GEORGIA PUBLIC SERVICE COMMISSION

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1 2000 Annual Report Chairman Bob Durden Vice Chairman David L. Burgess Commissioner Robert B. Baker, Jr. Commissioner Lauren Bubba McDonald, Jr. Commissioner Stan Wise 244 Washington Street SW Atlanta, Georgia (phone) (fax) (web page)

2 Table of Contents Letter to the Governor 2 History and Mission of the Commission 3 Public Service Commissioner Profiles 4 Bob Durden 4 David L. Burgess 5 Robert B. Baker, Jr. 6 Lauren "Bubba" McDonald, Jr. 7 Stan Wise 8 Managerial Personnel 9 Utilities Division 10 Telecommunications 11 Natural Gas And Pipeline Safety 14 Electric 19 Transportation Division 23 Administrative Division 27 Budget and Fiscal Office 27 Consumer Affairs Office 27 Executive Secretary s Office 29 Human Resources Office 30 Information Technology Office 30 Agency Budget 31 Organizational Chart 32 1

3 LETTER TO THE GOVERNOR JANUARY 1, 2001 Honorable Roy E. Barnes, Governor Office of the Governor State Capitol Atlanta, Georgia Dear Governor Barnes: It is a pleasure to present to you the 2000 Annual Report of the Georgia Public Service Commission (also referred to herein as PSC and Commission ). This annual report contains an overview of the history and structure of the Commission and identifies the major achievements in the state's utility and transportation industries during the past calendar year. For over 120 years, decisions made by the Commission have contributed to the state s economic growth and technological development. We look forward to serving Georgia s citizens into the next century. Respectfully submitted, Bob Durden, Chairman David L. Burgess, Vice Chairman Robert B, Baker, Jr., Commissioner Lauren "Bubba" McDonald, Jr., Commissioner Stan Wise, Commissioner 2

4 HISTORY AND MISSION OF THE COMMISSION HISTORY On October 14, 1879, Georgia became one of the first states to establish a regulatory body to resolve complications resulting from increased railroad expansion and competition. Known at that time as the Railroad Commission of Georgia, the members of this body originally were appointed by the governor for the purpose of regulating railway freight and passenger rates. In 1891, telegraph and express companies came under the Commission s jurisdiction. Sixteen years later, the Commission was given authority over docks and wharves, as well as telephone, natural gas and electric companies. This jurisdiction was further expanded in 1931 when authorization to regulate the trucking industry was conferred upon the Commission. Cognizant of the changing role of this regulatory body, the name of the Railroad Commission of Georgia was changed by the Legislature in 1922 to the Georgia Public Service Commission. MISSION The PSC is a quasi-legislative, quasi-judicial agency comprised of five Commissioners elected on a statewide basis. Beginning with the election in the year 2000, a candidate for a seat on the Commission must meet an additional requirement of qualifying by residency in the appropriate district for which a Commission seat is available. The PSC's mission is to ensure that consumers receive the best possible value for the telecommunications, electric and gas services they receive and have available to them transportation and pipeline services that are safe and reliable. The regulatory side of the Commission's activities is most prevalent in relation to investor-owned natural gas and electric power utilities. The Commission has the authority to set rates, require longrange energy plans and projections, and provide for the safety of gas pipeline distribution systems. Commercial vehicle and driver safety remains a Commission priority, as evidenced by the strong presence of enforcement officers around the state to enforce compliance with state and federal safety, hazardous materials and economic regulations for commercial vehicles. Over the past decade, expansion and competition have significantly changed the Commission's purpose. With the onset of competition in these industries, the Commission s role is slowly being transformed from that of a traditional regulator to a body that is called upon to arbitrate complaints among competitors. This is a trend that is expected to continue as these industries and possibly one day the electric industry move closer to being fully competitive. 3

5 PUBLIC SERVICE COMMISSIONER PROFILES Bob Durden Commissioner Since: January 1, 1991 Chair: January 15, January 14, 2001 Year Elected: 1990; Re-Elected: 1996 Serves Through: 2002 Republican, Forsyth County Chairman, Georgia Public Service Commission The longest serving member of the Commission and a native Georgian, Bob Durden is a graduate of Statesboro High and earned a B.A. (History), an M.A. (Political Science) and J.D. (Law) degrees from Emory University. Following military service in the Marine Corps, Bob taught courses in Economics, International Relations and American Government at Emory and was honored for his contribution to education as a recipient of Emory s "Spokesman Award." Prior to his election, Bob was a trial attorney in private practice. Bob was selected for membership in MENSA and has been named to "Who's Who in the South and Southwest," "Who's Who in American Law," Georgia Trend's "100 Most Influential Georgians," and "Who's Who in America." His plan to expand toll-free calling in Atlanta and 300 other Georgia communities and his successful fight to return $1.34 billion to Georgia ratepayers are hallmarks of his service. Bob served as Chairman of the Commission in 1991, 1992, and 1995 and again in

