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Subject 515-7-13 REGULATED PROVIDER GENERAL RULES AND SELECTION OF THE REGULATED PROVIDER

Rule 515-7-13-.01 Commission Authority and Scope

The Georgia Legislature has directed the Georgia Public Service Commission to create a Regulated Provider of natural gas service. Specifically, by July 1, 2002, the Commission shall select a Regulated Provider of natural gas to serve:

(1) Group 1, low-income residential consumers; and
(2) Group 2, firm natural gas consumers who have been unable to obtain or maintain natural gas commodity service, or whose utility payment history was cited by the Regulated Provider as a reason for the transfer from Group 1 to Group 2. The Commission is authorized to promulgate rules and regulations to implement this Code section.

Rule 515-7-13-.02 Definitions

Terms used in these rules have the following meaning:

(a) "Act" means the Natural Gas Competition and Deregulation Act, as amended, as provided for in O.C.G.A. § 46-4-150et seq.
(b) "Bidder" means any party submitting a Bid Package in response to a Request for Proposal issued by the Commission.
(c) "Commission" means the Georgia Public Service Commission.
(d) "Consumer" or "Customer" or "End-Use Customer" means a retail customer of commodity sales service or of firm distribution service who uses such service or services primarily for personal, family, or household purposes.
(e) "Electing Distribution Company" or "EDC" means a gas company that elects to become subject to the provisions of the Act and satisfies the requirements of O.C.G.A. § 46-4-154.
(f) "Firm" means a type of distribution service that ordinarily is not subject to interruption or curtailment.
(g) "Gas" means natural gas.
(h) "Group 1" means the group of consumers served by the Regulated Provider who meet the definition of "low-income residential consumer" as set forth in O.C.G.A. § 46-4-152(12.1).
(i) "Group 2" means the group of consumers served by the Regulated Provider who have been unable to obtain or maintain natural gas commodity service; or whose utility payment history was cited by the Regulated Provider as a reason for the transfer from Group 1 to Group 2.
(j) "Marketer" means any person certificated by the Commission to provide commodity sales service or distribution service pursuant to O.C.G.A. § 46-4-153 or ancillary services incident thereto.
(k) "Regulated Provider of natural gas" means the entity selected by the Commission to provide to consumers natural gas commodity service and ancillary services incident thereto in accordance with O.C.G.A. § 46-4-166.
(l) "Universal Service Fund" means the fund created and administered by the Commission pursuant to O.C.G.A § 46-4-161.

Rule 515-7-13-.03 General Rules for the Regulated Provider

(1) The Commission's selection of the Regulated Provider shall be made through a competitive request for proposal process. Certificated marketers shall be eligible to submit proposals.
(2) Selection criteria for the Regulated Provider shall include, but not be limited to, the following:
(a) Financial viability, as defined in Code Section 46-4-153 and set forth in 515-7-13-.05(1)(a);
(b) Technical expertise, as defined in Code Section 46-4-153 and set forth in 515-7-13-.05(1)(b);
(c) The amount of the proposed deposit requirements, proposed price structure, proposed customer charge, and cost recovery;
(d) The terms and conditions proposed for transfers of consumers from Group 1 to Group 2 and from Group 2 to Group 1; and
(e) The terms and conditions proposed for termination of service for Group 1 consumers and Group 2 consumers.
(3) If no acceptable proposals are filed with the Commission for the Regulated Provider of natural gas, the Commission shall designate the EDC or any other gas or electric utility holding a certificate of public convenience and necessity from the Commission if it consents to serve as the Regulated Provider of natural gas. A Regulated Provider who is not a certificated marketer shall only be authorized to provide natural gas commodity service to Group 1 and Group 2 consumers.
(4) The Regulated Provider selected by the Commission shall establish rates for both Group 1 and Group 2 consumers. These rates shall be approved by the Commission as a part of the Selection Process for the Regulated Provider, as described in Commission Rule 515-7-13-.06(3).
(5) The Commission shall annually review the performance of the Regulated Provider. The Commission shall utilize the process set forth above to select a Regulated Provider of natural gas every two years. If the Commission determines, in its discretion, that such an action is in the public interest, the Commission may extend the service of a Regulated Provider for a third year, or may terminate the service of a Regulated Provider after one year.
(6) The Accounts Receivable of the incumbent Regulated Provider will be purchased by the winning Bidder.

