Atlanta Gas wants rate to cover future construction costs

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ATLANTA - More than 1.4 million natural-gas customers across the state would be on the hook for $400 million if Atlanta Gas Light Co. persuades the Georgia Public Service Commission to accept its financing plan for expansion.

Just as Georgia Power Co. won approval earlier this year to charge customers to build two nuclear reactors while they are under construction, the regulated monopoly that distributes gas to homes and businesses is seeking its own guarantee of construction costs. And just as consumer groups mounted opposition to the electric utility’s Plant Vogtle guarantee, they are making the same arguments against the pipeline proposal.

“I just don’t think that the public has grasped how much this might impact them,” said John Coffman, an attorney representing the AARP advocacy group for seniors.

The Public Service Commission, which accepted Georgia Power’s request, votes in October on the new one.

“Even though the economy has slowed, we do have growth,” said Tami Gerke, spokeswoman for Atlanta Gas.

The 10-year Strategic Infrastructure Development and Enhancement, or STRIDE, program would begin by adding pipelines in Fulton, Cobb, Gwinnett, Coweta and other metro Atlanta counties that have experienced steady growth.

Traditionally, investors have borne the cost of construction with the expectation that the added customers will repay the expense. Because investors were taking a risk, regulators set utility rates high enough to generate an expected rate of return that will be attractive to those with money.

Under the STRIDE proposal, Atlanta Gas would face less risk because every customer would pay an added 95 cents per month, starting next month and continuing until 2022. The proposal seeks to build on a program begun in 1998 that levies a surcharge of $1.95 a month to upgrade pipes across the state for safety reasons.

The independent gas marketers who deal with consumers charge the expense and pass it along to Atlanta Gas.

Coffman warns that construction-cost guarantees often result in higher bills for consumers. If regulators consider such costs as part of a traditional rate case, then complete audits of the utility’s books frequently uncover other ways to economize, he said.

"When you start doing piecemeal, these single-issue mechanisms ... generally, they allow rates to be higher than they would be in other cases,” he said.

However, the company says its proposal for a new surcharge will save the $1 million expense of a traditional rate case for each of the next 10 years. Atlanta Gas Light hasn’t gotten permission to raise its base rates through a traditional rate case since 1993.

“Every time a utility applies for a rate case, we don’t always get it,” Gerke said. “So for us, it seemed the smartest thing to do was to take the infrastructure out of the base rate.”

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Barf Obama
Barf Obama 08/31/09 - 07:53 pm
They can suck it up like a

They can suck it up like a Kirby vacuum.
Next they will shed Crocodile tears
Then threaten to move to another state
Last but not least they will threaten to fire all the dead weight They have had to hire on for Politicians. That action will move mountains.

Fiat_Lux 08/31/09 - 08:22 pm
NO, NO, NO, NO, NO!!! We're

NO, NO, NO, NO, NO!!! We're already being sucked dry. Let them figure out where the waste is before they hit us up again, and then pass the costs on to the areas where the growth is happening, the areas that the construction is going to serve. And leave the rest of us alone.

disssman 08/31/09 - 10:48 pm
Does anyone understand what

Does anyone understand what was said in the last 4 paragraphs? I guess they are pretty plain to someone in the gas regulatory business, but us poor consumers need a better explanation without the buzz words. I think we are reaping the rewards of electing the same good old boys, time after time. I believe we shouldn't be on the hook just because "investors want an attractive rate of return".

Craig Spinks
Craig Spinks 09/01/09 - 01:03 am
What is the probability that

What is the probability that Lauren "Bubba" McDonald, GA PSC member, will ask, "Where is Deloitte and Touche when we need its expertise?"

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