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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 1.5 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 passed in 1997 allowed the State's two investor-owned utilities, AGL and United Cities Gas Company (a division of Atmos Energy Corporation), 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 revised the Natural Gas Competition and Deregulation Act enacted in 1997. The 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 2009, 11 marketers were certified in AGL's service area, although 2 of the companies are prohibited from enrolling new customers and their accounts have been transferred to other marketers because of financial problems and/or service complaints. The PSC revised its marketer rules in 2008 to prohibit marketers from preventing customers from switching to another marketer or provider. It also placed restrictions on a marketer's ability to trade customers and expanded the financial information that a marketer must report to the PSC each quarter.

In June 2002, SCANA Energy, a unit of SCANA Corporation, was selected as the regulated provider to serve low-income customers and 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 comes from the State's universal service fund, which is funded by surcharges on large industrial gas users. SCANA's contract has been extended four times, and in March 2009 the PSC voted to renew SCANA's contract for the 2 years from September 1, 2009, through August 31, 2011. (The PSC selects the regulated provider through a competitive bid process among certificated marketers.)

EIA State Data: In 2008, Georgia had 1,791,256 residential and 126,804 commercial customers. They consumed approximately 119 and 52 billion cubic feet of natural gas, respectively. The average prices residential and commercial customers paid for natural gas from local distribution companies and marketers were $18.26 and $14.30 per thousand cubic feet, respectively.
Eligibility and Participation in Retail Choice Programs:
Eligibility and Participation by Customer Class, December 2009

Customer Type

2008 Customer Total

Eligible December 2009

Participating December 2009

Total

Percent of 2008 Customer Total

Total

Percent of Eligible

Percent of 2008 Customer Total

Residential

1,791,256

1,461,748

81.6

1,461,748

100

81.6

Commercial

126,804

93,667

73.9

 93,667

100

73.9

Total

1,918,060

1,555,415

81.1

1,555,415

100

81.1

     Sources: 2008 Customer Total: Energy Information Administration, Natural Gas Annual 2008 (March 2010). 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 (December 2009).

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 allowed companies other than utilities to sell natural gas to residential consumers and altered 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 AGL's delivery area purchase gas directly from marketers. The PSC adopted rules in 2000 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 set up 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 revised the Natural Gas Competition and Deregulation Act of 1997. The 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 debts were keeping retail rates high. The PSC in May 2003 adopted final rules for determining if natural gas prices are competitive, as required by the Natural Gas Consumers Relief Act of 2002.
Regulatory and Legislative Actions


