Last Updated: October 2015
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One unique result of Georgia's experience with natural-gas deregulation was the creation of a regulated provider that was designed to offer low-income households lower cost gas and to serve customers who cannot get service elsewhere.
The regulated provider is required to serve two types of customers:
- Group 1 customers, defined as LIHEAP-eligible; and
- Group 2 customers, defined as those unable to obtain natural gas service as a result of poor credit or those who have been refused service by another marketer.
The Georgia Public Service Commission (PSC) chose SCANA Energy as the regulated provider in June 2002. SCANA has continued in that role ever since — the latest reappointment was in February 2012. Households meeting the low-income requirements established by the Georgia Department of Human Resources, the LIHEAP office, qualify for a reduced security deposit, special rates , and a lower customer service fee. These Group 1 customers apply for service through their local community action agencies. At the end 2014, SCANA had 21,355 customers designated as Group 1.
According to the PSC website, rates for Group 1 customers are approximately 13 to 52 cents per therm lower than the current variable rates, and low-income senior citizens receive an additional per therm discount. Deposits for Group 1 customers cannot exceed $100 , and the monthly customer service charge for Group 1 senior citizens is $2 less than other Group 1 customers. During 2014, the PSC approved $1.5 million for Group 1 customer assistance.
The rates for Group 2 customers are higher than the current market rates to offset the added costs and risks associated with serving these customers. These customers cannot obtain service from other marketers due to poor credit or no credit. Group 2 customers are required to pay a deposit of $150 and a higher monthly customer service charge. No funds are available for assisting Group 2 customers.
While the regulated provider's gas prices are supposed to be lower than prices of other providers, that has not always been the case. As a result, the PSC has had to step in and provide supplemental funding for low-income customers’ gas bills. (See history section).
The regulated provider is partially funded through Georgia's Universal Service Fund (USF), another result of Georgia's gas deregulation. Established under the original deregulation law and funded through surcharges on large industrial users and certain profits from Atlanta Gas Light (AGL), the deregulated natural gas company, the USF was originally designed to reimburse marketers for uncollectible accounts and to pay for extension of natural gas service into new territory. Any balance at the end of the fiscal year was to be reimbursed to customers.
The law was amended in 2001 and 2002 to allow a portion of the fund to be used for low-income energy assistance programs. The Natural Gas Consumers' Relief Act changed the law so that "assisting low-income residential consumers in times of emergency as determined by the PSC, and consumers of the regulated provider" were the primary purposes of the USF. According to the law, funding cannot exceed $25 million yearly. As of June 30, 2014, the USF had funding of $17.5 million and expenditures of $9.3 million, leaving an unencumbered balance of $8.2 million.
The PSC has utilized the USF on several occasions. The most recent release, September 2015, allocates $5 million over 5 years to three community service agencies to assist both low-income citizens and low-income senior citizens in paying natural gas bills and replacing or repairing natural gas furnaces and water heaters. A previous distribution in December 2011 provided approximately $10 million to low-income senior natural gas customers as a one-time $160 credit. An earlier release in January 2011 provided $5 million for bill payment assistance of up to $300 for low-income natural gas customers in the AGL distribution area. Low-income senior citizens received $4 million, with the remaining $1 million going to other low-income customers.
Georgia Power contributed $1.75 million annually to provide low-cost home energy conservation improvements to eligible households. The program is available to Georgia Power residential customers that live in single family detached homes. The current income level is 200 percent of the federal poverty level and targets homes of the elderly or those with small children. According to an evaluation of the 2014 program, 551 households received energy efficiency measures that totaled $1.5 million. The PSC approved continuation of the funding through 2016.
The PSC is authorized to use funds from the USF to assist low-income residential consumers in times of emergency. In November 2011, the PSC approved three-year funding of $1 million per year from the USF for an Emergency Gas Heater and Water Heater Repair and Replacement program for low-income seniors. The funds were allocated to six participating agencies. Starting November 1, 2014, the PSC approved another $1 million per year for three years.
Georgia's 1997 Natural Gas Competition and Deregulation Act forced most natural gas customers to choose a competitive marketer. One provision required that customers who had not selected a marketer by May 1999 be randomly assigned to a competitive supplier. (The law applied to customers of Atlanta Gas Light Company, the state's largest utility; the other large utility, United Cities, decided not to open its territory to competition.)
