2006 Accomplishments

OVERVIEW

During the calendar year 2006, the Consumers' Utility Counsel ("CUC") appeared and/or participated in a variety of cases involving electric, gas and telecommunications matters before the Georgia Public Service Commission, the Fulton County Superior Court and the Eleventh Circuit Court of Appeals. A detailed listing of the major cases in which CUC participated can be found below. These cases include, but are not limited to, the mergers of Georgia Power Company and Savannah Electric as well as BellSouth and AT&T; two fuel cost recovery requests made by Georgia Power Company; Fulton County Superior Court appeals filed by Atlanta Gas Light Company and Atmos Energy Corporation; several Georgia Power generation portfolio cases; and multiple electric and gas territorial dispute cases. In addition, CUC actively participated in the preparation and filing of the Eleventh Circuit appeal by National Association of State Utility Consumer Advocates/National Association of Regulatory Utility Commissioners regarding the States’ rights to require and/or prohibit the use of line items on customers’ bills.

ELECTRIC CASES

Georgia Power Company and Savannah Electric and Power Company 2006 Application to Increase Fuel Cost Recovery Allowance Pursuant to O.C.G.A. §46-2-26: GPSC Docket No. 22403-U; CUC File No. 06025

and

Application for Approval of Certain Matters Necessary to Effect the Merger of Georgia Power Company and Savannah Electric and Power Company: GPSC Docket No. 22202-U; CUC File No. 06003

In March 2006, the Georgia Power Company (“Georgia Power”) and Savannah Electric and Power Company (“SEPCO”) requested that the Public Service Commission (“Commission”) approve a merger of the two companies. At the same time, each company requested a significant increase in the amount it could charge its customers for fuel cost. CUC participated in both the merger and fuel cost proceedings.

Ultimately, the Commission entered an Order approving the merger and increasing fuel rates. However, consistent with the position taken by CUC, the increase to Georgia Power customers was approximately 30% less than Georgia Power had requested. Without the merger, SEPCO legacy customers would have faced a $10 per month fuel increase due to SEPCO’s heavy reliance on natural gas to produce electricity. As advocated by CUC, the fuel cost recovery allowance increase for an average Georgia Power residential customer was approximately $5.03 a month ($2.19 a month lower than originally proposed by the company). This smaller increase to Georgia Power ratepayers was accomplished by utilizing an updated fuel forecast that was $200 million lower than the fuel price forecast originally proposed by the company in its initial filing. SEPCO legacy customers’ saw only a slight increase in rates in the form of a credit to Georgia Power legacy customers to help mitigate any near-term adverse impacts of the merger on Georgia Power legacy customers.

Georgia Power Company Request for an Accounting Order: GPSC Docket No. 22449-U; CUC File No. 06020

In April 2006, Georgia Power informed the Public Service Commission that it intended to file and obtain federal permits and licenses for new nuclear generation, and requested that such amounts be included in a federal deferral account not to exceed $51 million plus carrying costs at a specified rate. The case was resolved by settlement agreement between the Commission Staff, Georgia Power, and others. CUC was unable to sign on to the settlement agreement due to an excessive interest rate used to calculate carrying costs. It was CUC’s position that a lower carrying cost rate should have been utilized to minimize the rate impacts of Georgia Power nuclear exploration to Georgia’s ratepayers.

As advocated by CUC, the Commission’s Final Order required the Commission to complete an examination of whether or not the costs incurred were proper before Georgia Power’s rates are otherwise adjusted. The Final Order also contained a provision advocated for by CUC that nothing in the Commission’s Order shall prejudge the prudence of the charges incurred by the company in seeking the federal permits and licenses. Consistent with the applicable accounting principles, CUC advocated for the above stated language to offset Georgia Power’s testimony which claimed that the mere use of “Federal Energy Regulatory Commission Account 183” to book the anticipated regulatory asset expenses automatically entitled the company to a presumption of prudence.