Rule 515-7-13-.04 Establishment of Rates, Terms and Conditions of the Regulated Provider

(1) The rate for a Group 1 low-income residential consumer shall be based upon actual commodity cost, a reasonable rate of return, and an equitable share of the cost of the transportation and distribution system over which such consumer receives distribution.
(a) Any low-income residential consumer may transfer to the Regulated Provider without being required to pay in full any debt to a marketer for previous service and without termination in service due to failure to pay such a debt;
(b) The Regulated Provider shall have access to the Universal Service Fund to recover bad debt arising from service to low-income residential consumers in accordance with Commission Utility Rule 515-7-5, which is designed to encourage efficient debt collection practices by the Regulated Provider; and
(c) The EDC shall waive any customer charge for each low-income residential consumer whose age exceeds 65 years. A Group 1 low-income residential consumer served by the Regulated Provider at this rate shall be subject to transfer to Group 2 for failure to pay distribution or commodity charges under the terms and conditions specified in the proposal and accepted by the Commission.
(2) The rate for Group 2 consumers shall be set to incorporate risks associated with serving these customers.
(a) The Regulated Provider shall be authorized to terminate service to a Group 2 consumer for failure to pay for commodity or distribution service;
(b) The Regulated Provider shall not have access to the Universal Service Fund to recover bad debt arising from service to such consumers; and
(c) A Group 2 consumer shall be eligible to transfer to Group 1 if such a consumer meets the income criteria to receive service from Group 1 and meets the transfer criteria specified in the Consent Order entered into by the winning Bidder and adopted by the Commission.

Rule 515-7-13-.05 Pre-Qualification Process

(1) All Bidders shall be required to submit information to the Commission in order to establish the Bidder's financial and technical qualifications necessary to serve as the Regulated Provider. Specifically, the Bidder must have sufficient technical and financial qualifications to complete an effective and efficient transition into its role as the new Regulated Provider.

The determination for pre-qualification of a Bidder's financial capability to serve as Regulated Provider will be based on the following:

