Fueling consumer distress.. Natural gas costs leave many angry, suspicious

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Matthew C. Quinn - Staff Friday, February 9, 2001

Lynn McManners opened her January gas bill last week and found out she owed Georgia Natural Gas Services a whopping $886.99.

"We're beside ourselves," said McManners, a stay-at-home mom who lives with her husband and 5-month-old daughter in Atlanta's Virginia-Highland neighborhood. "That's people's house payments!"

The bill for the couple's sunlit bungalow was $464 in December and $327 a year ago. McManners had been keeping the thermostat as high as 74 degrees to keep her baby warm during the day. "What do they want us to do? Freeze our children?''

So McManners turned the thermostat down to 68 degrees and will install plastic storm windows on her drafty 75-year old house. And pay the bill.

Michael T. Smith's January gas bill from Scana Energy for his piano restoration business in Smyrna was $767.38, a 156 percent jump from January 2000. "My operation cannot absorb these costs," he wrote the state Public Service Commission. Smith said he will be forced to lay off one of his two employees "if these are not scaled back."

McManners and Smith are among thousands of Georgians suffering from January gas attacks.

Consumers have been calling marketers and the Public Service Commission in record numbers. Atlanta Gas Light Co. and Georgia Natural Gas Services together took a "staggering" 93,000 calls the last week of January, compared with 4,000 the previous month, said Paula Rosput, chief executive of AGL Resources, parent of both companies.

Calls, e-mails and letters to the PSC have been running at a precedent-setting 700 to 800 a day --- double the usual load of complaints --- and are overwhelming the regulatory agency, which has limited power over the unregulated gas marketers.

The PSC has detailed eight additional staffers to supplement the dozen assigned to take calls. Still, they can't answer all the calls. "We're getting 60 e-mails a day and usually get 60 a week," said Philip Nowicki, director of consumer affairs. PSC Chairman Lauren "Bubba" McDonald said the commission is in a "state of siege . . . as consumers are experiencing shock, disbelief and outrage following receipt of their January gas bills."

"My bill is too high" is the most often-heard complaint. "You open the bill and it's two or three times last year and it's only natural for people to say: Something's wrong here," Nowicki said.

But in most cases, nothing is wrong. The bill is accurate and due.

Bobby Wallace, a retiree from Cumming, called when his Shell Energy bill went from $172 in December to $541 in January as his variable price increased from 78 cents per therm to $1.29.

"I can't believe it went up five times in a month when we had the coldest November and December on record," Wallace said.

The high prices are blamed on a convergence of factors, but the main culprit is that wholesale gas prices have more than quadrupled from a year ago. Increased use of natural gas as a fuel for electric power plants during the peak summer months depleted inventories and drove prices up just as temperatures plunged this winter and drove up demand. The winter of 2000-01 has been the coldest in many years.

"The bottom line is there was a confluence of colder weather and high wholesale prices," said AGL's Rosput. Georgians need an "attitude shift" toward turning down the heat and wearing an extra sweater, she added.

As the weather has turned warmer in recent weeks, wholesale prices have decreased, and most Georgia marketers dropped prices this month. No one expects this winter's peak prices to prevail, Rosput said, "but there's not much that can be done in the short term."

More supplies may also be on the way, with higher prices an incentive for more exploration. There are now 1,138 active natural gas rigs, up from 757 a year ago, according to UBS Warburg. But it will be well into next year before wholesale prices return to last year's levels, according to the investment bank's latest projections.

That will be a bit late for Geneva Reeves, 85, who got a $114 bill last month from Georgia Natural Gas to heat her small northwest Atlanta home that was recently insulated by an Atlanta social service agency. Her December bill was $85, and it's hard to stretch her Social Security check to make up the difference.

"I couldn't pay it all. I just sent part of it," she said. "I could pay it all but would have to let something else go, like grocery bills."

Reeves would qualify for monthly discounts available from all marketers for low-income senior citizens but she hasn't applied. The $9 monthly discount is funded by monthly charges of 20 cents paid by other consumers. Public Service Commissioner David Burgess said about 30,000 people older than 65 with incomes less than $10,000 receive the discount, but he believes another 30,000 qualify and don't get it.

Under the state's 1997 deregulation law, Atlanta Gas Light Co. withdrew from gas sales and now distributes gas to 1.5 million homes and businesses. Marketers supply gas at unregulated prices, which last month were more than double those from the previous January. Many consumers are blaming that deregulation for their higher gas bills.

But Anna Ludviksen of Dacula wishes for deregulation. Ludviksen, a human resources manager, said she is "hostage" to the City of Buford's municipal utility. Her December bill was $210, up from $90 in November. She'd like to be able to comparison shop among unregulated marketers. "At least I'd have a choice," she said.

The story is much the same at gas utilities in the Southeast that remain monopolies and Georgia's 84 municipal gas companies unaffected by deregulation. Bills at the City of Bowman's gas utility were up 100 percent last month from January 1999 and are expected to be 68 percent higher this month.

Gas shocks have spread across the country. Washington, D.C., area gas bills more than doubled from a year ago. One suburban Virginia customer told The Washington Post "it was cardiac arrest" when she opened her $750 January bill.

One bright spot in Georgia has been the availability from some marketers of fixed prices that allow residential and small businesses to lock in prices for a year or more. Most bills that skyrocketed in recent weeks have been for variable prices that fluctuate with volatile wholesale gas prices.

About 25 percent of consumers in Georgia's deregulated gas market have chosen fixed prices, which can be a gamble because wholesale prices can drop. Some Columbia Energy customers who signed up last year before the marketer was acquired by New Power Co. are still paying 38 cents per therm for gas, one-third of last month's going rate. The last of Shell Energy's 39-cent plans expires March 31.

"People are getting shocked when they get their bills, but I don't have to deal with it," said Connie Davis, a Shell customer from Acworth. When her 45-cent fixed price expired in December, she was shifted to 69 cents, locked in for another year.

The disclosure last week that Georgia Natural Gas overcharged 140,000 customers by 15 percent fanned the flames of discontent over high bills.

Nowicki said many of the most recent callers to the PSC have wanted to know whether they too have been overcharged. The commission has not detected any irregularities of the magnitude of Georgia Natural Gas's overcharges. But glitches continue.

An estimated 20,000 Shell customers last month were mistakenly switched to variable prices when their fixed price agreements expired. Variable prices paid by another 5,000 Shell customers were raised from 78 cents per therm to $1.29 per therm in December, when the increase was not supposed to take effect until January.

Both mistakes were caught, accounts credited and corrections made before the bills were due, said Shell business manager Tim Sheehan, who attributed the problem to human error.


-- Tess (webwoman@iamit.com), February 13, 2001

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