Georgia Power Company Application for Certification of Progress Energy Ventures’ MPC Generating, LLC Washington County Power, LLC; and Walton County Power, LLC Power Purchase Agreements and Upgrade to the Rocky Mountain Pumped Storage Hydroelectric Generating Facility: GPSC Docket No. 22528-U; CUC File No. 06033

In May 2006, Georgia Power sought permission to enter into three purchase power agreements (PPAs) for energy from sources outside of the Georgia Power and Southern Company network. The Company also sought a premium, provided for by Georgia law to encourage electric utilities to enter into PPAs as opposed to generating the power itself. Georgia law requires that a premium be paid, but does not state how much the premium should be. (Per O.C.G.A. Section 46-3A-8, the Commission shall allow recovery of an additional sum to “encourage” certificated, long-term power purchases. In determining the appropriate level for an additional sum award, Georgia law requires the Commission to consider “lost revenues, if any, changed risks, and an equitable sharing of benefits between the utility and its retail customers.”).

Despite the objections of CUC and other interested parties, the Commission adopted a settlement agreement entered into between Georgia Power and the Commission Staff which granted Georgia Power a premium of approximately $31 million in additional revenues over the life of the 15-year PPAs. CUC’s opposition to the settlement stemmed from the failure of Georgia Power to provide sufficient evidentiary support for the premium requested. However, consistent with the CUC’s position in the docket, the Final Order requires the company to provide supporting analysis in future cases seeking a premium. Also, by order of the Commission, the premium adopted in this docket does not create a presumption regarding the appropriate premium in future dockets.

Petition of Biomass Gas & Electric, LLC to Establish a Docket Regarding its Forsyth County Renewable Energy Plant and Capacity and Energy Payments to Cogenerators Under PURPA: GPSC Docket No. 19279-U and 4822-U; CUC File No. 04064

In July 2004, Biomass Gas & Electric, LLC filed a petition to establish a standard contract for renewable resources using biomass to sell power to Georgia Power pursuant to Federal law. In June of 2006, the Commission adopted a standard renewable contract which included many provisions advocated for by CUC that encouraged renewable resources without increasing the costs paid by residential and small business ratepayers. While not all of the ratepayer-safe guards for which CUC argued were included in the standard contract, the Order struck a cogent balance between encouraging renewable resources and protecting rate payers.

Transfer of Electric Retail Service of ERCO Worldwide from Colquitt EMC to Georgia Power Company: Docket No. 23549; CUC File No. 06071

Around May of 2006, discussion of the transfer of ERCO Worldwide, Inc.’s retail electric service from Colquitt EMC to Georgia Power Company was raised as a discussion item on the Public Service Commission’s Energy Committee Agenda. ERCO (a large load industrial customer located in Valdosta, Georgia) alleged that Colquitt EMC, as of January 1, 2007, would not have adequate power to supply its facility due to the exit of Oglethorpe Power from the original three party power supply contract. Per ERCO, Colquitt had not refused to serve ERCO but rather, Colquitt’s post January 1, 2007, prices would have been higher than what ERCO wanted to pay. In response to this discussion item, Georgia Power and CUC immediately objected and argued that Georgia is not an electric choice state. Furthermore, Georgia Power and CUC stated that ERCO had one opportunity to select its electric provider at the time the plant opened and that pursuant to Georgia law, ERCO’s initial choice was for the life of the plant. (O.C.G.A. Section 46-3-8(a)).

The issue before the Commission was the lawfulness of ERCO’s request to transfer to Georgia Power absent statutory authority granting retail choice.

On October 3, 2006, the Commission found that Colquitt EMC’s proposed post January 1, 2007 rates were discriminatory in nature and ordered that ERCO be transferred to Georgia Power. The Commission further found that “opt-out provisions in electric service agreements similar to the provision in the [ERCO] Agreement, or any other provision that purports to give a customer a choice of electric supplier after the initial choice of supplier are contrary to public policy as well as the Territorial Act.” (See Docket No. 23549, Final Order issued October 17, 2006, at 12).

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NATURAL GAS CASES

Atmos Energy Corporation vs. Georgia Public Service Commission, Superior Court of Fulton County Georgia Civil Action No. 2006CV111396: GPSC Docket No. 20298-U; CUC File No. 05015

In January 2006 Atmos Energy filed an appeal to the Superior Court of Fulton County of the Commission’s decision in the 2005 Atmos Energy base rate case. Atmos had appealed the Commission’s decisions on the following issues: return on equity, bad debt recovery, additional research funding, and additional reporting requirements mandated by the Commission. CUC supported the Commission’s initial rate case Order and opposed Atmos Energy’s appeal of same on all four issues. In September 2006, after oral arguments and briefs to the Superior Court, the Court affirmed the Commission’s decision on all four counts.