6 David L. Burgess Commissioner Since: April 8, 1999 Elected: 2000 Serves Through: 2006 Democrat, DeKalb County Vice Chairman, Georgia Public Service Commission Governor Roy E. Barnes appointed David Burgess to fill a vacant Commission seat on April 8, l999. His appointment to the Commission is one of several first. Burgess is the first African-American person to serve on the vital utility board; the first former PSC staff member to hold a Commission seat; and according to PSC Historian, the first Georgia Tech graduate on the Commission. He was elected to a full six-year term in November Burgess graduated from Georgia Tech in 1981 with a Bachelor of Science Degree in Electrical Engineering. He served as a member of the PSC staff for 17 years. Burgess began as public utilities engineer, rose through the ranks in six years to become the PSC s Director of Rates and Tariffs; and served as the Director of the PSC s Telecommunication Unit for two years prior to his appointment. He has effectively resolved various electric, gas and telecommunications issues during his tenure at the commission. Burgess continues to lead the Commission s efforts to implement the requirements of the 1996 Federal Telecommunications Act. Burgess currently serves as the Chairman of the Commission s Telecommunications Committee, member of the Georgia Utilities Facility Protection Act Advisory Committee and the Advisory Board of the Georgia Center for Advanced Telecommunications Technology (GCATT). An Atlanta native, Burgess and his wife Phyllis have been married for seven years. They have two daughters, Crystal, 5 and Christina, 2. Burgess is the Superintendent of Sunday School and a trustee at Turner Monumental A.M.E. Church. 5

7 Robert B. Baker, Jr. Commissioner Since: January 1, 1993 Year Elected: 1992; Re-Elected: 1998 Serves Through: 2004 Republican, DeKalb County Commissioner, Georgia Public Service Commission Bobby Baker was the first Republican elected to a statewide office since Reconstruction, and was re-elected in Bobby Baker grew up in DeKalb County and graduated from Oglethorpe University with honors. He received his law degree from the University of Georgia. After graduating from law school, Commissioner Baker joined the Southeastern Legal Foundation, a regional conservative public interest law firm, and later entered private practice. In 1994 Bobby Baker became the first Republican to serve as Chairman of the Public Service Commission. In 1998 he served his second term as chairman. During his tenure on the PSC he has worked aggressively to develop competitive markets for utility services, reduce regulation and expand toll free calling in Georgia. In 1995, 1998 and 1999 he was selected as one of Georgia Trend s 100 most influential people in Georgia, and was honored to be the 1998 recipient of the Oglethorpe University Talmadge Award. Commissioner Baker served on the board of directors for the Georgia Center for Advanced Telecommunications Technology (GCATT) from 1994 to 1998, and served as Vice-Chairman of the Gwinnett County Planning Commission from 1991 to He is a member and director of the Peachtree-Atlanta Kiwanis Club. 6

8 Lauren "Bubba" McDonald, Jr. Commissioner Since: June 10, 1998 Year Elected: 1998 Serves Through: 2002 Nonpartisan, Forsyth County Commissioner, Public Service Commission Governor Zell Miller appointed Lauren "Bubba" McDonald, Jr. to fill a vacant Commission seat on June 10, At a special election held later that year, McDonald was elected by an overwhelming majority of voters to serve as Commissioner. Commissioner McDonald is serving on two Committees of the National Association of Regulatory Utilities Commissions: the Committee on Electricity and the Nuclear Electric Insurance Limited Committee. Under Electricity he serves on two subcommittees (Subcommittee on Nuclear Issues Waste Disposal and the Subcommittee of Strategic Issues). A graduate of the University of Georgia with a BBA in Business, McDonald brings to the Commission twenty years experience in the Georgia House of Representatives, where he chaired the Industry Committee for five years and the Appropriations Committee for eight years. McDonald is a former member of the Jackson County Board of Commissioners and the Board of Managers of the Association of County Commissioners of Georgia. He has also served as a member of the Board of Governors of Mercer Medical College, a director of the Small Business Development Center at the University of Georgia and as a member of the Board of the Advanced Technology Center at the Georgia Institute of Technology. A Commerce native, McDonald is a partner in L.W. McDonald & Son Funeral Home with his son, Lauren III, in Cumming, Georgia. McDonald is married to Sunny McDonald (Nivens), formerly of Gainesville. He is an elder in the Presbyterian Church, a private pilot and an avid golfer. 7

9 Stan Wise Commissioner Since: January 1, 1995 Year Elected: 1994; Re-Elected: 2000 Serves Through: 2006 Republican, Cobb County Commissioner, Georgia Public Service Commission Stan Wise won re-election to his second six-year term on the Commission in November He served as Commission Chairman in 1997 and He was first elected to public office as a Cobb County Commissioner in 1990 and had previously served that county as a member of the Cobb County Planning Commission and the Board of Zoning Appeals. Wise was a Board Member of the ten-county Atlanta Regional Commission from Wise is a past President of the Southeastern Association of Regulatory Utility Commissioners (SEARUC) and serves on the Gas Committee of the National Association of Regulatory Utility Commissioners (NARUC). He is also chair of the advisory council to the Gas Technical Institute. He has also served on the Board of Directors of the Cobb YMCA, the Boys Club of Cobb County and the Advisory Board of the North Georgia Law Enforcement Academy. A former member of the Air Force Reserve, Wise was awarded his B.S. in Business Management from the Charleston Southern University in He and his wife, Denise, have been married for 27 years and have two children. His daughter Lindsay, 21, attends Georgia Southern University and his son Adam, 19, attends Gardner-Webb University in North Carolina on a baseball scholarship. 8

