Retail Gas Reform: Learning from the Georgia Model

Fortnightly Magazine - April 15 1997
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New legislation would tackle the most difficult problem (em low load factors for small-volume customers.

We commend the Natural Gas Competition and Deregulation Act, SB 215, passed by the Georgia General Assembly in March. (Governor Zell Miller was expected to sign the bill in April.) The Georgia legislation envisions a new framework for regulating the retail gas market. In the broad sense, the Georgia plan eschews experimental pilots in favor of creating a new industry structure that is amenable to competition, and a new regulatory scheme to be administered by the Georgia Public Service Commission. The Georgia reforms can, and should, serve as a model for gas retail reform legislation in all states.

Over the past decade, the Federal Energy Regulatory Commission's restructuring of the wholesale gas market has produced enormous gains to consumers and to the performance of the U.S. economy. By unbundling the competitive from noncompetitive wholesale functions and by subjecting the structurally competitive functions to the discipline of the market, the FERC has reduced costs, improved quality, spurred innovation and increased the menu of alternatives available to purchasers. %n1%n

Wholesale gas prices have declined by 52 percent. Service reliability has improved. Moreover, every function affected by competition (em exploration, production, wholesale trade, pipeline transportation, and storage (em has seen significant, efficiency-enhancing innovations that have improved the price-quality relationship and increased the range of service options available to wholesale purchasers.

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