(a) The Bidder's ability to meet the increased credit requirements of the EDC's approved security deposit necessary to serve customers (e.g., parental/corporate guarantee, letter of credit, surety bond);
(b) The Bidder's ability to manage the Regulated Provider's Group 1 and Group 2 customer load, including, but not limited to
1. Proficient knowledge and experience with the EDC's Gas Operating System and Electronic Bulletin Board systems;
2. Billing Services;
3. Customer Service; and
4. Interfacing with the Commission, Commission Staff, and other state agencies, as needed;
(c) The Bidder's ability to provide the additional resources needed to manage the Regulated Provider program without diminishing its ability to serve its existing customer base, if applicable;
(d) If applicable, the Bidder's past experience as Regulated Provider;
(e) The Bidder's compliance with the service quality standards as set forth in Commission Rule 515-7-8;
(f) The number of complaints that have resulted in enforcement action against the Bidder;
(g) The Bidder's ability to meet the required increased interstate pipeline security deposit necessary to serve customers;
(h) The Bidder's ability to manage bad debt and collections for the Regulated Provider's customer base;
(i) The Bidder's ability to provide the additional resources needed to manage the Regulated Provider program without diminishing its ability to serve its existing customer base, if applicable;
(j) The Bidder's ability to ensure against cross subsidization between Group 1, Group 2, and/or the Bidder's other customers; and
(k) The Bidder's ability to withstand reasonable financial losses and/or obligations in its Georgia operations by providing the following information:
1. The last three years of income statements, balance sheets, statement of cash flows, and all debt information. If available, this requirement can be satisfied by prior filings with the Commission;
2. In those instances in which a Bidder proposes to provide a corporation or parent company as the financial guarantor to be responsible for collateral requirements and/or obligations insuring against any losses incurred by the Regulated Provider, the most current six months of the corporation's or parent company's financial statements, as listed above (income statements, balance sheets, statement of cash flows, and all debt information), supported by the sworn certification of a Company officer;
3. Sufficient information to demonstrate that there is adequate funding to manage the cash flow/working capital requirements of the Regulated Provider during the winter months; and
4. A Parental or corporate guarantee must also be provided stating that the Parent or Corporation agrees to financially back the Bidder with a specific dollar amount.
(2) Within five (5) days of the Commission's issuance of the Request for Proposal, provided that a signed confidentiality agreement between the incumbent Regulated Provider and the prospective Bidder has been executed, the incumbent Regulated Provider shall provide the information listed below to the prospective Bidders for each month of the current Regulated Provider term. The incumbent Regulated Provider shall update such information to such potential Bidders each month thereafter until the Commission's determination of pre-qualification status.
(a) Total Accounts Receivables, write-offs, collections, and aging reports detailing the following receivables data broken out for both Group 1 and Group 2 customers:
(1) 30;
(2) 60;
(3) 90;
(4) 120 days;
(b) Bad debt reports for Group 1 and Group 2 for each quarter of operation, including but not limited to the following:
1. Dollar amounts in arrears; and
2. Write offs (dollar amount and number of customers);
(c) Number of shut-offs for non-payments submitted to the EDC for Group 1 and Group 2 including number of actual disconnections;
(d) Number of customer requested turn-offs for Group 1 and Group 2;
(e) Consumption data by pool group for both Group 1 and Group 2 customers;
(f) Number of inbound calls and average length of call, as well as any available breakdown of calls by general types of calls and subject matter (such as request for payment arrangements, request for duplicate copy of bill, inquiry regarding charges on bill, and so forth);
(g) Number of customers switching each month from Group 1 to Group 2 and number of customers switching each month from Group 2 to Group 1;
(h) Number of payment arrangements;
(i) A description and/or copy of a sample bill for Group 1 and Group 2 customers;
(j) The number of customers, by primary pool, broken down into Group 1 and Group 2;
(k) The average DDDC, broken down by primary pool and by Group 1 and 2;
(l) A description of customer education or assistance programs administered through or in conjunction with the Georgia Department of Human Resources ("DHR"), including any statistical information about monthly or yearly customer contacts in connection with these programs;
(m) A description of all non-propriety computer systems in place that provide for communication with the DHR and community action agencies;
(n) The amount of the deposit provided to the EDC and interstate pipelines in support of the Regulated Provider customer class; and
(o) A description of any fixed price or other commitments made to customers that extend beyond the scheduled term of the Regulated Provider.
(3) The Commission shall determine the potential Bidders' financial and technical capabilities to serve as Regulated Provider by the end of the calendar year in which the RFP is issued, unless the Commission extends the term of the incumbent Regulated provider, pursuant to O.C.G.A. § 46-4-166(f)prior to such time.

