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Georgia PSC Denies Application Of City To Become Retail Gas Marketer, City To Appeal

April 28, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The Georgia PSC last week, in a 4-1 vote, issued a written order dismissing the application of Marietta Natural Gas, LLC (MNG), ultimately a unit of the City of Marietta, to become a competitive retail natural gas marketer

Several competitive retail suppliers had moved to dismiss the City's application, arguing that the City is ineligible to be a gas marketer because certificates may only be granted to a "person" under the statute, as the competitive suppliers argued that the City was not a "person."

The PSC found that, "based on a cautious comparison of O.C.G.A. 46-1-1(12) (General Provisions) and O.C.G.A. 46-4-152(14), the General Assembly did not intend for 'municipalities' or 'political subdivisions' to fall within the definition of a 'person' under the Natural Gas Act."

"Therefore the Commission concludes, as a matter of law, that Marietta Natural Gas, LLC is not a legitimate candidate permitted to apply for a Certificate of Authority as a Natural Gas Marketer under the Act," the PSC said

The Commission also found, "compelling," concerns raised by intervening competitive marketers, which alleged the City would receive unfair advantages as a gas marketer

The PSC noted that some of the advantages that would inure to the benefit of the City, that could impact market-based competition include:

(1) The ability to obtain below-market loans from MGAG [Municipal Gas Authority of Georgia] on such terms as the two shall agree from MGAG bond proceeds. O.C.G.A. §§ 46-4-99(g) and -101(6).

(2) The inability of the PSC to regulate MGAG as to storage and transmission of natural gas or charges for the same at rates below those available to other Marketers. O.C.G.A. § 46-4-122.

(3) The ability of MNG to obtain daily operating services at cost from an untaxed, non-profit entity. O.C.G.A. §§ 46-4-97 (MGAG is a not-for profit which is able to charge for its services at cost) and -98 (except for payment in lieu for property taxes, MGAG is exempt from state taxation).

Speaking at the National Energy Marketers Association's 20th Annual National Energy Restructuring Conference, Tim Echols, PSC Vice-Chairman, said that Marietta is taking the matter to court.

Echols noted that when various electric membership corporations wanted to become gas marketers, the EMCs went to the legislature to get the law changed, and suggested that Marietta should be required to do the same

Noting for the potential for other large municipalities to become marketers, Echols mused, "How many cities are going to want to get in on this," if cities are allowed to be gas marketers

PSC Chairman Stan Wise dissented from the PSC's decision.

"Staff clearly demonstrated that Marietta is legally permitted to seek a natural gas marketer certificate. The Marketers claim that Marietta is not a 'person' under O.C.G.A. § 46-4-152(14) and therefore does not have the legal authority to seek a natural certificate to provide natural gas service. However, the Commission has previously determined that municipalities are ‘persons’ under O.C.G.A. § 46-1-1 and that determination has been upheld by Fulton Superior Court. This Commission is tasked with making legal determinations on those issues that fall under its jurisdiction and the majority opinion has failed to carry out that obligation," Wise wrote.

"MNG’s presence as a gas marketer would add robust competition to a competitive, customer-driven, efficient marketplace. This proceeding is simply about market share and the existing marketers desire to protect it. I am disappointed that my colleagues have been swayed by the marketers’ policy argument that limiting competition trumps Marietta’s legal right to file for a certificate," Wise wrote.

Docket No. 40894

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