The Recession could drive up Atlanta Natural Gas Rates

Thanks in part to the recession, Atlanta Gas Light has announced its intent for a $54 million dollar rate hike. This translates to an additional $3 to the pipeline cost for customers on their gas bill. Note that this rate hike is irrespective of the gas marketer in use by the customer. If approved by the Georgia Public Service Commission, the rate hike would take effect in fall 2010.



The specific reasons provided by AGL for the rate hike are;

• Rising operating expenses
• Declining revenues due to the economy

Note that AGL has not had a rate hike in 17 years, however it has collected significant revenue from other sources. We recently gave a breakdown of a gas bill where 61% of the bill was AGL pass through charges. These pass through charges will increase with this proposed rate hike.

Consumer groups opposed to the rate hike claim that AGL is exaggerating its need for the additional revenue, and that the revenue from pass through charges more than make up for the lost revenue due to the declining economy. AGL has stated that a significant portion of the rate hike would go towards service improvement programs with goals such as expanding appliance rebates and call center repatriation to reduce costs. The declining economy is viewed by opponents of this rate increase as an excuse by AGL to increase its rates.

From the AGL website, here is a summary of the fixed portion of AGL gas bills

• AGLC Base Charge

  - Base customer charge
  - Ancillary service
  - Dedicated Design Day Capacity (DDDC) charge
  - Peaking service
  - Franchise recovery cost

• GNG customer service charge
• Interstate pipeline capacity charges (if applicable)
• Sales tax
• Social responsibility rider
• Pipeline replacement program
• Environmental response cost

The Gas Charge for monthly usage is then added to the above fees.

So this raises the questions;

How long will consumers have to pay for the Pipeline replacement program?

Will the Base customer charge drop once AGL successfully implements its service improvement programs aimed at cost reduction?

It would be interesting to know the specific considerations the Georgia PSC will review in approving or rejecting this rate hike.