Atlanta Gas Light Company Files Response in Rate Proceedings Before the Georgia Public Service Commission
January 11, 2002
ATLANTA, GEORGIA - Atlanta Gas Light Company, a wholly owned subsidiary of AGL Resources Inc. (NYSE: ATG), today filed its cost-of-service study as directed by the Georgia Public Service Commission (GPSC) order in the ongoing review of the company's earnings. Atlanta Gas Light Company's (AGLC) analysis counters the GPSC adversary staff's contention that the company is earning currently a return above that authorized by the GPSC, and clearly demonstrates that a rate increase of approximately $50.3 million is justified, based on its cost to serve approximately 1.5 million customers in Georgia. The amount reflects an average monthly cost increase of $2.32 to each natural gas customer on an annualized basis.
"Atlanta Gas Light Company has not had a base rate increase since 1993, and it was not going to request one," said Kevin P. Madden, executive vice president of legal, regulatory and governmental strategy for AGL Resources. "Rather, it remains the company's goal to try to maintain over the years the current rate structure by managing its expenditures, achieving further productivity improvements and operating efficiencies, despite its increasing costs. The legal requirements of this proceeding, however, mandate a review of the rate structure based on the company's costs for a 12-month period in the future. The company is therefore obligated to file this information about its actual costs to continue to maintain a safe, reliable system for Georgia's natural gas consumers."
The GPSC adversary staff recommended a review of AGLC's earnings in August 2001 and initially sought to reduce the company's rates by nearly $53 million. The GPSC adversary staff subsequently reduced its estimate by more than $20 million in November 2001 to $33 million. In accordance with the GPSC procedural schedule, AGLC will file testimony to support its cost-of-service study on January 28, 2002. Under this schedule, a final ruling is expected by April 17, 2002, with new rates to go into effect on May 1, 2002.
In 1998, in conjunction with deregulation of natural gas in Georgia, AGLC exited the merchant function, and as a result, the GPSC reduced the company's base rates by $55 million. The reduction was based largely upon the assumption that AGLC would no longer provide certain customer service functions. These assumptions have not become a reality in the four years since deregulation, and in fact, the company has incurred unanticipated costs, such as higher customer call center volumes, marketer bankruptcies, as well as annual inflation.
"On an annual basis our base rates last year comprised only 23 percent of the average consumer's total gas bill," said Susan A. McLaughlin, president and chief executive officer of Atlanta Gas Light Company. "Since deregulation, we have taken great strides to increase operational efficiencies, and today we run one of the most efficient distribution companies in the country. However, we have not been able to entirely absorb the cost increases related to inflation and the unanticipated costs of deregulation. We remain willing to work collaboratively with the GPSC and its staff to establish just and reasonable gas distribution rates for our company. Given the many issues surrounding natural gas deregulation in this state, we believe it is in the consumers' best interest for all industry participants, the Governor, the legislature and the Georgia Public Service Commission to resolve those issues that are impacting total natural gas bills and services."