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A Round Robin of Residential Unbundling

Fortnightly Magazine - October 15 1996

O. Wise, Jr. of the Georgia Public Service Commission (PSC). "Certainly, the largest obstacle has been the attempt by everyone in the debate to tilt the rule in their favor."

The PSC had a gas deregulation bill ready to go this year, but was hammered by opposition from Atlanta Gas Light Co. (AGL) and large industrial users (who proposed a very extreme model, Wise says). No legislation passed, but the conference committee was formed. The PSC expects AGL to press its position again in the new legislative session.

So far in Georgia, the PSC has approved a small residential pilot for United Cities Gas and a service-provider selection plan for AGL. Neither program will be implemented until after the

1996-97 heating season (em but before October 1, 1997. The overall plan for the transition to increased natural gas competition was approved by the PSC on May 31 (Docket No. 6455-U).

As Wise puts it, the PSC wants to examine the "rules of engagement." How will everyone compete fairly? Brokers and marketers are concerned that AGL could "squire" its old customers to its new unregulated marketing subsidiaries.

The PSC will have to ensure that local distribution companies like AGL erect Chinese walls to separate affiliates.

"We don't know if they're quite as separate as they need to be yet, and that's what we're going to look at," Wise says. "If we tell the Texacos and the Chevrons to come to Georgia, we want them to come knowing we'll enforce the rules of the game. They don't have to worry about AGL cutting their legs out by aiding their own marketing folks."

So far, it appears pilots won't be needed. Larger customers with flexibility as to alternative fuels and pricing wouldn't want to participate in a pilot anyway, Wise says. Residential participants, meanwhile, simply want their gas.

Exit fees could pose a problem, however. "I think that's going to be a real tough issue as we get down the road," Wise says. "How do you protect the incumbent? Does the incumbent need protecting?

"I believe in the next couple of years [that issue] will end up in this commission's lap."

Once the rules are set, he says, the PSC has to get out of the


"We've got to be willing to change. We've got to change the way we regulate, change the way the commission operates, and we've got to be flexible in the market, too."

Foretelling the FERC:

Experts Weigh the Issues

To get a sense of attitudes toward Federal Energy Regulatory Commission (FERC) initiatives, PUBLIC UTILITIES FORTNIGHTLY interviewed two natural gas attorneys as well as a representative from a major pipeline. Since the issues addressed below are still open for comment, the answers we obtained may well shape policy to come.

The respondents are:

Katherine B. Edwards, a natural gas attorney and partner in the Washington, DC, practice of Grammer, Kissel, Robbins & Skancke. Edwards notes that her views do not reflect those of her law firm or her clients.

Robert O. Reid, v.p. of planning and evaluation for Colorado Interstate