10 PUBLIC SERVICE COMMISSION MANAGERIAL PERSONNEL DECEMBER 31, 2000 Commissioners Bob Durden, Chairman David Burgess, Vice Chairman Robert "Bobby" Baker, Jr., Commissioner Lauren "Bubba" McDonald, Jr., Commissioner Stan Wise, Commissioner Administrative Division Deborah Flannagan, Executive Director Helen O'Leary, Executive Secretary Bill Edge, Public Information Officer/Legislative Liaison Glenda Knowles, Fiscal and Budget Officer Jackie Thomas, Human Resources Officer Phil Nowicki, Ph.D, Director of Consumer Affairs Lamar Pearce, Director of Information Technology Utilities Division B.B. Knowles, Utilities Division Director Ken Ellison, Assistant to the Utilities Division Director Leon Bowles, Director of the Telecommunications Unit Sheree Kernizan, Director of the Electric Unit Nancy Tyer, Director of the Natural Gas Unit Tim Hopkins, Director of Utilities Finance Transportation Division Al Hatcher, Transportation Division Director Major Al Algier, Director of the MCSAP Enforcement Unit Lucia Ramey, Director of the MCSAP Compliance Unit Maria Dorough, Director of the Certification and Permitting Unit Nora Blair, Director of the Administrative Support Unit 9

11 UTILITIES DIVISION Historically, the Georgia Public Service Commission ( Commission ) has been responsible for setting the rates charged by telecommunications, natural gas and electric companies through economic regulation and for establishing and enforcing quality of service and customer service standards. The telecommunications, natural gas, and electric industries previously were characterized as natural monopolies. Now a number of these industries are evolving from a monopoly market structure where a single provider serves customers to a competitive market that allows customers to choose among multiple providers for certain services. Other services will continue to be monopoly services regulated by the Commission. The pace at which competition is being implemented varies among these industries. In the telecommunications industry, long distance service has been competitive since the mid-1980 s. In 1995 and 1996, local telephone service was opened to competition by state and federal legislation, respectively. In 1998, Georgia opened the natural gas industry to competition. Restructuring of the electric utility industry has taken place in a number of states, with varying results, but there has been no action in Georgia. It appears unlikely that electric utility restructuring will take place in the state in the near future. In spite of these changes in the regulatory environment, the Commission has continued to be active in differing roles to ensure that consumers receive the best possible value in telecommunications, electric and natural gas services and to improve natural gas pipeline safety. An overview of the roles that the Commission has played in each of these utility industries over the past year, as well as key decisions of this agency, are set forth in the following sections. 10

12 TELECOMMUNICATIONS The telecommunications industry is indispensable to the economy of the state. Georgia s Telecommunications and Competition Development Act of 1995 and the federal Telecommunications Act of 1996 have had a great impact on the Commission s role in this vital industry. The primary goal of both of these statutes was to replace traditional regulated monopoly service with a competitive market. By the end of 2000, the Commission certificated a total of 217 competitive local exchange providers, 476 resellers, 138 alternative operator service providers, 73 interexchange carriers and 588 payphone service providers since competition was first introduced in The Commission also heard 7 arbitration cases, approved 372 interconnection agreements and continued to administer and prepare for the transition of the Universal Access Fund to its next phase. Noteworthy developments in the Georgia telecommunications industry that occurred during calendar year 2000 are set forth in the following section. SIGNIFICANT MATTERS IN THE TELECOMMUNICATIONS INDUSTRY IN 2000 Commission Actions Are Taken That Affect the Universal Access Fund During the year, the Commission ruled that effective June 30, 2001, Tier II telephone companies, which include all incumbent local exchange carriers (ILECs) other than BellSouth, could no longer receive disbursements from the Universal Access Fund (UAF) without demonstrating their need for funding to provide universal service. Until June 30, 2001, such companies can continue to receive disbursements from the Universal Access Fund that are not based on need as provided in O.C.G.A (f)(2). The permanent need for the Universal Access Fund and the procedures and requirements to obtain UAF disbursements were established after a series of hearings held in November 2000 in accordance with O.C.G.A Prospectively, any requests for UAF disbursements after July 1, 2001 must be accompanied by a futurelooking cost study submitted by the applicant. The Commission further provided for the ability of smaller ILECs to opt out of this hearing process and instead participate in an informal workshop process provided that the expected annual disbursement request is no greater than $1.5 million. Certain cost study requirements will remain; however, the process will be truncated, thereby minimizing costs and resource requirements for both the applicants and the Commission. 11

13 New Area Codes GEORGIA PUBLIC SERVICE COMMISSION In 2000, NeuStar, Inc., the North American Numbering Administration (NANPA), advised the Commission that the projected exhaust timeframe for the NPA 678 area code is June 2001 and the projected exhaust timeframe for the NPA 706 area code is the fourth quarter The Commission has scheduled hearings to consider relief for these exhausting area codes and to consider conservation measures to help relieve the continuing demand on the state s telephone number resources. Number Conservation The Federal Communications Commission (FCC) has adopted 1000-number block pooling as a mandatory nationwide numbering optimization strategy, with pooling to be administered by a national Pooling Administrator. In order for number pooling to be implemented, appropriate software and procedures must be developed. Carriers in Georgia are currently in the process of completing systems and developing procedures that will allow implementation of this number pooling optimization and the selection of the Pooling Administrator. The Commission has petitioned the FCC for the Atlanta Metropolitan Statistical Area (MSA) to be included in the first MSAs for which 1000-number block pooling will be implemented. Rate Center Consolidation Commission staff held a series of Rate Center Consolidation (RCC) workshops at the Commission where the industry identified and resolved issues involved with implementation before filing an Industry Consensus Plan for RCC with the Commission. The industry plan will reduce the present number of rate centers in the Atlanta Metropolitan Local Calling Area from 63 to 39. Presently any competing local exchange company certified to operate must be issued an NXX code block of 10,000 numbers for each rate center area they serve. This plan will conserve the use of NXX codes, which could extend the life of NPA area codes. In Administrative Session on August 1, 2000 the Commission approved the Industry Consensus Plan for RCC for the metropolitan Atlanta local calling area with implementation to be completed in August