Legislation 01/06 Legislation approved to reduce tax on natural gas and liquid propane sales  (House Bill 970). Legislature approves tax cut that suspends half the tax collected on consumer purchases of natural gas from January 1 to April 30, 2006, and liquid propane until March 31, 2006. Bill is a response to Governor Perdue's Executive Order issued in December 2005 that suspended taxes on natural gas.
  01/06 Legislation proposed to re-regulate retail gas market (House Bill 1108 and Senate Bill 448). Proposals would prohibit marketers from renewing contracts and return customers to AGL, who would again serve as the regulated supplier and transporter. Similar bills were rejected in 2000, 2001, and 2002. Another proposal would require selection of more than one regulated gas provider for low-income and high-risk customers. (The proposals were rejected during the session.)
  04/02 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.
  04/99 Legislative amendment (House Bill 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.
  04/97 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 05/09 PSC penalizes Stream Energy for slamming. The company did not admit wrongdoing but agreed to pay penalties to resolve customer allegations that their service had been switched to Stream Energy without their consent. The company must file a progress report with PSC within 90 days of the signed agreement date. The PSC issued an interim certificate to the company in April 2008.
  03/09 SCANA retained as regulated provider. The PSC voted to renew SCANA Energy's contract as the regulated provider in AGL's service area for the 2 years from September 1, 2009, through August 31, 2011. The regulated provider provides natural gas service to low-income consumers and to customers who are unable to obtain natural gas service from other marketers because of poor credit. SCANA has been the regulated provider since the program was established in 2002.
  10/08 Catalyst Energy's customers transferred to MXEnergy. The Federal bankruptcy court approved the transfer of Catalyst Energy's 30,000 natural gas customers to MXEnergy, another marketer in AGL's service territory. The PSC had conditionally approved the transfer after Catalyst filed for bankruptcy. Catalyst lost its line of credit with Constellation Energy, which was a trading partner of Lehman Brothers who filed for bankruptcy in September.
  06/08 PSC approves agreement to resolve complaints about SCANA Energy's variable rate plans. Customers had complained that they were not notified when cheaper rates were available under the company's variable rate plans. The agreement specifies that up to 50,000 variable-rate customers who switched to another SCANA rate plan between March 1, 2007, and October 31, 2008, will receive a $25 credit in November 2008. If more than 50,000 customers qualify for the credit, the credits will be reduced accordingly. The total credit amount will be capped at $1.25 million. Customers' bills will be reformatted to show the name of the customer's plan on the bill. The agreement also specifies that SCANA cannot object to a rulemaking that would require marketers to notify customers of new or retired pricing plans.
  04/08 Stream Energy Georgia conditionally approved as gas marketer. The company plans to use the "Multi-Level Marketing" program of its affiliate Ignite to promote its supply service in Georgia. The PSC issued an interim certificate that requires the company to report quarterly on complaints regarding enrollment problems and the details of enrollments through its Ignite affiliate compared with direct calls, Internet, or other contacts, and provide updated training materials if it initiates other marketer methods. The PSC will review Stream's operations in the State after 3 months.
  03/08 Georgia Natural Gas accepts settlement to resolve complaints about its variable rate plans. Customers had complained that they were not notified when cheaper rates were available under the company's variable rate plans. The marketer agreed to issue $2.5 million in rebates. Up to 100, 000 variable-rate customers who switch to another rate plan between December 2006 and July 2008 will receive a $25 credit in August 2008. If more than 100,000 customers qualify for the credit, the amount will be reduced accordingly.
  02/08 PSC revises marketer rule. The revision prohibits marketers from preventing customers from switching to another marketer or provider. It also places restrictions on a marketer's ability to trade customers and expands the financial information that a marketer needs to report to the PSC each quarter. It also clarifies marketer certification procedures.
  01/08 Constellation NewEnergy-Gas Division LLC approved as gas marketer. The PSC certified Constellation as a marketer in the State of Georgia. The company expects to serve commercial and industrial customers in the State.
  10/07 PSC issues notice of proposed rulemaking revising marketer certificate rules. The PSC intends to amend marketer certification rules to require additional information from applicants, specify requirements for marketers purchasing or transferring customers from existing marketers, and spell out language to be used in continuous gas service agreements. The rules would also eliminate the requirement for marketers to file monthly reports with the PSC but would expand the information needed in quarterly financial reports.
  07/07 Fireside Natural Gas LLC approved as gas marketer. The PSC certified Fireside Natural Gas as a marketer in AGL's service territory. The company was formed in 2007 by the owner of Energy Solutions, Inc., a wholesale industrial natural gas marketing company.
  06/07 SCANA retained as regulated provider. The PSC voted to renew SCANA Energy's contract as the regulated provider in AGL's service area for the 2 years from September 1, 2007, through August 31, 2009. The regulated provider provides natural gas service to low-income consumers and to customers who are unable to obtain natural gas service from other marketers because of poor credit.
  11/06 Commerce Energy customers transferred to GNG. The PSC approved the transfer of Commerce Energy, Inc. retail natural gas customers to Georgia Natural Gas (GNG). Commerce currently serves approximately 6,500 retail natural gas customers in Georgia. GNG and Commerce must jointly send a notification letter to all affected customers. GNG must honor Commerce's fixed-rate contracts and Commerce's current charge for customers on a variable price plan. Customers can switch to another marketer without charge prior to the effective transfer date.
  02/06 Catalyst Energy approved as gas marketer. The PSC certified Catalyst Energy LLC as a marketer in AGL's service territory. Catalyst is a privately owned minority enterprise based in the Atlanta area. The company must file monthly financial statements with the PSC and is subject to a PSC-performance review in May 2006. Enrollment numbers are to be limited to 3,000 until the company can demonstrate that it has sufficient capital to take on additional customers.
  01/06 Gas South LLC approved as gas marketer. PSC approved Gas South's application as a marketer in Atlanta Gas Light's (AGL) service territory and authorized the transfer of the customers of Southern Company Gas to Gas South. The company must honor all existing contracts between Southern Company Gas and its customers. Gas South is a consumer-owned electric utility
  10/05 PSC approves disbursement from Universal Service Fund. PSC approved disbursement of $6 million from the Universal Service Fund to the Department of Human Resources to supplement grants from the federally funded Low-Income Home Energy Assistance Program (LIHEAP).
  08/05 PSC issues Notice of Inquiry on multiple natural gas systems within a single certificated area. PSC asked for comments on what factors should be considered if multiple natural gas systems were allowed to operate within a single service area.
  07/05 PSC adopts affiliate transaction guidelines for AGL.
  07/05 Commerce Energy approved as gas marketer.  PSC approved Commerce Energy's application for a natural gas marketer certificate of authority. It also approved the transfer of all customers and assets of gas marketer ACN Energy to Commerce Energy.
  06/05 SCANA retained as regulated provider.   PSC voted to renew SCANA's contract as the regulated provider in AGL's service area for the 2 years from September 1, 2005, through August 31, 2007. The regulated provider provides natural gas service to low income consumers and to customers who are unable to obtain natural gas service from other marketers because of poor credit. SCANA has been the regulated provider since the program was set up in 2002.
  01/05 Marketer late fee policy changed. PSC voted to raise the minimum balance that late fees can be assessed on past due accounts from $10 to $30. The late fee remains at $10 or 1.5 percent, whichever is greater.