The Fayette Citizen-News Page
Wednesday, October 21, 1998
Deregulation will affect gas franchise fees locally

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Deregulation of the natural gas industry will probably change the amount of money local governments receive in franchise fees, but how much change is still in question.

Fayetteville city attorney David Winkle told City Council Monday that Atlanta Gas Light Company, the Public Service Commission and the Georgia Municipal Association have agreed on a new formula for the franchise fees based on the total volume of gas flowing through the company's pipes within the city.

The old formula was based on sales to customers, but the company no longer will sell gas directly to customers. Atlanta Gas Light will act as a wholesaler, and a crop of new retailers will handle sales to customers.

The formula is filled with scientific language that's hard to decipher, said Winkle.

"I couldn't tell you what this means" in terms of money the city will receive, he said. Probably franchise fees from Atlanta Gas Light will be reduced, but new fees for the new retail companies probably will fill the gap, he said.

One thing the new formula means is that the city, which approved a new franchise agreement with Atlanta Gas Light just last month, will have to approve a revised agreement using the new formula and a longer term. The term will grow from ten years to 30 years.

In exchange for a longer term, Winkle said, the company has agreed to have its fees annually adjusted for inflation.

Council conducted first reading of the new agreement Monday and will vote on it Nov. 2

Its effective date will be Oct. 31, said Winkle, so that it will have been in effect when deregulation becomes effective, Nov. 1.


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