In November 2006, Atmos Energy filed with the Georgia Court of Appeals, a Notice of Appeal of the Superior Court Order. As of the date of this report, the Court of Appeals had not yet set a procedural order in this matter. CUC will participate in the Georgia Court of Appeals proceeding and defend the Commission and Superior Court Orders.

Atlanta Gas Light Company Company vs. Georgia Public Service Commission, Superior Court of Fulton County Georgia Civil Action No. 2006CV111385 and 2005CV103783: GPSC Docket Nos. 19219-U and 18723-U; CUC File No. 04058

In May 2006 CUC joined Atlanta Gas Light Company (“AGLC”) in its appeals of the Commission’s decision to grant the City of Buford certification to provide natural gas services in areas that the Commission had previously determined were unsafe for Buford to have done so. In August 2006, the Superior Court of Fulton County heard oral argument from AGLC, CUC and the Attorney General’s Office (representing the Commission). CUC argued that the Commission erred in granting the City of Buford permission to construct and operate natural gas lines that the Commission, in a previous docket, had ordered the city to cease and desist from constructing or operating due to the Commission’s findings that the city’s extension created safety hazards. CUC maintained that no evidence had subsequently been presented that squarely addressed and/or corrected the initial safety violations found by the Commission. A decision from the Superior Court is pending.

In the Matter of City of Monroe Application For Certificate of Public Convenience and Necessity; Docket No. 22850-U

and

Complaint of Atlanta Gas Light Company against the City Of Monroe for Unreasonably Interfering with Company’s Gas Distribution System: Docket No. 22787-U; CUC File No. 06035

On April 18, 2006, Atlanta Gas Light Company filed a complaint with the Public Service Commission against the City of Monroe for unreasonably interfering with AGLC’s gas distribution system. AGLC complained that the city was unlawfully serving in the company’s certificated area in question - the southwest portion of Oconee County. AGLC argued that the city’s entrance into Oconee County was unlawful since the company holds the certificate to service the area in question.

On May 30, 2006, the city of Monroe filed an Application for a Certificate of Public Convenience and Necessity for the disputed portion of southwest Oconee County. The city alleged that it began serving the southwest portion of Oconee County after AGLC refused to provide service to area residents. The city further alleged that AGLC has known about the city serving that portion of Oconee County and that the company had never previously objected.

Pivotal to the issues before the Commission (Commission jurisdiction, certification and unreasonable interference) was the question of whether or not the city’s system was at any time, funded by revenue bonds, all or in part. Testimony and exhibits established the use of revenue bonds at several points in the construction and expansion of Monroe’s system. Accordingly, on December 11, 2006, the Hearing Officer filed with the Commission his recommendation in the form of a proposed Order, recommending that the Commission make the following findings: that the Commission has jurisdiction over Monroe pursuant to Article IX §VI, Para. II since Monroe was found to have used revenue bonds to finance its gas system; Monroe should be granted a certificate to provide natural gas services within a defined area of southwest Oconee County; Monroe should be assessed a $200,000 penalty for entering Oconee County without a certificate; that AGLC had not provided adequate service to the areas of Oconee County that Monroe had been serving since 2000; that AGLC’s certificate be amended to reflect the loss of the service area granted to Monroe; that the Commission should audit the Municipal Gas Authority of Georgia ("MGAG") to ensure that it is complying with Commission rules and to audit cities that subscribe to MGAG’s regulatory compliance service to ensure that the Commission’s enabling statutes and rules are not being violated. As of the date of this report, no Final Order had yet to have been rendered by the Commission. The Hearing Officer’s recommendations were consistent with many of the points argued by CUC.

