§ 46-2-23-1 — "Alternative form of regulation" defined; filing; notice; approval; release of interstate pipeline capacity

(a) As used in this Code section, the term "alternative form of regulation" means a method of establishing just and reasonable rates and charges for a gas company by performance based regulation without regard to methods based strictly upon cost of service, rate base, and rate of return. Performance based regulation may include without limitation one or more of the following features: earnings sharing, price caps, price-indexing formulas, ranges of authorized rates of return, and the reduction or suspension of regulatory requirements. (b) A gas company may from time to time file an application with the commission to have its rates, charges, classifications, and services regulated under an alternative form of regulation. Within ten days of the filing, the gas company shall publish a notice generally describing the application in a newspaper or newspapers with general circulation in its service territory. (c) After notice and hearing the commission may approve the plan, or approve it with modifications, if the commission determines that the application is in the public interest and will produce just and reasonable rates, after taking into consideration the extent to which the application: (1) Is designed to and is likely to produce lower prices for consumers of natural gas in Georgia; (2) Will provide incentives for the gas company to lower its costs and rates; (3) Will provide incentives to improve the efficiency and productivity of the gas company; (4) Will foster the long-term provision of natural gas service in a manner that will improve the quality and choices of service; (5) Is consistent with maintenance and enhancement of safe, adequate, and reliable service and will maintain or improve preexisting service quality and consumer protection safeguards; (6) Will not result in cross-subsidization among or between groups of gas company customers; (7) Will not result in cross-subsidization among or between the portion of the gas company's business or operations subject to the alternative form of regulation and any unregulated portion of the business or operations of the gas company or of any of its affiliates; (8) Will reduce regulatory delay and cost; and (9) Will tend to enhance economic activity in the affected service territory. (d) Performance based regulation adopted by the commission as an alternative form of regulation shall provide for the following: (1) Equal and symmetric opportunities to earn above and below the performance standard; (2) Performance incentives based upon conditions within the control of the management of the gas company; and (3) Adjustments from time to time for the net effect of changes in tax rates, other costs imposed by law, and the cost of capital. (e) Where an application for an alternative form of regulation has been filed by a gas company and the commission determines that the proposal does not satisfy the requirements of this Code section, it may either reject the proposal or issue an order approving an alternative with such modifications as the commission deems necessary to satisfy the requirements of this Code section. The commission shall determine and prescribe in any such order establishing rates and charges the revenue requirements of the gas company filing the application. (f) An order adopting an alternative form of regulation may include: (1) Terms and conditions for establishing new services, withdrawing services, price changes to services, and services by contract to individual customers; (2) Terms and conditions necessary to achieve the objectives contained in subsection (c) of this Code section; (3) General or specific authorization for changes in rates, charges, classifications, or services such that the provisions of subsection (a) of Code Section 46-2-25 do not require 30 days' notice and commission approval before such change or changes may go into effect; and (4) Other rates, terms, and conditions that are consistent with the objectives and requirements of subsection (c) of this Code section. (g) Except as otherwise provided in this Code section, the provisions of this title relating to the rates, charges, and terms of service of a gas company shall apply to rates, charges, and terms of service established pursuant to this Code section. (h) Any special or negotiated contract between a gas company and a retail customer approved by the commission shall not be invalidated or modified by the provisions of this Code section. (i) (1) Neither the provisions of this Code section nor the provisions of Article 5 of Chapter 4 of this title shall prohibit a gas company from releasing interstate pipeline capacity available to it from time to time and not required to serve the requirements of its retail customers and marketers and from making sales of gas with or without interstate transportation capacity to municipal corporations, other local gas distribution companies, or marketers and end users connected to an interstate pipeline company or connected to another local distribution company; provided, however, that where net benefits to the firm retail customers who are receiving commodity sales service from the gas company accrue: (A) Twenty percent of the revenues from the release of interstate pipeline capacity for the purposes of transporting gas to end users in Georgia shall be allocated to the gas company, and the remaining 80 percent of such revenues shall be credited to the costs of gas sold by the gas company to firm retail customers; (B) Ten percent of the revenues from the release of interstate pipeline capacity for the purpose of transporting gas to end users outside of Georgia shall be allocated to the gas company, and the remaining 90 percent of such revenues shall be credited to the costs of gas sold by the gas company to firm retail customers; and (C) Fifty percent of the net margin from the sale of gas, with or without interstate capacity, to municipal corporations, other local gas distribution companies, or marketers and end users connected to an interstate pipeline company or connected to another local distribution company shall be allocated to the gas company, and the remaining 50 percent of such net margins shall be credited to the costs of gas sold by the gas company to firm retail customers; provided, however, that if as a result of such sale, the then existing natural gas requirements of retail customers in Georgia cannot be supplied physically, all of such net margin shall be credited to the costs of gas. The net margin shall be calculated by subtracting all variable costs associated with the transaction from the revenues generated by the transaction. The costs recovered by the gas company through such transactions shall be credited to the gas costs payable by retail customers of the gas company. (2) Where a universal service fund has been created by the commission pursuant to Code Section 46-4-161 for a gas company which is an electing distribution company, as defined in paragraph (10) of Code Section 46-4-152 , the shares that are to be credited to the costs of gas sold to firm retail customers under subparagraphs (A), (B), and (C) of paragraph (1) of this subsection shall be allocated to such fund, and the costs recovered through a transaction described in subparagraph (C) of this subsection shall be allocated to such company. (3) Any gas company which engages in a transaction of a type described in paragraph (1) of this subsection, which results in the allocation to the gas company of a share of the revenues or net margin therefrom, shall make a report to the commission annually describing each such transaction and explaining the benefits resulting to firm retail customers from each such transaction.

Legislative History

Amended by 2015 Ga. Laws 187,§ 35, eff. 7/1/2015.