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Southern Company Gas Plans to Sell Georgia Assets to Electricity Provider

Posted on: Sunday, 10 July 2005, 15:00 CDT

Jul. 9--The marketing of natural gas in Georgia is poised for a shake-up that could benefit consumers.

Southern Company Gas, a subsidiary of Atlanta-based Southern Co., on Friday said it signed a letter of intent to negotiate the sale of its Georgia assets to Cobb Electric Membership Corp. Southern Company Gas sells natural gas to 170,000 residential and commercial customers.

Cobb EMC, which is based in Marietta and serves 185,000 electricity customers in nine counties, is preparing to seek certification from the state Public Service Commission to become a licensed natural gas marketer.

"As we move into the future, it's important that Cobb Electric be able to offer gas to its customers," said Dwight Brown, Cobb EMC's president and chief executive.

Right now, Cobb Energy, 29 percent owned by Cobb EMC, offers Scana Energy's natural gas to residential and business customers. The contract with Scana expires in May 2008.

Brown said Cobb EMC approached Southern Company Gas "several weeks" ago after "we heard that the possibility existed" for a sale."

Statewide market share figures are hard to come by, but Southern Company Gas claims to have a 12.5 percent share. It's generally believed that Georgia Natural Gas Services, Scana and Shell Energy Marketing are larger, in that order.

Southern Co. declined to disclose Southern Company Gas' revenue and profits.

But David Ratcliffe, Southern Co.'s chairman, president and chief executive, said the subsidiary is profitable.

"As a result, we have received unsolicited offers from gas marketers to buy the company in recent months," he said. "It just makes sense for us to explore our options at this time."

Southern Co., parent of Georgia Power Co., launched Southern Company Gas in 2002. It did so by acquiring the customers of New Power Co., owned by NewPower Holdings, an affiliate of Enron Corp. New Power, in turn, acquired its initial 80,000 customers from Columbia Energy in 2001.

"We started into the natural gas business with 215,000 customers," said Southern Co. spokeswoman Terri B. McCullough.

"Today we have 170,000. The numbers have decreased because our credit standards, compared to the previous owner, have tightened since we bought the business."

Since the marketing of natural gas was deregulated by the state in 1998, the number of marketers has waxed and waned.

From a peak of 19, there are now 11, including two electric membership cooperatives, Coweta-Fayette and Walton. Both EMCs have consistently had the lowest natural gas prices, according to PSC data.

Like other certified marketers, the EMCs are authorized to sell throughout the Atlanta Gas Light Co. distribution territory, including Atlanta and most of North Georgia.

PSC Commissioner Robert B. Baker said Cobb EMC could roil the competitive environment.

"It could generate some genuine price competition because Cobb EMC is very innovative and aggressive," Baker said.

Through the Cobb Energy affiliate, Cobb EMC has forged partnerships with other companies to provide a variety of services. In addition to offering natural gas through Scana, Cobb EMC offers home security, telecommunications, entertainment and financial services. It also offers a tree trimming and removal service.

Formed in 1938, Cobb EMC has customers in Cobb, Cherokee, Paulding, Bartow, Fulton, Randolph, Calhoun, Quitman and Clay counties.

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Copyright (c) 2005, The Atlanta Journal-Constitution

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Source: The Atlanta Journal and Constitution

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