$535 million in proposed upgrades would improve capacity and replace aging pipe.
ATLANTA - May 13, 2013 – With low and stable natural gas prices, Atlanta Gas Light Company (AGL) is seeking approval from the Georgia Public Service Commission (PSC) for up to $535 million in infrastructure spending over the next three years. In separate proposals to be decided by the PSC later this year, the natural gas distributor has determined monthly rate increases between $2-$3 per residential customer are necessary to upgrade its system to meet demand on the coldest days of the year and to replace aging plastic pipe.
The utility has launched a public awareness campaign called “Energy for a Growing Georgia,” to inform customers of its ongoing capital investments and its future plans. The program is an extension of existing infrastructure improvements already underway.
The proposed programs would help create jobs in Georgia as hundreds of skilled craftsmen and other contractors, from welders to machinery operators will be needed to work on the pipeline projects.
“These investments are necessary to maintain the kind of safety and reliability our customers have come to expect from Atlanta Gas Light,” said company president Bryan Batson. “While it’s true our nation’s economic outlook is improving, today’s low natural gas prices present an ideal time to invest in system-wide improvements that will position our service area for growth well into the future,” said Batson.
Since 1998, AGL has replaced more than 2,700 miles of aging bare steel and cast iron pipe throughout the state via its Pipeline Replacement Program (PRP) at an estimated cost of $801 million as reported to the PSC in December. The PRP is scheduled to be completed in December 2013. Georgia was one of the first states to adopt such an initiative; now more than 40 utilities in over 20 states have similar programs.
In a hearing later this month, the company will present its new replacement program – integrated Vintage Plastic Replacement (iVPR)-- to accelerate replacement of approximately 756 miles of plastic pipe installed in or before 1974 at an estimated cost of $275 million. The natural gas industry has identified certain resins contained in the vintage plastic pipe as being susceptible to early breakdown depending on service conditions. Vintage plastics in the AGL system have not been linked to any reportable incidents involving persons or property, although some performance issues have been identified when the pipe is disturbed.
In August the utility will file phase 2 of its STRIDE program (Strategic Infrastructure Development and Enhancement). Started in 2009 as part of a 10-year system reinforcement program, the utility has been upgrading existing pipelines and installing new ones to maintain pressure in high growth areas farthest removed from the interstate supply points that feed the region with natural gas. Phase 1 of the $271 million dollar program improved capacity and pressure in the heart of Atlanta and Riverdale, and in Cherokee, Cobb, North Fulton, and Forsyth counties. A new supply point also was added by the company by tapping into an interstate gas line in Newnan. Phase 2, estimated to cost $214 million, will include pressure improvements in Coweta, Fayette and Hall counties, and northern Gwinnett and Forsyth counties.
The company also is proposing to spend up to $46 million to extend its natural gas system into communities throughout the state that are currently not served or underserved. As part of the first phase of STRIDE, AGL’s Customer Growth Program extended service into an industrial area in Bryan County on the coast, residential areas of Lake Sinclair, Grovetown in Columbia County, and the mountainous communities of Cleveland/Helen, White County, and Ellijay/Blue Ridge, where a wrench turning ceremony will be held May 29.
Rate Adjustments Below Inflation
Atlanta Gas Light has invested more than $2 billion on new energy infrastructure since 1998. Despite these major investments, the average residential bill has increased by only $4.38 over 15 years and rate adjustments have been below the rate of inflation.
“We believe state regulators recognize that rates are kept lowest over time through continued investment. Whether one is talking about roads, water systems or energy infrastructure, deferring capital investment and maintenance can be exponentially more expensive in the long run,” he said.
Since natural gas deregulation in 1998, AGL has functioned as a distribution-only company; installing, maintaining, and arranging for transportation of the natural gas on behalf of multiple certificated marketers. AGL’s delivery charges appear as a pass-through on the retail bills of the certificated marketers.
The hearing on the vintage plastic pipeline replacement program will be held May 30 and the hearing on system reinforcement is expected in the fall of this year.
The Short-Term Energy Outlook report issued May 7, 2013 by the U.S. Energy Information Administration expects natural gas prices to remain relatively stable in 2013 and 2014 and at prices lower than the 2010 annual average.
About Atlanta Gas Light
Atlanta Gas Light, a wholly owned subsidiary of AGL Resources (NYSE: GAS), provides natural gas delivery service to more than 1.5 million customers in Georgia. In operation since 1856, the company is one of the oldest corporations in the state. For more information, visit www.atlantagaslight.com.
About AGL Resources
AGL Resources (NYSE: GAS) is an Atlanta-based energy services holding company with operations in natural gas distribution, retail operations, wholesale services, midstream operations and cargo shipping. As the nation's largest natural gas-only distributor based on customer count, AGL Resources serves approximately 4.5 million utility customers through its regulated distribution subsidiaries in seven states. The company also serves approximately 600,000 retail energy customers and approximately 1.2 million customer service contracts through its SouthStar Energy Services joint venture and Nicor National, which market natural gas and related home services. Other non-utility businesses include asset management for natural gas wholesale customers through Sequent Energy Management, ownership and operation of natural gas storage facilities, and ownership of Tropical Shipping, one of the largest containerized cargo carriers serving the Bahamas and Caribbean region. AGL Resources is a member of the S&P 500 Index. For more information, visit www.aglresources.com.
Kristie Swink Benson