Nineteen marketers entered a field previously dominated by two companies, bringing with them new pricing methods, delayed billings, erroneous billing practices, and, in some cases, illegal practices such as slamming - switching users to their service without the user's knowledge or authorization.
To complicate matters, Georgia consumers were hit with increased prices for natural gas during the unusually cold winter of 2000-2001 when monthly bills soared to hundreds of dollars.
In response to public outcry over high heating bills, the PSC voted in January 2001 to prohibit natural gas marketers from disconnecting residential customers for nonpayment until April 1, 2001. When the moratorium expired, marketers disconnected 124,000 customers. As the winter of 2001-2002 began, about 64,000 customers remained disconnected because of arrearages, and many did not have the means to have their gas turned back on. In November, then-Governor Roy Barnes appointed a task force to investigate how to protect natural gas customers from high prices and disconnection.
In February 2002, the Governor's Blue Ribbon Task Force on Natural Gas released its final report, calling for a "multi-pronged approach" that neither dismantled deregulation nor relied entirely on the free market. The task force dismissed the increasingly popular idea of returning to a natural gas monopoly because of serious financial and legal barriers. Its report noted, for example, that legal claims from marketers could run as high as $500 million if the state were to put them out of business.
Instead, the task force recommended that the PSC designate a provider with regulated rates that could serve low-income and other residential consumers who needed an alternative to competitive marketers.
The General Assembly rated the natural gas issue a top priority for its 2002 session. Using the recommendations of his natural gas task force, Governor Barnes sponsored the Natural Gas Consumers' Relief Act and lawmakers voted overwhelmingly to approve it.
Along with creating the regulated provider, the Act clarified the purpose of the USF as "assisting low-income residential consumers in times of emergency as determined by the PSC, and consumers of the regulated provider." It also established a number of consumer protections. It limited late fees to $10 or 1.5 percent of past due balance (whichever is greater), limited deposits to $150, and prohibited newly published prices from being applied to already consumed gas.
In June 2002, the PSC selected SCANA, one of three marketers to bid, as the regulated natural gas provider. When its program started in September 2002, SCANA was offering rates 10 to 14 cents per therm less than other residential rates; seniors were to receive rates of 12 to 16 cents less per therm. However, the company did not procure enough gas through long-term contracts to honor those prices for longer than a few months. Its regulated-provider contract with the PSC allowed the company to adjust prices to reflect higher wholesale prices the first half of 2003. Because that adjustment was so severe - forcing the company's low-income enrollees to pay the highest prices in the state — the PSC tapped the state's USF for $750,000 to give the regulated-provider enrollees a $50 bill credit in June of 2003. Customers transferred to SCANA because of credit problems did not receive the bill credit.
As mentioned above, the PSC has continued to utilize the USF to help low-income households when high natural gas prices have hit the state.
In May 2010, the PSC released matching funds of $500,000 from USF funds for a federal program called Fresh Start, which provides one-time crisis assistance payments for low-income customers' natural gas bills. The PSC did not release any other USF funds for low-income purposes in 2009 or 2010, when gas prices had fallen and LIHEAP funding had dramatically increased.
In February 2008, the PSC provided $7 million to assist over 26,000 low-income customers on the Atlanta Gas Light system with grants of up to $250 for winter natural gas bill.
The total amount of USF funds disbursed by the PSC to low-income households since 2001 is nearly $65 million.
Other Payment Assistance
In 1987, the PSC mandated that major gas and electric utilities waive their monthly service charge for customers age 65 or over earning less than $10,000 per year — the income limit has since been raised to $14,355 for Atlantic Gas Light and $23,540 for Georgia Power customers. Georgia Power customers who get the senior citizen's discount will also receive a $6.00 per month fuel credit to their bills.
On December 17, 2013, the PSC approved a settlement in a Georgia Power Company rate case that, among other things, increased the senior citizen discount by $4, from a maximum or $14 to $18.
A Social Responsibility Cost rider covers the cost of the senior discount and is charged to all residential customers who are not receiving the discount.
As of October 1, 2015, 30,357 gas customers were receiving a $14 discount for an annual cost of about $5.1 million. At the end of 2013, 74,580 seniors were receiving the electric discount at an annual cost of over $16 million.
Liberty Utilities customers who are 65 years of age or older with an income limit of $14,355 are eligible to receive a waiver of the $10.50 monthly customer charge. In 2014, about 18,966 customers received the waiver.