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Final Report of the Governor's Blue Ribbon Natural Gas Task Force

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Final Report of the Governor's Blue Ribbon Natural Gas Task Force Final Report of the Governor’s Blue Ribbon Natural Gas Task Force February 5, 2002 February 5, 2002 Honorable Roy E. Barnes, Governor Office of the Governor State Capitol Atlanta, Georgia 30334 Dear Governor Barnes: Pursuant to your executive order dated November 18, 2001 it is my pleasure to submit to you and the General Assembly the report from the Blue Ribbon Task Force on Natural Gas. Speaking on behalf of the Task Force as Chair, I am confident we have provided a range of policy options to address the issues created as a result of deregulation of natural gas in 1997. In the course of our activities, we held four lengthy meetings of the Task Force, formed and met with the Industrial Advisory Group, heard from consumers through members of the task force and reviews of 14,000 records of consumer complaints, and worked with all parties to develop the final report. We have attempted to provide you and the General Assembly with a concise list of recommendations while backing them up with documentation to support our conclusions. As you know, while deregulation was intended to benefit the consumer, there were many unintended consequences for consumers, businesses, state regulators, and gas marketers alike. The Task Force believes that resolution of these matters calls for a multi-pronged approach to provide for enhanced consumer protection and education, improved levels of service, and stability in the marketplace. We do not believe that re-regulating is appropriate at this time. I know you will join me in thanking the members of the Task Force and the Industry Advisory Group. They worked hard and diligently to find a resolution that will serve the citizens and businesses of the State of Georgia well into the future. We benefited greatly from the support of the Public Service Commission and their staff. I would also like to express my appreciation to Mr. Chris Carpenter of your office and to members of our support team from Georgia Tech, Mrs. Lynn Durham, Dr. Jan Youtie and Mr. Andrew Harris. This report brings to a close the primary charge you have given the Task Force. However, we stand ready to answer questions or provide commentary on our report as needed. Thank you for this opportunity to serve the State of Georgia. Sincerely yours, Wayne Clough Governor’s Blue Ribbon Natural Gas Task Force Members Dr. Wayne Clough Barry W. Reid President Administrator Georgia Institute of Technology Governor’s Office of Consumer Affairs Chair, Natural Gas Task Force Kristy Holley The Honorable Newt Hudson Director State Representative, District 156 Consumers’ Utility Counsel Division Governor’s Office of Consumer Affairs The Honorable Jimmy Skipper State Representative, District 137 Janice Riley Executive Director The Honorable Mark Burkhalter Ninth District Opportunity Inc. State Representative, District 41 The Honorable Brenda Cornelius The Honorable Nathan Dean Commissioner State Senator, District 31 Governor’s Office of Human Relations The Honorable Regina Thomas The Honorable Jim Martin State Senator, District 2 Commissioner Georgia Department of Human The Honorable Jeff Mullis Resources State Senator, District 53 Langdon Sheffield The Honorable Lauren “Bubba” Americus, Georgia McDonald Commissioner Dr. William Nevin Jones Georgia Public Service Commission Rome, Georgia Task Force Staff The Honorable Robert Baker Commissioner Andrew Harris Georgia Public Service Commission Special Assistant to the President and Director of Government Relations The Honorable David Burgess Georgia Institute of Technology Commissioner Georgia Public Service Commission Dr. Jan Youtie Principal Research Associate The Honorable Bob Durden Georgia Institute of Technology Commissioner Georgia Public Service Commission Lynn Durham Government Relations The Honorable Stan Wise Georgia Institute of Technology Commissioner Georgia Public Service Commission ii Table of Contents Executive Summary............................................................................................................ 1 Current Situation: Summary of Findings........................................................................ 1 Issues that Need to be Addressed.................................................................................... 3 Task Force Process.......................................................................................................... 3 Recommended Approaches............................................................................................. 4 Introduction......................................................................................................................... 7 Task Force Mission and Organization............................................................................ 7 Overview of Report......................................................................................................... 8 History................................................................................................................................. 9 Assumptions About Deregulation................................................................................... 9 Key Concepts .................................................................................................................. 9 Deregulation Timeline in Georgia ................................................................................ 10 Other State Models........................................................................................................ 12 Georgia Market To Date ............................................................................................... 13 Deregulation in Other States Did Not Occur at the Speed or Comprehensiveness That Took Place in Georgia. ................................................................................. 13 Georgia’s Early Into Deregulation Has Not Yet Affected a Significant Long-Term Advantage. ............................................................................................................ 14 The Benefits of Deregulated Rates Have Been Mixed ............................................ 14 Deregulation Has Not Yielded Better Customer Service And Has Raised Concerns About Service To Low-Income Customers .......................................................... 15 Most Consumers Want Reliable Service, Fair Prices, Stability, Accurate And Timely Bills, And Not Deregulation Per Se ......................................................... 17 Much Regulatory And Legislative Involvement Has Occurred Following The Initial 1997 Legislation.................................................................................................... 18 Issues that Need to be Addressed...................................................................................... 19 Consumer Education..................................................................................................... 19 Consumer Protection, Disclosures, Contract Terms, Disconnections .......................... 19 Ensuring an Adequate Safety Net for Low Income and Disabled Customers.............. 19 Bad Debt ....................................................................................................................... 20 AGLC Interaction with Marketers ................................................................................ 20 Organizational Issues .................................................................................................... 20 Pricing........................................................................................................................... 20 Enhancing Competition................................................................................................. 21 Recommendations ............................................................................................................. 22 Do Not Return To A Traditional Regulated Monopoly................................................ 22 Adopt Approaches to Refine and Improve the Present Market.................................... 24 Proposals Needing Legislative/Regulatory/Executive Action................................. 24 Proposals Needing Review ...................................................................................... 30 Proposals Considered but Not Recommended......................................................... 32 Proposals Considered but No Conclusions Drawn.................................................. 34 Implementation............................................................................................................. 37 Acknowledgements........................................................................................................... 38 iii Appendix 1. Governor’s Executive Order, Blue Ribbon Natural Gas Task Force........... 39 Appendix 2. Members of the Industry Advisory Committee ........................................... 45 Appendix 3. Timeline and Deregulation Activities Regarding Natural Gas Deregulation Since April 1997 ............................................................................................................ 46 Appendix 4. Disconnections and Reconnections .............................................................. 48 Appendix 5. The Competitiveness Of The Georgia Deregulated Gas Market ................. 51 Appendix 6. Monthly Price Comparisons......................................................................... 53 Appendix 7. Bad Debt Study............................................................................................ 55 Appendix 8. Sampling
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