Complaint of Atlanta Gas Light Company against City of Cartersville for Unreasonably Interfering with the Company’s Gas Distribution System in Bartow County, Georgia: Docket No. 23887; CUC File No. 06074

On September 22, 2006, AGLC filed a complaint with the Public Service Commission against the city of Cartersville alleging that the city of Cartersville was unreasonably interfering with the company’s gas distribution system in violation of Georgia law and Commission rules. AGLC alleged that Cartersville was attempting to extend its gas system into AGLC’s certificated territory in Bartow County, in order to attempt to serve a new residential development. AGLC contended that its existing distribution lines ran in front of the proposed development and thus, Cartersville’s attempts to serve the proposed development created increased safety concerns. AGLC further alleged that the city’s attempts to serve an additional residential subdivision, was also an interference with its gas distribution system in Bartow County. AGLC alleged that Cartersville paralleled and crossed its lines in its attempts to serve the areas in question. AGLC additionally alleged that Cartersville annexed both properties into the city limits in order serve the subdivisions and to get around the Commission’s certification requirements.

The city has argued that even if the annexation had not occurred, the city would have been permitted to serve due to the proximity of the developments. Moreover, the city claimed that as early as January 2005, the city and an AGLC representative discussed by telephone, the city’s intention to serve at least one of the two subdivisions in question.

Hearing dates have been extended to March of 2007 at the request of AGLC and Cartersville in order to provide additional time to discuss settlement.

Georgia Public Service Commission Rulemaking to Consider Rule 515-7-1-.15, “Multiple Natural Gas Distribution Systems Within a Single Certificated Area:” Docket No. 21205-U: CUC File No. 05064

On July 24, 2006 and in response to the numerous natural gas territorial cases that have come before the Commission on point, the Public Service Commission issued a Notice of Proposed Rulemaking to consider the adoption of proposed rules revising its existing rules governing multiple natural gas distribution systems within a single certificated area. CUC provided comments in this docket and asserted that pursuant to Georgia law, the Commission had jurisdiction to promulgate the proposed rule changes.(O.C.G.A. Sections 46-2-20, 46-4-1, Title 46, Chapter 4, Article 2 of the Georgia Code on Intrastate Pipelines and Distributions systems, and O.C.G.A. Section 46-4-20 et seq. (see especially, O.C.G.A. Section 46-4-31)). CUC further asserted that the Commission had the same jurisdiction over a municipality which it would otherwise have over Georgia’s investor-owned utilities where the municipality extended its system, utilizing revenue bonds, outside of its home county. (See GA Const. Article IX, Section VI, Paragraph II). CUC asserted that establishment of the Commission’s jurisdiction was critical to this rulemaking as well as to the numerous cases the Commission has continued to hear on point.

On September 19, 2006, the Commission issued a Final Order adopting the proposed rule regarding multiple natural gas provider certificates in a single area with modifications, based on input received by CUC and others during the comment period.

In Re: Alanta Gas Light Company's 2005-2010 Earnings Review; Docket No. 18638-U: CUC File No. 04037

On July 26, 2006, the Public Service Commission approved a contract with the University of Georgia's College of Family and Consumer Sciences and also approved AGLC's Customer Education Program. On November 13, 2006, the Commission approved several amendments recommended by Staff in order to allow the Customer Education Program to move forward for the 2006/2007 winter heating season. In furtherance of this program, a Natural Gas Customer Education Team was created to provide advice and counsel on the creation and implementation of the curriculum, training, tracking metrics and tactical outreach necessary to deploy statewide consumer education within AGLC’s certificated territories. The Team is comprised of representatives from AGLC, Georgia’s Natural Gas Marketers, the University of Georgia’s College of Family and Consumer Sciences, the Public Service Commission and the Consumers’ Utility Counsel Division of the Governor’s Office of Consumer Affairs. The work of this team is ongoing in nature.

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TELECOMMUNICATION CASES

National Association of State Utility Consumer Advocates and National Association of Regulatory Utility Commissioners vs. Federal Communications Commission et. al., United States Court of Appeals Eleventh Circuit Case No. 05-11682: FCC No. 98-00170; CUC File No. 05028

In 1999 the Federal Communications Commission (“FCC”) promulgated “Truth-in-Billing” Rules to ensure consumers were provided basic information needed to make informed decisions and to protect consumers from unscrupulous competitors. State consumer advocates, National Association of Regulatory Utility Commissioners (“NARUC”) and National Association of State Utility Consumer Advocates (“NASUCA”), (of which CUC is a member) petitioned the FCC for certain state mandated consumer protections. The FCC preempted the States and the States appealed the decision to the United States Court of Appeals for the 11th Circuit.

