Tue., November 24, 2009 12:54pm (EST)

AARP Sues Over Atlanta Gas Light Surcharge
By Melissa Stiers
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Updated: 5 years ago

ATLANTA  —  
Atlanta Gas Light customers are opening up their bills this month to a surcharge that has the AARP calling foul and suing the company and the PSC who approved it.
Atlanta Gas Light customers are opening up their bills this month to a surcharge that has the AARP calling foul and suing the company and the PSC who approved it.
There’s no doubt Atlanta has grown over the years and so has its demand for natural gas. Atlanta Gas Light’s Suzanne Sitherwood says to keep up, the company needs to lay bigger pipes around metro Atlanta.

"We’ve had a lot of growth in the metro Atlanta area," says Sitherwood, "and we’ve added, in the last seven years, one million new homes, so we’re constantly trying to manage growth in and around Atlanta and that growth requires infrastructure."

To build that infrastructure, the gas monopoly convinced its regulators the Public Service Commission to authorize a surcharge.

Over a million AGL customers are now paying an extra $0.39, and the fee will increase to over a dollar over the next couple of years.

PSC Chairman Doug Everett says he approved the surcharge because he wanted to make sure everyone gets gas even on the coldest days of winter.

"We had letters from chambers of commerces, letters from county commissions supporting this because they needed additional pressure," says Everett. "The time to do this is now, not in the future when somebody’s gas is going out. You need to do it now."

But charging customers now for future expansion didn’t sit well with Commissioner Robert Baker. His was the sole dissenting vote.

"I don’t think it’s fair for customers" says Baker, "because essentially what you’re asking for are customers today to pay for assets or investments they may never use in their life time. They may move away to another state. They may pass away."

And that is why the AARP is now suing the PSC and the gas company. It argues that it’s unfair to charge customers $400 million over the next 13 years through the surcharge. AARP lawyer John Coffman says it’s like paying for a house before it’s finished.

"You might look at it as whether you have to perform a construction and then turn in your receipts for eview after the fact or whether you simply have someone’s credit card. Using someone else’s credit card as you go is not the best way to manage a project."

Traditionally, Coffman says utilities had to put up all the money themselves, and then justify the costs to regulators like the PSC. Now with the surcharge, he says there’s little incentive for a company to come in on time and at cost.

"There’s a trend particularly with large projects, large coal plants or large nuclear facilities," says Coffman. "Often the utility will convince the government to give them an ability to charge in advance for those investments, and consumers usually wind up paying much more."

Earlier this year, Georgia Power won approval from state lawmakers to charge its customers in advance to build two new nuclear reactors at Plant Vogtle near Augusta. Similarly consumer groups called foul then.

But PSC Chairman Doug Everett says charging upfront saves consumers money in the long run because the utilities save on financing. He says it’s just like funding public transportation.

"You know, not only utilities do that every road and bridge you drive on has been doing that way for years," says Everett. "I mean it’s the way it’s always been financed."

But the difference is, roads are built by the state; Atlanta Gas Light and Georgia Power are profit-driven monopolies. That’s why those businesses, the AARP argues, should finance big projects without help from ratepayers. The advocacy group hopes a judge will hear them out in court.