14 Third-Party Testing of BellSouth s Operational Support Systems Continues On May 20, 1999, the Georgia Public Service Commission issued an Order requiring third-party testing of BellSouth s Operational Support Systems (OSS). In this Order, a testing plan was prescribed that would allow a thorough audit of BellSouth s OSS to provide the Commission with additional information as to whether nondiscriminatory access to BellSouth s OSS is available. During the remainder of 1999, the two companies auditing BellSouth s OSS, KPMG and Hewlett Packard, worked steadily to implement the directives contained in the test plan approved by the Commission. Also, after thoroughly reviewing a letter written to US West by the Chief of the FCC s Common Carrier Bureau dated September 27, 1999, which provided Bell Operating Companies with additional guidance concerning third-party testing, the Commission amended its Order to include additional testing of BellSouth s Operational Support Systems. This testing continued throughout Once this third-party testing has concluded, the Commission will be able to incorporate the test results in its recommendation to the FCC after BellSouth files its request for InterLATA relief. Commission Orders $11.5 Million in Refunds to Alltel Customers During 2000, the Commission and Alltel settled a case that had been in litigation since The principal terms of the settlement resulted in the following: Alltel refunded $25 per customer to its 450,000 wireline customers; Disbursements to Alltel from the USF were reduced by $21 million; By July 2001, Alltel (including Standard Telephone Company and Georgia Telephone Company) will make Internet Service available to all of its access lines on a local calling basis; By December 31, 2001, Alltel (including Standard Telephone Company and Georgia Telephone Company) will deploy broad band DSL service to at least 40% of its access lines; Alltel reduced prices on several optional EAS routes; and Alltel offered new EAS routes. 13

15 NATURAL GAS AND PIPELINE SAFETY GEORGIA PUBLIC SERVICE COMMISSION NATURAL GAS Natural gas is vital to the development and economic well-being of Georgia. Over 1,500,000 customers use natural gas that is delivered by the state's two investor-owned natural gas systems, Atlanta Gas Light Company (AGLC) and United Cities Gas Company (United Cities). In early 1997, the Georgia Legislature passed the Natural Gas Competition and Deregulation Act (the Act), O.C.G.A et seq., which gave both of these companies the option of electing to be governed under a new regulatory framework. More specifically, the Act provides for a transition of the natural gas commodity market from a regulated monopoly to a competitive marketplace. The Commission s role under the Act would be to facilitate this transition. Although United Cities has not elected to be governed under the Act, AGLC filed notification of its intent to be subject to the new regulatory model in November In managing the transition to competition in what traditionally were AGLC s service areas, the Commission s main objectives have been to implement the Act in a manner that allows a majority of end users to realize the benefits of competition, which include a greater choice among gas providers and better customer service. The success of opening the natural gas market to competition ultimately will be judged on whether consumers benefit, economic efficiency is improved, fair competition is promoted, and safety and reliability are maintained or enhanced. Important events in the Georgia natural gas industry that occurred during calendar year 2000 are set forth in the following section. SIGNIFICANT MATTERS IN THE NATURAL GAS INDUSTRY IN 2000 Commission Approves $73.7 Million in Refunds In December 1999, the Commission Staff determined an over-collection of $33.7 million had been made by Atlanta Gas Light Company in its Purchased Gas Cost Adjustments for Fiscal Year The Commission subsequently took charge of this money from the Company and placed it in an interest-bearing escrow account until a refund to customers could be effected. The principal and interest earned were refunded to customers in May On September 19, 2000 the Commission approved a modification to AGLC s Tariff; a Seasonal rate that mirrors historical volumetric charges, which is to become effective February 1,

