By Rep. David Lucas

In 1997, then-state Senator Sonny Perdue met with representatives from the Atlanta Gas Light Co., at the office of his grain company in Bonaire. He agreed to carry legislation to deregulate Georgia’s retail natural gas business.

Atlanta Gas Light claimed they needed deregulation because they were not making much, if any, money selling natural gas to its customers, who had no choice from whom they could buy gas. Such monopolies are regulated in Georgia by the Public Service Commission, and the sale of natural gas has never been allowed to be very profitable by the PSC.

The idea pitched by Sen. Perdue was to give anyone who wanted to try the business a chance to do so. They claimed the resulting competition among gas vendors would result in lower prices to consumers. In fact, it only reduced the price of doing business for Atlanta Gas Light.

Fast forward to the winter of 2006. Gas deregulation has been a failure in Georgia. It has not been great for consumers or for business. Competition among retail gas vendors has not lowered retail prices for gas because the prices they paid to buy gas never fell.

The gas producers didn’t lower prices because they do not care whether they were selling to one supplier in Georgia, or to 100. Producers kept the price pegged at the same level for all wholesale customers. The inability to get a lower price may be due to the fact that the new gas marketers actually bring less market power to the table than Atlanta Gas Light because they each buy less gas.

The new marketers also brought new expenses into the retail gas business: promotional costs to sign up customers, legal expenses to start new firms and to haggle with Atlanta Gas Light and the PSC, separate billing systems, separate offices, and similar costs. All of these expenses had to be recovered from ratepayers, and each firm had to duplicate the efforts of the others. There is a reason some businesses are called natural monopolies, because it costs too much to make them into competitive enterprises.

Now, nine years later, Atlanta Gas Light wants to introduce something that it again says will increase more competition into Georgia’s natural gas markets. That is exactly what they promised when they pushed deregulation through the legislature with the powerful help of Senator Sonny Perdue. A person might be forgiven for being skeptical of this competition talk a second time, given the unhappy results of the first attempt at introducing competition.

The 2006 version of more competition would direct the Public Service Commission to let Atlanta Gas Light add a surcharge of at least $300 million onto the rates of all Georgia retail gas customers to finance a new natural gas pipeline that would run from the Liquid Natural Gas Terminal at Savannah to Atlanta.

This is the kind of swashbuckling behavior that might be expected from an under-regulated monopoly, like Georgia Power Co., but why is Atlanta Gas Light, supplier to competing marketers, appearing at the PSC at all? And why do they need the General Assembly to tell the PSC what to do? Isn’t that already the job of the PSC, which is elected, and funded by taxpayers at considerable expense?

The Atlanta Gas Light pipeline proposal duplicates another pipeline project, already underway, at no expense to Georgia ratepayers, being built by the El Paso Natural Gas Co. Atlanta Gas Light wants its former customers, whom it ditched to higher cost marketers, to pay for it to be able to compete with El Paso Natural Gas Co., something it apparently feels it cannot do without a ratepayer subsidy.

The General Assembly should politely tell Atlanta Gas Light to fund its pipeline subsidy elsewhere. If the idea is so good, they can take it to Wall Street, the same way El Paso Natural Gas has done, and investors can take the risks of competition and reap the rewards of success. Atlanta Gas Light wants to compete, but only with money belonging to other people — its own former ratepayers.

If Atlanta Gas Light wants to act like a monopoly some of the time, they are going to have to be treated like one all of the time, and be fully regulated again, so that it can supply a vital commodity to customers at the lowest possible rates.

Lucas is a state representative (D-Macon) and former chair of the House Public Utilities Committee. © 2006 by the Georgia Forum. The Georgia Forum, a nonprofit, nonpartisan, educational organization, provides the media with the views of state experts on major public concerns in order to stimulate informed discussion.

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