Gas and Electric Systems

February 22, 2018

Municipal Gas Systems

Historic Overview of Municipal Operated Natural Gas Systems
Natural gas is a market-driven commodity that rapidly grew in demand in the 1930s. In the 1950s, the Georgia Municipal Association established the GMA Gas Section, and in 1987 the Municipal Gas Authority of Georgia (MGAG) was formed by the Georgia General Assembly to assist municipal gas system owners.

Today, GMA’s Gas Section and MGAG collectively represent 84 municipally owned public gas systems. The purpose of GMA’s Gas Section is to coordinate and assist municipal natural gas systems in providing efficient, safe, and economic services to their consumers and communities. To ensure the best consumer experience, the Gas Section offers trainings and conferences for municipal operators along with research on best storage and production practices.

Municipal Gas Authority of Georgia
In the late 1980s, the Georgia General Assembly decided that certain political subdivisions of this state could own and operate gas distribution systems to serve their citizens and customers by providing them with gas. If the political subdivision was able to supply the resource and the citizens in the service area were able to receive it, then the delivery service had to be an adequate, dependable, and economical source of gas supplies.

As a result, the General Assembly declared there was a state need for a non-profit authority to assist municipalities in developing and promoting efficient gas supply practices for the public good. The authority was also enacted to offer financial assistance for additions and other expenditures for the municipal gas systems (O.C.G.A. § 46-4-80).

Today, the Municipal Gas Authority of Georgia is the largest non-profit natural gas joint-action agency in the United States, serving 79 members in a multi-state area. MGAG exists to aid municipalities with operating and growing their existing natural gas systems in the most efficient way possible. MGAG helps member systems to market their product effectively in residential, commercial, agricultural, and industrial markets.

Purchasing Natural Gas
According to Georgia’s Public Service Commission (PSC), natural gas customers can purchase gas from one of three types of providers based on their location in the state:
  1. an investor-owned local distribution company
  2. a natural gas marketer
  3. a municipal gas system.
  • Liberty Utilities, Georgia’s only local distribution company, is fully regulated by the PSC.
  • Atlanta Gas Light Company (AGLC) became a pipes-only gas company in 1998, when it elected to open its territory to competition pursuant to the Natural Gas Competition and Deregulation Act of 1997. Ten certified natural gas marketers now serve customers on AGLC’s system. The prices charged by marketers are market-based, but rates for AGLC’s distribution service are still regulated by the PSC.
  • In Georgia, 84 municipal gas systems provide natural gas to their residents. Prices for municipal gas service are not subject to PSC regulation.
Legislative Deregulation
Natural gas deregulation began with Senate Bill 215, which was passed by the Georgia Legislature and signed into law in 1997. This legislation allows Atlanta Gaslight Company to store and distribute natural gas in its facilities (pipelines, storage facilities, and other supporting services) and marketers to sell this natural gas to consumers. The Georgia Public Service Commission is tasked with administering gas deregulation. House Bill 1568 took effect in 2002 and charged the PSC with implementing rules that expanded consumers’ rights.

The Natural Gas Competition and Deregulation Act’s stated intent and purposes are to:
  • promote competition
  • protect the consumer during and after the transition to competition
  • maintain and encourage safe and reliable service
  • deregulate those components of the industry subject to actual competition
  • continue to regulate those services subject to monopoly power
  • promote an orderly and expeditious transition of the industry toward fully developed competition
  • provide for rate-making methods which include the use of straight fixed-variable rate design, the recovery of certain stranded costs, and the use of alternative forms of rate regulation, and
  • allow gas companies the opportunity to compete effectively in a competitive marketplace (O.C.G.A. § 46-4-.151(b)(1)-(8)). 
The Act was amended in 1999 with House Bill 822, relating to customer assignment, and again in 2001 with Senate Bill 217, which addressed pricing, billing, meter reading, and other consumer issues.

Municipal Electric Systems

Historic Overview of Municipal Operated Electric Systems
In the early 1900s municipalities began to provide electric services to their citizens, originally in the form of wholesale power from small plants owned and operated by the municipality, which eventually evolved into larger generating stations connected by transmission systems. Electric demand drove down costs and allowed municipalities to become wholesale power customers of Georgia Power Company (GPC), an investor-owned electric utility.

It was not until the 1960s that the Federal Power Commission began using its regulatory authority over wholesale power supply contracts, which included those between Georgia Power Company and the municipal operators.

Georgia Power Company pursued wholesale rate increases to raise additional revenue for the buildout of new plants. This initiated the largest generation construction program to date and resulted in two nuclear plants, Hatch and Vogtle, along with two coal-burning plants, Wansley and Scherer.

Georgia Power Company asserted that their priority during a power shortage would be providing for their retail load, and it would not be responsible for the wholesale supply requirements for municipal systems. As a result, municipalities worked together through GMA’s Electric Section, and GPC agreed to sell an appropriate share of its power facilities to municipal and electric membership corporations.

Municipal Electric Authority of Georgia
In 1975, the Georgia General Assembly created the Municipal Electric Authority of Georgia (MEAG) to acquire generation and provide wholesale power supply to municipalities (O.C.G.A. § 46-3-110). Prior relationships with energy providers had left cities vulnerable to supplier’s ratemaking and service delivery. The formation of MEAG Power gives cities an option and enables local governments to control their energy decision-making. Today MEAG represents a total of 49 member communities.

Public Service Commission
Georgia Power Company is fully regulated by the Commission. Currently, GPC serves approximately 2.4 million customers in 155 of Georgia’s 159 counties. The Commission has limited regulatory authority over the 42 electric membership corporations (EMCs) and 52 municipally-owned electric systems in the state. Without federal action, the electric industry in Georgia will remain traditionally regulated in its present form.

Some retail competition has been present in Georgia since 1973 with the passage of the Georgia Territorial Electric Service Act. This Act grants customers with manufacturing or commercial loads of 900 kW or greater a one-time choice in their electric supplier. It also provides eligible customers the opportunity to transfer from one electric supplier to another, provided all parties agree. The Commission resolves territorial disputes and customer complaints involving customer choice and approves requests for transfer of retail electric service.

Municipal Competitive Trust
In 1999, MEAG helped participants form the Municipal Competitive Trust to ready them for deregulation. Until such legislation comes to Georgia, the Competitive Trust helps participants manage their long-term financial security. The Competitive Trust has been applauded by the credit rating industry and has been instrumental in securing low-cost funding for MEAG and other participants.

Electric Cities of Georgia
Electric Cities of Georgia (ECG) officially incorporated in 1992 and operated as a trade organization through 2009. MEAG allocated more services to Electric Cities, and today they represent 52 municipal electric systems. ECG provides economic and strategic services to community-owned utility systems that sell public power. ECG advocates for local communities’ infrastructural and economic success. ECG also partners with municipalities and industry experts to find cost-effective solutions that benefit the city, the community, and utility customers. Recognizing that a community-owned utility infuses the local economy, ECG exists to provide resources to ensure structural reliability and economic success.

Legislation on Electric Service
  • The Georgia Territorial Electric Service Act of 1973 provides for exclusive service areas for each electric service provider (GPC, EMC, and Municipals) with limited exceptions (e.g., large load customer choice and corridor (existing line) rights) and provides protections from discrimination by electric providers.
  • The Georgia Cogeneration and Distributed Generation Act of 2001 provides that customers who generate their own electricity may use that electricity free from most PSC regulation and provides for the process by which customer generators may sell electricity back to an electric supplier. 

Back to Listing