16 In order to ease the transition to this revised rate, and in anticipation of above normal natural gas prices this winter, the Commission approved a $40 million refund from the Universal Service Fund to residential customers, effective for February and March 2001 natural gas bills (an additional refund of $10 a month for the period January 1, 2001 through March 31, 2001 for low income/senior citizen customers was also approved on September 9, 2000). The Commission Adopts Rules to Prevent Slamming, Require Marketers to File Prices and Sets Service Quality Standards for Billing On January 8, 2000, the Commission adopted rules pertaining to changing consumers natural gas providers without proper authorization, including guidelines and sanctions. The Commission amended marketer rules to require marketers to file pricing information with the Commission, as well as to disclose relevant pricing information when making offers to customers. Finally, the amended rules include additional standards for certification and additional grounds for revocation, suspension, or modification of a certificate of authority. These amendments became effective in June The number of natural gas-related complaints officially logged by the Commission during 2000 was 15,890 (the majority, 12,985, were concerned with billing problems). In response to these complaints, the Commission approved a new rule on December 21, 2000 (effective January 25, 2001) that addresses service quality standards for billing (and their enforcement) and consumers rights and remedies for untimely bills. The Commission s goal in this regard is to establish a more consistent natural gas marketer billing format that should make it easier for consumers to compare the prices of different natural gas marketers. Bankruptcy Filings Closely Monitored by the Commission Peachtree Natural Gas filed Chapter 11 Bankruptcy in U.S. Bankruptcy Court on October 26, With procedures already in place, the Commission approved an interim pooler within a week, resulting in no interruption of gas service to any of Peachtree s 172,000 customers. Peachtree s certificate was subsequently revoked and a penalty of $10 per any customer slammed by the Company was imposed (in response to problems in this area identified by the Commission). The Commission continued to monitor the Peachtree Bankruptcy proceedings and joined with the U.S. Trustees Office in petitioning the Bankruptcy Court to place an Administrator over the Peachtree Estate. Peachtree subsequently filed suit against the Commission to gain access to the Universal Service Fund. Peachtree later voluntarily dismissed the suit. 15

17 Titan Energy filed Chapter 11 Bankruptcy in U. S. Bankruptcy Court on July 1, 2000 and the case is still pending. The Commission successfully convinced the Bankruptcy Court to include customer protection requirements as part of the sale of Titan s customer base. The Commission has continued to monitor the Titan Bankruptcy proceedings. Southeastern States Energy (SSE) filed Chapter 11 bankruptcy in U. S. Bankruptcy Court on August 11, PowerTrust.com purchased SSE in bankruptcy and entered the Georgia natural gas market, the sale being completed on December 8, An application for transfer of ownership was filed with the Commission and approved on November 21, PowerTrust s intent is to keep SSE as an operating company and honor all existing customer contracts. Energy America s Business Practices Examined by the Georgia Public Service Commission A Rule Nisi was issued to Energy America on April 27, 2000 for unauthorized changing of consumers natural gas providers and deceptive practices as a means to enlist customers. On May 30, 2000, the Commission Staff and Energy America signed a joint stipulation, resolving outstanding issues and benefiting their customers on a prospective basis. The Commission approved the stipulation on July 18, The Commission is currently monitoring Energy America to ensure the conditions of the stipulation are met, including establishment of a $75,000 fund to assist low income/senior citizen customers during the winter heating season, a $25,000 payment to the Commission to cover expenses, implementation of a third party verification system and compliance with Federal Trade Commission regulations for door-to-door sales. Interim Poolers Designated At midyear the Commission issued a request for proposals to all certificated natural gas marketers in order to competitively select an interim pooler to provide natural gas service to the customers of any marketer that might cease to provide service in Georgia. On August 15, 2000 the Commission approved SCANA and Georgia Natural Gas Services as interim poolers for the period July 1, 2000 through June 30, 2001 pursuant to this request for proposals. The Commission plans to issue a request for proposals in each subsequent year to allow all marketers an opportunity to serve as an interim pooler. The Commission s selection of interim poolers in the request for proposal process is based on an assessment of marketers overall rates, terms, and conditions most favorable to the consumer. 16

18 Operational Issues GEORGIA PUBLIC SERVICE COMMISSION The Commission approved two capacity amendments during The first, approved April 13, 2000, granted Atlanta Gas Light Company s request for a three-year extension of their contract with Southern Natural Gas Pipeline Company. Approval of this amendment reduced annual interstate transportation rates by $4.8 million. Storage demand rates were reduced approximately $2 million per year by the approval of the second capacity amendment on October 13, Commission Approves Pipe Replacement Program On December 21, 2000, the Commission approved a program filed by United Cities Gas Company to replace 184 miles of cast iron pipe in Columbus, Georgia over a 15-year period and 46 miles of bare steel pipe in Gainesville, Georgia over the next 20 years. The Commission approved a surcharge addition to present rates that will recover the capital costs of this pipe replacement program. This surcharge to customers bills is estimated to be 9 cents per month for Additional surcharges beyond 2001 will be required as well. PIPELINE SAFETY The year 2000 marked the 32 nd year of certification for the Pipeline Safety Section of the Georgia Public Service Commission in conjunction with the Research and Special Programs Administration of the federal Department of Transportation. The year also presented this Section with additional responsibilities and challenges. Despite the restructuring of the sale of natural gas by Atlanta Gas Light Company, the Commission retains responsibility for ensuring that all natural gas operators in the state meet federal pipeline safety requirements. The Commission s Pipeline Safety Section oversees more than 700 miles of transmission pipelines and over 38,000 miles of distribution lines that transport natural gas to over 2 million Georgia customers. During 2000, this Section continued to regulate all pipeline safety matters involving private and municipally owned natural gas distribution systems, liquefied natural gas facilities, master-metered operators and direct sales customers, including propane facilities, that operate in the state of Georgia. The Pipeline Safety Section enforces those regulations contained in Parts 191, 192, 193 and 199 and 40 of the Code of Federal Regulations, as well as applicable state regulations. As the need arises, the Section is authorized to adopt additional regulations. 17

