Georgia
has 84 municipal gas systems, and two investor-owned systems (Atlanta Gas Light
Company and United Cities Gas Company). The municipal systems were built mainly
in the 1950's as a result of local citizen and industrial interest in getting
natural gas to their communities, and because at that time investor-owned
utilities were not interested in building a system into these more rural areas
of the state.
When did Georgia deregulate Natural Gas and why were Municipal
systems excluded?
Georgia’s Deregulated Gas
Market and Municipal Exemption
In
April, 1997, the Georgia General Assembly passed Senate Bill 215 (Natural Gas Competition
and Deregulation Act), paving the way for investor-owned utilities to elect to
"unbundle" their gas supply service from the distribution function.
In November, 1997, one of the two investor-owned utilities in the state,
Atlanta Gas Light Company (AGL), filed its plan to become subject to the
Deregulation Act. In October, 1998, marketers began offering natural gas to AGL
customers at decontrolled prices. On October 1, 1999, AGL officially exited the
gas supply and customer service functions and all 1.5 million gas customers
connected to their system were now being served by gas marketers.
Municipally-owned gas systems were specifically exempted from the Deregulation
Act.
Municipal
systems were specifically exempted from the legislation for many reasons,
including:
1)
Municipals did not see the need for deregulation and significant rate
changes;
2)
Concerns about the cost to deregulate; and
3)
Concerns about a Competitive Market.
First
and foremost, municipal systems did not see the need for deregulation of their
services; they wanted to stay in the gas supply business and felt they were
doing a good job providing this service. Additionally, they were not being
forced to look at significant rate changes because of industrial pricing
concerns. Second, municipals had concerns about the costs to develop and
implement the systems and controls required to allow independent marketers to
operate on their system, which proved to be a significant hurdle of the AGL
deregulation process. And third, municipals did not feel that marketers would
aggressively compete for their customers in many markets since most municipals
serve less than 5,000 customers (versus AGL's 1.5 million), and because the
average municipal system's customer uses less natural gas volume than the
average AGL customer.
What benefit
does a Municipal system receive by being a Member of the Gas
Authority?
Gas Industry Professionals and Buying
Power
In
1987, a majority of the municipal gas systems in Georgia came together and
formed a joint-action agency to represent them in their efforts to procure and
obtain delivery of natural gas in the most economic and reliable means
available. The organization that was formed by these municipal systems to meet
their common need was the Municipal Gas Authority of Georgia (Gas Authority).
The Gas Authority aggregates its Members gas requirements and procures a
majority of those needs on a long-term basis that provides extremely reliable
supply at very competitive market prices. Remaining short-term needs are
competitively purchases from over 20 of the largest and most reliable natural
gas producers and suppliers.
Today,
sixty-one of the municipal systems in Georgia are Members of the Gas Authority.
Click here (Members)
for a listing and more information on each of our Members. The Gas Authority
also provides services to ten Member systems in Alabama and Florida, and to several
contract customers from Mississippi to Vermont. In addition to gas supply
procurement, the Gas Authority provides its Members with capacity planning and
management, regulatory representation, and financial, marketing and
communications assistance.
How is my
Municipal Gas bill calculated?
Understanding Municipal Gas
System Pricing - Rates and Service
A
municipal gas system’s rates and services are established locally and require
local elected official approval for change. Most municipal systems offer
market-based pricing to their customers, which means it can change monthly,
based on underlying gas costs along with a fixed monthly administrative
customer charge. Municipals usually have a number of rate options, including
rates for residential, commercial, firm industrial and interruptible industrial
customers.
Many
municipal gas systems bill their customers in cubic feet (cf), or hundred cubic
feet (ccf), which is the volume measurement of gas consumed. For customers of
some municipal systems and Atlanta Gas Light, this amount is then converted to
a heating value content for use in billing purposes, usually called a
therm.
1
therm = approximately 1 ccf = approximately 100 cf
=
approximately 103,000 British Thermal Units (1030 Btu gas)
More
gas systems are billing in therms or heating value so it can be more easily compared
to other energy sources and their heating values. So depending upon the billing
unit of measure used, comparable gas pricing would be $1.03 per ccf and $1.00
per therm (at 1030 Btu gas).
What
Value does a Municipally owned and operated gas system offer to its
customers?
Value Added Service
A
city operates its natural gas system as a business enterprise for its citizens
who are really the owners, and strives to provide a quality service at a
competitive price. In addition to providing a value-added service, another
benefit of a city-owned system is that the local consumer’s dollars stay on
Main Street they don’t flow to Wall Street. Any earnings from gas system
operations are reinvested in the city for the benefit of all citizens so that
all enjoy a better quality of life. In addition, a city gas system can be
extremely responsive to its customers. And that’s real value customers can
count on and bank on!
