Subject 515-7-12 STANDARDS FOR DETERMINING WHETHER NATURAL GAS PRICES ARE CONSTRAINED BY MARKET FORCES

Rule 515-7-12-.01 Temporary Directives

If, in an expedited hearing pursuant to the provisions of Chapter 13 of Title 50, the Georgia Administrative Procedure Act:

(a)	The Commission determines for a specific delivery group, as to which the Commission has issued an order pursuant to subsection

(b)

of Code Section 46-4-156, that the prices for natural gas paid by firm retail customers in such delivery group are not constrained by market forces and are significantly higher than such prices would be if they were constrained by market forces; or (b) The Commission determines for a specific delivery group, as to which the Commission has not issued an order pursuant to subsection (b) of Code Section 46-4-156, that the prices charged by an electing distribution company to consumers for commodity sales services, which prices have not been approved by the Commission pursuant to Code Section 46-2-26.5, are generally not constrained by market forces and are significantly higher than such prices would be if they were constrained by market forces, then the Commission, on an emergency basis, may by order temporarily impose such directives on gas companies subject to its jurisdiction as are required to protect the interests of firm retail customers in such delivery group including but not limited to price regulations and the imposition upon the electing distribution company of the obligation to serve retail customers in such delivery group under the same or similar conditions to those under which such customers were served prior to customer assignment in such delivery group. In no event shall such emergency directives extend beyond the first day of July immediately following the next full annual session of the General Assembly after the imposition of such directives. In its order the Commission shall provide for recovery of all costs reasonably incurred by the electing distribution company in complying with the directives. Any such directives shall be drawn as narrowly as possible to accomplish the purpose of protecting the public on an interim basis. No such directive shall impose any condition upon the electing distribution company that unreasonably burdens the company. Such directives shall be immediately reviewable in the Superior Court of Fulton County in the same manner and subject to the same procedures as the review of any other contested case under the provisions of Code Section 50-13-19.

(2)

If, in an expedited hearing pursuant to the provisions of Chapter 13 of Title 50, the Georgia Administrative Procedure Act, the Commission makes any of the determinations described in subsection (3) or (4) of this Rule, the Commission may, on a temporary basis, by order impose on marketers such directives as are required to protect the interest of firm retail customers in a specific delivery group, including but not limited to price regulations. In no event shall such emergency directives extend beyond the first day of July in the year immediately following imposition of such directives. Any such directives shall be drawn as narrowly as possible to accomplish the purpose of protecting the public on an interim basis. Such directives shall be immediately reviewable in the Superior Court of Fulton County in the same manner and subject to the same procedures as the review of any other contested case under the provisions of Code Section 50-13-19.

(3)

Upon determination by the Commission that market conditions are no longer competitive, the Commission may impose directives as described in subsection (2) of this Rule. For purposes of this subsection, there shall be a rebuttable presumption that market conditions are not competitive if more than 90 percent of firm retail customers in a specific delivery group are served by three or fewer marketers; provided, however, that marketers who are affiliates shall be deemed to be one marketer for purposes of this subsection.

(4)

Upon determination by the Commission, based upon the standards set forth below and after a hearing in which all interested parties have an opportunity to present relevant evidence regarding such standards, that prices paid by firm retail customers for natural gas in a specific delivery group are not constrained by market forces and are significantly higher than such prices would be if they were constrained by market forces, the Commission may impose directives as described in subsection (2) of this Rule. For purposes of this subsection, the Commission will utilize the following standards:

(a)

Prices paid by firm retail customers for natural gas in a specific delivery group shall be considered to be not constrained by market forces if an emergency market failure results in excessive market power. A market failure shall be deemed an emergency if reasonably prudent firm retail customers are substantially harmed by the resulting market power. To the extent that it finds such information relevant in assessing if reasonably prudent firm retail customers can avoid being substantially harmed, the Commission may consider barriers to customer switching, the degree to which alternative choices do or may exist, and the amount of information about alternative choices available to consumers.

(b)

If the standard established in (a) is met, the prices paid by the affected firm retail customers for natural gas in a specific delivery group shall be considered significantly higher than such prices would be if they were constrained by market forces if:

1.	Over the prior 12 months, such prices are more than 20% higher than such prices would be if they were constrained by market forces;

2.	Over the prior 3 months, such prices are more than 30% higher than such prices would be if they were constrained by market forces; or

3.

The current prices are more than 50% higher than such prices would be if they were constrained by market forces. In determining what the prices would be if they were constrained by market forces, the Commission shall consider the wholesale price of natural gas, the cost of transportation, the costs of providing marketer services, and the impact of specific retail pricing structures, e.g., fixed price contracts. The Commission may also consider, to the extent that it finds such information relevant, the prices firm retail customers pay for natural gas in other areas of the southeast, the prices firm retail customers pay for natural gas in other states that have implemented retail competition, and the historical spread between wholesale and retail prices. Additionally, any such analysis may include the consideration of factors such as any cross-subsidization that may exist, operating and other risk borne by Marketers in competitive retail environments, and any other factors that affect the Marketers' cost of providing service.

(5)

Any Order issued by the Commission pursuant to subsection (2) of this Rule shall set forth its findings of fact and conclusions of law. Findings of fact shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings. As stated in subsection (2) of this Rule, any directive set forth in such Order shall be drawn as narrowly as possible to accomplish the purpose of protecting the public on an interim basis.

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