19 During the year, the Pipeline Safety Section spent 1,120 inspection days performing 530 inspections. Approximately 98 days were spent investigating 45 accidents that involved the release of natural gas. This Section continues to conduct investigations of all natural gas incidents that result in fatalities, personal injury, evacuations, major road closures, or property damage in excess of $5,000. The Georgia Public Service Commission will also investigate all incidents that require notice to the Federal Office of Pipeline Safety, in accordance with state and federal regulations. SIGNIFICANT MATTERS REGARDING PIPELINE SAFETY IN 2000 House Bill 1290 Enacted During the 2000 legislative session, House Bill 1290 was introduced and enacted by the General Assembly. Effective July 1, 2000, the new law, known as the Georgia Utility Facility Protection Act, gives the Georgia Public Service Commission authority to enforce the new guidelines prescribed, as well as levy penalties against violators that damage utility facilities or otherwise fail to follow the requirements of the law. Pipeline Safety Section investigations during the past several years indicated that excavators had caused the majority of facility damages ($3 million in 1999) which have taken place. This was the principal reason the new facility protection act was implemented. Through its investigations, the Pipeline Safety Section has made recommendations to the newly appointed Advisory Committee concerning probable violations of the new law. To effectively enforce the provisions of this law, the Commission needs additional investigative and administrative support personnel. Operator Qualifications Requirements Increased Under Part 192 of the Code of Federal Regulations, a new section (800) was added during the year that requires qualification of facility operators personnel. Due to numerous natural gas pipeline accidents attributed to operator error, the Federal Pipeline Safety Regulations now require facility operators to qualify their employees that perform various functions on their natural gas pipeline systems. The Pipeline Safety Section is working to ensure steps are taken by facility operators to qualify their personnel. This qualification process is being enhanced by direct onsite assistance from Pipeline Safety Section personnel along with the conduct of training seminars by Section personnel throughout the state for facility operators personnel. 18

20 ELECTRIC Electricity is an energy form that is vital to the economy of the state and to the quality of life of Georgia s citizens. Of the three utility industries, the electric industry is the most universally utilized and perhaps the most essential. Like the natural gas and telecommunications industries, the electric industry is in a state of change on a national level. The Georgia Public Service Commission had expected that the electric industry in Georgia would possibly be restructured at some point in the future. However, due to the recent failures of electric restructuring experienced in other states and the unprecedented increase in natural gas prices, this view has changed. It now appears, absent federal legislative action, that the electric industry in Georgia will remain traditionally regulated in its present form, which has provided benefits to Georgia s citizens and industries. The two investor-owned electric utilities, Georgia Power Company and Savannah Electric and Power Company, are fully regulated by the Commission. Together these companies serve approximately 2 million consumers and collected retail revenues of approximately $5 billion in The Commission has limited regulatory authority over the 42 electric membership corporations (EMCs) and 52 municipally owned electric systems in the state. Pursuant to O.C.G.A 46-3A-1 et seq., the Integrated Resource Planning Act, the Commission is responsible for evaluating and approving integrated resource plans filed by these investor-owned utilities on a three-year cycle and for granting applications for certificates for supply and demand side resources as indicated by need. During 2000, new resources were approved to meet Georgia s increased energy needs and to provide for adequate reserves for peak period energy needs. The Commission also oversees territorial assignments for all electricity suppliers pursuant to the Georgia Territorial Electric Service Act, O.C.G.A et seq., by reviewing and authorizing requests for transfers of retail electric service, resolving disputes over territories and customer choice, and maintaining the electric supplier territorial maps for each of the one hundred and fifty-nine (159) counties in the state. The Commission also approves the financing applications of electric membership corporations. SIGNIFICANT MATTERS IN THE ELECTRIC INDUSTRY IN 2000 Approval of Negotiated Electric Contracts Keeps Georgia s Businesses Competitive In recent years, the Georgia Public Service Commission approved five-year negotiated contracts between Georgia Power and ten of its industrial customers. These companies were granted special services and reduced rates by the utility to help economic 19

21 development and keep jobs in Georgia. Prior to being authorized to enter into such a contract, each prospective company had to certify that its work force would have to be substantially reduced or the company would be prevented from expanding existing operations if the subject contract were not approved. In 2000, a number of these contracts were re-approved to reflect changes in a particular company s operations. The Commission Continues Investigations for a Potentially Restructured Electric Industry The Georgia Public Service Commission is active unilaterally as well as in concert with its national organization, the National Association of Regulatory Utility Commissioners (NARUC), to ensure that any federal restructuring legislation will be beneficial to Georgia ratepayers. In 1997, the Commission completed a series of electric restructuring workshops and published a report in January 1998 that identified issues that must be resolved for competition to succeed in Georgia s electric industry. During 2000, the Commission continued to address these complex issues. An investigation to determine whether or not, and how to, unbundle traditional electric rates also continued. The development of a model to determine the potential level of stranded costs or stranded benefits of utility assets continued. The Commission also began investigating the performance of the regulated utilities generating plants to ensure that they are being operated in an efficient manner. The Federal Energy Regulatory Commission (FERC) required electric utilities to file a plan to implement a Regional Transmission Organization (RTO) by October Southern Company filed its comments, which were reviewed by the Commission Staff. The staff filed its comments on the Southern Company proposal with the FERC in November Commission Approves Additional Rate Reductions After analyzing Georgia Power s 1999 earnings and determining that the Company had over earned approximately $120 million, the Commission voted unanimously to provide additional benefits to Georgia Power s customers which included approximately $70 million in refunds and $50 million to be set aside in a special interest bearing account to offset potential stranded costs customers might be required to pay if the electric industry were restructured in Georgia. In 1998, the Commission reduced Georgia Power s revenues by more than $1 billion over three years, with $834 million being applied directly to rate reductions starting in January 1999 in a three-year accounting plan. An additional $255 million in earnings was designated to accelerate depreciation of certain regulatory assets. The Company s rate of return was capped at 12.5% return on equity. The first $50 million earned over 12.5% in the second and third years of the plan, 2000 and 2001, is slated for additional accelerated depreciation. Two-thirds of any earnings 20