As advocated by the state consumer advocates,, the Court of Appeals found that the FCC had exceeded its authority in preempting the States, and found that the specific consumer protections were within the purview of the States’ respective jurisdictions.

On October 3, 2006, as advocated by the state consumer advocates, the 11th Circuit denied appeals for reconsideration filed by the FCC and wireless industry.

AT&T Inc. and BellSouth Corporation, Inc., Together with its Certified Georgia Subsidiaries: Docket No. 22682; CUC Case File No. 06027

On March 31, 2006, AT&T and BellSouth filed a Notice of Merger with the Public Service Commission. At the outset, the companies took the position that the Commission need not rule on the merger and that the filing made was only informative in nature. At the objections of multiple intervernors, the Commission set the matter for Comment and Oral Argument. Thereafter, the companies alternatively asserted that expedited resolution through the issuance of a Letter Order from the Commission would suffice under prior Commission precedence.

In their Notice, AT&T and BellSouth asserted inter alia that the proposed merger was in the public interest. Given the potential powerhouse created by the proposed merger, CUC advised the Commission that careful consideration of the proposed benefits of the AT&T BellSouth merger should be carefully weighed against the Competitive Local Exchange Carriers’ concerns that such a merger could have anti-competitive impacts. CUC advised that movement towards BellSouth’s becoming one of many subsidiaries of a much larger corporate machine that spans a more global, competitive environment must necessarily entail careful consideration of both the positive and negative impacts on competition in the State of Georgia. CUC asserted that such exploration was the key to preserving affordable, competitive rates for Georgia ratepayers.

On August 18, 2006, the Commission approved the AT&T and BellSouth merger subject to several conditions. The Commission, in a 3-2 vote, turned down motions to require the merged companies to offer stand alone DSL service.

Encartele, Inc. Application for a Certificate of Authority to provide Institutional Telecommunication Services (ITS) in Georgia; Docket No. 22071-U, and The Complaint by Pay Tel Communications, Inc. of illegal and unauthorized operations by Encartele; Docket No. 22120-U: CUC Case File No. 05085

On December 19, 2005, Encartele, Inc. (“Encartele”) filed an application with the Public Service Commission to provide institutional telecommunication services (“ITS”). On January 3, 2006, Pay Tel Communications (“Pay Tel”), a certified ITS provider, filed a complaint alleging that Encartele had been providing ITS without certification. The dockets were consolidated and a hearing was held on July 21, 2006.

All parties submitted briefs to the hearing officer on September 19, 2006. Based upon the evidence presented, CUC argued that Encartele did not exercise due diligence prior to beginning ITS in Georgia. CUC also argued that Encartele’s broadband usage not withstanding, that the Commission did have jurisdiction over this matter because it was the ITS service itself that was regulated by the Commission, not the technology with which such service was provided.

On November 20, 2006, a stipulation was entered into by Encartele, Pay Tel, Commission Staff and CUC. The Commission adopted the stipulation at its December 19, 2006 Administrative Session. Encartele was ordered to pay a civil penalty of $10,000. The penalty will be administered as a reduction in the surcharge for ITS calls. CUC requested that the Commission audit Encartele’s surcharge reductions until the $10,000 fine amount has been fully exhausted through consumer credits. Encartele will be granted a Certificate of Authority upon a showing that the $10,000 has been credited to ITS surcharges. Pay Tel’s Complaint was dismissed.

Comments to the Federal Communications Commission Urging It to Improve Existing Safeguards to Protect Customer Proprietary Network Information: CUC Case File No. 06049

On April 28, 2006 CUC signed on to Comments filed at the FCC by the National Association of Attorneys General (of which the Governor’s Office of Consumer Affairs is a member) regarding the privacy of Customer Proprietary Network Information (“CPNI”). The Comments urged the FCC to protect the privacy rights of consumers by improving existing safeguards to protect CPNI. More specifically, the Comments urged the FCC to require carriers to obtain affirmative “opt in” rather than “opt out” approval from customers before the carrier shared or otherwise used the customer’s CPNI for marketing purposes. Generally, the wireline and wireless carriers’ took the position that the FCC’s then current rules were adequate to safeguard consumer privacy. As of the date of this report, CUC could find no record of the FCC’s having ruled on the issues involved in this docket.

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