule (515-7-4). The PSC will randomly assign unassigned customers to marketers based on the total market share of the marketers on the 100th day following determination that adequate competitive market conditions exist for the delivery group.

 

10/98

Marketer Certification. The PSC issued certificates to 19 gas marketers, allowing them to provide natural gas service to retail customers in the AGL delivery area.

 

9/98

Relationship Between AGL and Marketers. Partial Order on Motions to Reconsider Re AGL Filing of Election and Application for New Rates, Docket 8390-U. Requires that AGL, at its own expense, provide additional information to certified marketers, such as customers' names, service and billing addresses, SIC code(commercial customers) design day requirements, 12-month consumption data, billing cycle, and meter type. Increases the monthly discount a marketer receives for service bought on AGL on behalf of others. Directs AGL to unbundle its storage and peaking services. If a marketer uses third-party no-notice storage or peaking service, AGL cannot impose balancing charges. Marketers must receive PSC permission to own or install a meter.

 

6/98

Restructuring Rules. PSC issued rules to implement the Natural Gas Competition and Deregulation Act and set the rates that AGL can charge during the transition period to deregulation. Marketers must apply for certification by July 16 to be eligible to sell gas in fall 1998. Customer choice in the AGL service area begins November 1, 1998, and customers will be allowed to change gas providers once during a year without incurring a switching fee. Marketers cannot receive customer information unless the customer has given authorization. Other rules pertain to ancillary services, daily balancing, and the requirement that AGL has an electronic bulletin board operating by November 1, 1998.

 

6/98

Service Disconnection. NOPR Relating to Residential Gas Service Disconnection, Docket 9205-U. Amends rules by creating two separate rules to address the needs of the gas and electric industries, since the Natural Gas Competition and Deregulation Act does not affect electric utilities.

 

2/98

Universal Service Provisions. NOPR Relating to Universal Service Fund, Docket 7604-U. Sets requirements for establishing and administering a universal service fund to help assure natural gas availability and service and to expand necessary facilities.

 

12/97

Marketer Certification. Rule Concerning Marketers' Certificates of Authority, Docket 8044-U. Marketer applications must include company financial information and technical information that demonstrate capability to provide reliable service.

 

12/97

Random Assignment. PSC issued proposed rules to implement the Natural Gas Competition and Deregulation Act. The rules include criteria for random assignment of customers to marketers once competitive conditions are determined to exist within a delivery area.


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File last modified: 1/31/2003