22 over 12.5%, and after the first $50 million in 2000 and 2001, will be shared with ratepayers, with the remaining third being retained by the Company. The bulk of the rate reductions, $483 million, will go to 213,000 small business customers who had been paying disproportionately higher rates. Residential customers will see reductions of $196 million over the period. Large commercial customers will receive reductions of $147 million while outdoor lighting customers will receive discounts of $7.5 million. In 2000, Savannah Electric and Power Company implemented its fourth and final small business rate reduction which provides for a reduction of approximately $12 million in its small business customers rates over a four-year accounting plan period 1998 through After learning that Savannah Electric potentially could be over earning as much as $7 million annually, the Commission Staff successfully negotiated an agreement in 1998 with this utility to reduce its earnings by $22 million over a four-year period. These reductions will be achieved through a combination of rate cuts, accelerated depreciation of assets and storm damage accruals. On June 10, 1998, the Commission approved electric rate reductions over the next four years in the amount of $11 million for small business customers of Savannah Electric and Power Company. Beginning with the first billing cycle in July 1999, small businesses realized a 5% reduction in rates. By the fourth year of this plan rate reductions will climb to approximately 8.6%. Customers benefiting from this rate relief range in size from small businesses in strip malls to large grocery stores using 50,000 kilowatt hours or less per month. During 2000 the Commission Staff also began an investigation into the fuel procurement practices used by both Georgia Power Company and Savannah Electric and Power Company to determine the cause(s) of rising fuel costs. PSC Seeks To Protect Ratepayer Interests In Environmental Policy Decisions The Commission continued to monitor the progress of Georgia s Environmental Protection Division (of the state Department of Natural Resources) as well as the federal Environmental Protection Agency rulemaking proceedings to improve Georgia s air quality. The Georgia Department of Natural Resources approved a plan that requires Georgia Power Company to install new emission controls on seven of its generating plants. Georgia Power Company estimates these requirements will cost approximately $800 million. It is anticipated that the Company will ask the Commission to allow it to seek recovery of these costs. The Commission Staff continues to monitor developments in the federal Environmental Protection Agency s lawsuits against Georgia Power Company and Savannah Electric and Power Company for violations of the New Source 21

23 Performance Standards. In May 1999, The Commission provided comments to the Environmental Protection Division of the Georgia Department of Natural Resources in response to proposed rules regarding nitrogen oxide compliance and that agency s plans for stricter controls on utility coal burning plants. In doing so, the Commission expressed a desire to support metropolitan Atlanta s clean air initiatives in a manner that would not adversely affect customers utility rates. The Commission began a formal investigation into issues concerning ratepayer payments into the federal Nuclear Waste Fund as a result of: (1) the federal Department of Energy s violation of its contract to begin accepting spent nuclear fuel from Georgia Power Company s nuclear plants and from nuclear plants in other states; and (2) the President s veto of legislation to correct this situation. The Commission continues to take a strong stance against the Department of Energy for its failure to comply with laws that require the Department to remove spent nuclear fuel from nuclear plants in Georgia beginning in January The Department of Energy s inaction has resulted in the need for Georgia Power Company to construct, at ratepayers expense, additional onsite storage facilities to handle the accumulation of spent nuclear fuel and to engage in activities to construct an interim storage site. The Commission has addressed the Department of Energy at formal hearings and in written documents to emphasize the severity of this situation. The Commission continues to work on a national level to ensure that any proposed federal legislation that seeks to address this problem provides and appropriate solution. 22

