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Georgia Marketers Question Methodology of BLS Study Showing Higher Atlanta Gas Prices

January 12, 2012

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Copyright 2010-12 Energy Choice Matters

The unknown methodology used in a Bureau of Labor Statistics study concerning retail natural gas prices in Georgia, "creates questions regarding [the] reliability of [the] comparison," several retail gas suppliers said in separate comments to the Georgia PSC.

Among other things, the BLS report claims that, "residents in the 20-county [Atlanta] metro area pay 37 percent more for natural gas than the national average," which prompted Georgia Public Service Commissioner Stan Wise to ask marketers to explain this report in light of a two-year low in wholesale gas prices.

SCANA Energy Marketing, Inc., and other retail suppliers in separately filed comments, noted that the BLS report methodology is unknown, and that the BLS report: (1) does not make clear whether municipal rates are relied upon by BLS, (2) does not reveal assumptions made regarding average monthly consumption, and (3) does not disclose whether fixed rates are included as a basis for the claims asserted.

"The accuracy and significance of the [BLS] Report must be critically analyzed because BLS appears to acknowledge the limitations of this Report by explaining on page 112 that '[t]he average price per therm . . . [is not] generally suitable for use in place-to-place price comparisons,'" SCANA Energy Marketing said.

Most notably, the "apples to apples" marketer price per therm comparison published on the PSC's website relied on an average November consumption of 85 therms. "If the BLS assumed a lower monthly consumption amount, there would be fewer therms upon which to spread Atlanta Gas Light Company ('AGLC') pass through and customer service charges, which would cause the BLS-determined price to be higher. This uncertainty has the potential to significantly skew the accuracy of the BLS Report," SCANA Energy Marketing said.

SCANA Energy Marketing also said that BLS confirmed that the sampling data it relies upon was established in 2000 and has not been updated since then.

Furthermore, SCANA Energy Marketing said that Georgia's deregulated natural gas rates are comparable with other providers in nearby states, while the BLS Report relies on data and assumptions, "that skew the Report's capability to be viewed as a true and accurate comparison of market conditions."

Specifically, SCANA Energy Marketing listed average per therm rates in November 2011 as follows:
Georgia (Deregulated - Average Fixed): $1.00
Public Service of North Carolina: $1.07
Atmos Energy (GA): $1.09
Piedmont Natural Gas (NC): $1.10
Piedmont Natural Gas (SC): $1.12
Georgia (Deregulated - Variable/Fixed Average): $1.16
South Carolina Electric & Gas: $1.20
Georgia (Deregulated Lowest Variable): $1.27
Peoples Gas System (FL): $1.31
Georgia (Deregulated - Average Variable): $1.32

Atlanta Gas Light Company noted that not only is BLS' data inconsistent with the Apples to Apples marketer pricing, it is inconsistent with Energy Information Administration data.

"Customers on AGLC's system are paying less than, or at, the national average and average of our neighboring states for their retail natural gas service depending on their choice of pricing plans. As well, for customers of AGLC the average retail prices have slowly declined over the past two years consistent with the decline in wholesale natural gas prices which also stands in contrast to the data published by the Regional BLS for the Atlanta area," AGL said.

"Significantly, the $1.03 to $1.21 per therm range of fixed pricing options [at AGL] compares very favorably to national average for October 2011 of $1.22 per therm from data compiled and reported by the EIA. (Data for November 2011 is not yet available from EIA). As well, even a review of the variable price offerings [at AGL] filed with the Commission show rates available as low as $1.27 per therm in November, 2011 and $1.16 per therm in December 2011, which are competitive with the EIA national average for essentially fixed rates," AGL said.

AGL further said that regulated rates for neighboring states range from $1.00 (Tennessee) to $1.90 (Florida) per therm with an average of $1.40 per therm.

Gas South said, to the extent any data does show Atlanta natural gas prices are above the national average, "the rate differentials are long standing and primarily attributable to geography, climate, taxation, the lack of natural gas production and storage facilities located in the State of Georgia, reliance on interstate pipelines to transport natural gas over long distances, as well as other structural factors."

Gas South, using EIA data, compared Georgia rates to rates in Alabama, "a comparable state in climate and interstate pipeline infrastructure."

"While Alabama natural gas is regulated and though they do have some natural gas production, their prices have consistently been higher than those of Georgia, before and after the 1999 deregulation. This suggests that deregulation has not been a significant factor in overall residential, market driven prices," Gas South said.

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