Chattanooga: Gas companies' bill moving through House

Chattanooga: Gas companies' bill moving through House

April 1st, 2009 by Andy Sher in Local Regional News

NASHVILLE - A bill making it easier for natural gas companies to hike rates annually on thousands of consumers in Chattanooga and across the state moved through the House Utilities and Banking Subcommittee Tuesday.

The move came despite continued concerns raised about the bill's impacts on consumers by the state Attorney General's office and Tennessee Regulatory Authority Chairman Eddie Roberson.

Chattanooga and Hamilton County governments as well as the Chattanooga Manufacturers Association and the seniors group AARP also oppose the bill.

"It's a big change, and we need to take our time in getting it right," Assistant Attorney General Joe Shirley said as he urged the panel to move cautiously. "We opposed the changes in this bill because we believe they will lead to unjustified rate increases for thousands of Tennesseans."

The bill's sponsor, Rep. Charles Sargent, R-Franklin, said the bill provides two new methods to regulate rates charged to residential and business customers by by AGL Resources, which owns Chattanooga Gas. Co., Atmos Energy and Piedmont Natural Gas.

The companies collectively provide gas to 350,000 residential or business customers across the state, according to the state attorney general's office.

One provision allows for annual rate reviews. The other "decouples," or allows the companies to separate the amount of gas they sell from their rates. It is intended to allow the company to push conservation measures without an adverse economic impact on them.

It "does not deregulate. It does not provide automatic increases," Rep. Sargent said, later adding, "TRA can approve or lower" rates based on an examination. The bill will benefit consumers, he said.

But TRA Chairman Roberson and the Attorney General's Consumer Advocate Division, which often intervenes in rate cases before the TRA, said consumers will be adversely affected.

Under current law, regulated companies file a petition with the Tennessee Regulatory Authority when seeking a rate increase, then present revenues, expenses, inflationary adjustments and a proposed rate of return for their investors based on their risk.

But annual rate review does not allow the agency to examine whether expenses are "prudent" nor apply a "just and reasonable" standard, Dr. Roberson said. Moreover, it allows the gas companies to seek up to 4 percent in increases annually based on total revenues.

He countered with a proposal that would let companies raise rates 3 percent based on non-gas revenues. The difference between total and non-gas revenues is huge, according to TRA figures.

The attorney general's office also argues the companies will profit from the decoupling proposals as well as another conservation measure that would require consumers to pay "incentive bonuses" to the gas companies for conservation measures.

That comes to a 15 percent bonus to the company for conservation plans funded by ratepayers, the office contends.

Rep. Phillip Johnson, R-Pegram, objected to "the lobbying effort here" by Attorney General Robert Cooper's office.

Mr. Shirley said the office's statutory duties include representing consumer interests before the TRA and on utility regulatory matters in the General Assembly.

House Republican Caucus Chairman Glen Casada, R-College Grove, said, "I didn't hear any concrete facts" and quickly moved for a vote, adding, "I like the bill."

Afterward, Chattanooga Manufacturing Association President Ray Childers said the subcommittee did not grant his request to speak and address concerns.

Subcommittee Chairman Richard Montgomery, R-Sevierville, said he was unaware of any such request, but he noted if officials wished to speak to contact him before the measure goes to the full Commerce Committee.