24 TRANSPORTATION DIVISION GEORGIA PUBLIC SERVICE COMMISSION The Transportation Division functions under cooperative agreements between the PSC, the U.S. Department of Transportation, the Georgia Department of Natural Resources and several other agencies. These cooperative agreements cover motor carrier vehicle safety and hazardous materials regulation. The primary responsibilities of the PSC s Transportation Division include establishing rates, certifying and registering motor carriers, and enforcing motor carrier safety on Georgia s roads and highways. With respect to its regulatory obligations, the Commission s Transportation Division has price-setting authority over household goods, bus (other than charter) and limousine carriers and is responsible for permitting and certifying for hire intrastate and interstate motor carriers. In exercising this authority, it is essential that the Commission establish reasonable rates and tariffs and ensures that carriers are properly registered, certificated and insured. The Certification and Permitting Unit verifies that all for hire carriers have proof of insurance. Certificates of Public Convenience and Necessity must be obtained by for hire household goods, bus (other than charter) and limousine carriers. Other carriers are not required to have a certificate but must register or obtain a permit to operate in Georgia. In addition to these, the Commission also issues and tracks chauffeur permits granted to individuals who drive limousines in Georgia. Before a chauffeur s permit is issued, the Commission must perform extensive background investigations on each limousine driver and obtain evidence that a limousine carrier has liability insurance. The Enforcement and Compliance Units of the PSC s Transportation Division ensure compliance by commercial vehicles with safety and hazardous materials regulations. These Units have 41 uniformed enforcement officers, who reside and work in assigned territories that range in size from four to ten counties. Part of the PSC s commitment to commercial vehicle safety has been to work with other state and federal agencies and with enforcement divisions in respective counties to promote commercial vehicle safety. Currently, several counties and cities that have trained officers to perform commercial motor vehicle inspections. These counties receive funding under the Motor Carrier Safety Assistance Program of the Public Service Commission. Additionally, the PSC has trained 21 Georgia Department of Transportation enforcement officers to perform Level Three CMV inspections at the various weigh stations throughout the state during this year. The goal is to train approximately 60 Georgia Department of Transportation officers by the end of In addition, the PSC s enforcement officers participate in concentrated efforts in high crash corridors, the existence of which have been identified from vehicle accident reports by location, time-of-day, day-of-week and other contributing factors. As a result of traffic density, a majority of accidents involving commercial motor vehicles occurs on sections of Georgia s highways that are either major transportation arteries or located 23

25 near metropolitan areas. By concentrating enforcement activities in these high-risk areas, a dramatic reduction in accidents, fatalities and injuries involving commercial motor vehicles should be apparent in the years to come. The Transportation Division aggressively promotes safety education as an important part of its responsibilities. To enhance awareness of commercial motor vehicle safety regulations, the Commission offers assistance to the industry in understanding and complying with these regulations. This is accomplished through the P.I.E. (Public Information and Education Program, Hazardous Material and Judicial Outreach seminars, Introduction to Commercial Vehicle classes (CMV 101) safety meetings and the distribution of safety and educational handouts. Through these meetings, road checks and direct contacts, 3,682 packets of safety information, 61,227 fact sheets, forms and other items with safety messages were distributed in The Public Service Commission now has 54 informational safety brochures and facts sheets that are utilized in the P.I.E. Program. In the PSC s effort to educate industry personnel, the enforcement officers have conducted 95 industry safety meetings with 2,152 people in attendance in Additionally, in order to educate other law enforcement agencies, they conducted 15 CMV 101 classes throughout the state with approximately 270 officers in attendance. Comprehensive student manuals for these classes were created and produced inhouse. In FY 2000, PSC officers participated in two special outreach activities. One such activity involved participation in seminars sponsored by the Georgia Department of Revenue to educate industry personnel about the motor carrier requirements of various state agencies in Georgia. This agency participated in nine such seminars that reached 358 industry representatives. The other outreach activity involved the education of judges, court clerks, and judicial personnel on motor carrier regulations. During 2000, there were four judicial outreach meetings in various parts of the state that involved training of 145 court officers. Another aspect of education and enforcement involves visits to terminals and office facilities by PSC officers to conduct Terminal Inspections on carriers vehicles and Compliance Reviews on carriers records. These audits reveal a company s compliance with safety regulations in areas that include the qualifications of drivers, drug and alcohol testing and proper maintenance of vehicles. This year, the Commission s officers conducted 48 Terminal Inspections and 202 Compliance Reviews. There were 56 enforcement cases for violations of motor carrier safety regulations that resulted in civil penalties totaling $384,

26 SIGNIFICANT MATTERS IN THE TRANSPORTATION INDUSTRY IN 2000 Commercial Vehicle Inspections Remain a Top Priority For The PSC Since the number of miles traveled each year by commercial motor vehicles is increasing, PSC enforcement officers and sub-grantee agencies continued to concentrate their efforts in areas designated as high crash corridors in From January 1 to December 31, enforcement officers inspected 13,819 vehicles, found 45,413 violations, and issued over 1,000 citations during high crash corridor road checks. As a result, 1,748 drivers and 2,636 vehicles were placed out-of-service. In the entire state of Georgia during this same period, enforcement officers conducted a total of 30,203 commercial vehicle inspections, issued over 3,000 citations, found 109,494 violations, and placed 7,043 vehicles and 3,998 drivers out-of-service. Of the vehicles inspected, 2,683 were transporting hazardous materials, of which 652 vehicles and 254 drivers were placed out-of-service. PSC Authorizes the Issuance of Interim Certificates Of Public Convenience and Necessity Effective January 1, 2000, the Commission began issuing Certificates of Public Convenience and Necessity to carriers on a twelve-month interim basis. This change was instituted to streamline the application process and allow the carrier to obtain proper authorization to commence its commercial operations. Thereafter, the decision whether to issue a carrier a permanent certificate will be made on the basis of its service record during the period of time that it operated under an interim certificate. In calendar year 2000, there were 100 Interim Certifications of Public Convenience and Necessity issued. PSC Provides A More Detailed Movers Report Card On Its Web Site In November of 1997, the Household Goods Consumer Service Report Card was added to the Commission s web page at The availability of this report allows consumers to view the number of complaints received on household goods carriers and identify those carriers that are operating illegally in this state. This report card is updated weekly. In 2000, the information provided on this report card was enhanced to allow consumers to determine whether the complaint was for rates, service or damages. During this same year, the Commission staff assisted consumers in resolving 30 complaints against household goods carriers. As a result of staff s role in 25