Rule 515-7-13-.06 Information to Be Included in the Request for Proposal

(1) The Request for Proposal shall contain a timetable for the process, including deadlines for submission of pre-qualification information, Bid Packages, any proposed oral presentation dates, and the targeted Administrative Session date(s) for the Commission's consideration of selecting a Regulated Provider.
(2) The Request for Proposal for the Regulated Provider shall contain, at a minimum, the following provisions:
(a) The time period for which the Bidder will remain bound by the Terms and Conditions of its Bid Package;
(b) A statement that the Regulated Provider designation shall be made to the responsible Bidder whose proposal is determined to be the most advantageous for the ratepayers of Georgia, taking into account all of the evaluation factors set forth in the RFP;
(c) The minimum bidding requirements, which shall include, but not be limited to, the following:
1. Bids must disclose the amount of the proposed deposit requirements, price structure, proposed customer charge, and cost recovery;
2. Bids must disclose the terms and conditions proposed for service to Group 1 and Group 2 customers;
3. Bids must disclose the terms and conditions proposed for transfers of customers from Group 1 to Group 2 and from Group 2 to Group 1;
4. Bids must include the terms and conditions proposed for termination of service for Group 1 customers and Group 2 customers;
5. The Bidders must commit to work with Department of Human Resources in qualifying customers that may be eligible for service from the Regulated Provider;
6. The Bidders must agree to abide by the rules and regulations governing marketers;
7. The Bidders must demonstrate the ability to transition the customers from the current Regulated Provider with the least amount of customer confusion, and must provide a general description of the envisioned transition process;
8. The Bidders must work with the Commission Staff and the EDC to resolve any technical, financial, customer service, and gas supply issues;
9. The Bidders must comply with all Commission rules and regulations regarding the Regulated Provider, service quality standards, and any other applicable rule(s) approved by the Commission. Bidders must state any and all rules applicable to marketers for which they are seeking an exemption in their capacity as Regulated Provider;
10. Two years of pro forma financial statements to include income statement, balance sheet, statement of cash flows, and customer projections broken down between Group 1 and Group 2. All support for these quantifications should be provided, including but not limited to assumptions, data, computations and electronic spreadsheets with formulas intact; and
11. Bid Packages shall provide the Bidder's proposal regarding the purchase of the Accounts Receivable of the incumbent Regulated Provider, as discussed in Commission Rule 515-7-13-.07.
(d) Stated evaluation factors, the assigned point values for each evaluation factor, and any additional points or consideration for Optional Enhancements that a Bidder may offer;
(e) A statement that no other factors or criteria other than those specified in the RFP shall be used in the evaluation;
(f) A statement that the Commission reserves the right to reject any and all proposals submitted in response to this request;
(g) The name and contact information for the Commission appointed Issuing Officer that the Bidder may contact regarding the RFP, Bidding process, or the Bidder's submission of a Bid package, as well as the following statement,"From the issue date of this RFP, until a Regulated Provider is selected and the selection is announced, Bidders are not allowed to communicate for any reason with any Commission Staff member concerning this RFP except through the Issuing Officer named herein. For violation of this process, the Commission shall reserve the right to reject the proposal of the offending Bidder.";
(h) A statement that the Commission reserves the right to amend the RFP prior to the date of proposal submission and that the amendments will be sent to all potential Bidders who originally received a copy of the RFP, withdraw the RFP at any time, regardless of whether it has received any acceptable bids, and that any amendments will be sent to all Bidders who originally received a copy of the RFP;
(i) A statement that prior to the decision date, a submitted proposal may be withdrawn by the Bidder by submitting a request to the Issuing Officer named herein, and that any such request must be signed by a person authorized to sign for the Bidder;
(j) A statement that the cost of developing the proposal is the sole responsibility of the Bidder, and that the State will not provide reimbursement for such costs;
(k) The number of complete Bid Package copies that should be submitted to the Commission. A statement that failure to provide the correct number of copies could result in rejection of the Bid Package;
(l) A statement that all material (Bid Packages, handouts, etc.) submitted in response to the RFP will become the property of the Commission and may be returned to the Bidder at the option of the Commission, however, one copy shall be retained by the Commission for official files;
(m) Statements conveying that the pre-qualified Bidders may be invited to participate in oral presentations at a scheduled time to discuss their proposals. However, participation in oral presentations does not necessarily mean that the Bidder has met all of the RFP requirements. Oral presentations shall not be a substitute or a supplement for the Bid Package. New information presented at oral presentations shall not be utilized as part of the Evaluation Process;
(n) The Review and Evaluation Process as further detailed in 515-7-13-06(2);
(o) The Selection Process as further detailed in 515-7-13-.06(3);
(p) A timeline for the review of an Acceptable Bid;
(q) Specific point values or ranking methodology that will be utilized in the review and evaluation process;
(r) Optional Enhancements submitted as part of the Bid Package shall provide the Bidder the opportunity to enhance its score or ranking during the review and evaluation process. The Commission issued RFP shall prescribe the scope of the Optional Enhancements and any associated scoring or ranking values. The RFP shall clearly detail which enhancements, if any, the Commission will consider during the review and evaluation process; and
(s) A statement that "There is no assurance, expressed or implied, that an award will necessarily be made pursuant to this RFP. This RFP shall not give any rights to any respondent for any indemnification claims."
(3) The Request for Proposal shall provide for the Review and Evaluation Process that will be utilized in evaluating the Bid packages.
(a) The Review and Evaluation Process shall require the Commission Staff to review and evaluate each proposal submitted by utilizing criteria set forth in the RFP;
(b) Each proposal shall be given a total score and the Staff shall prepare a recommendation for selection to the Commission based on this scoring;
1. The Staff shall prepare and provide to the Commissioners a Bid Evaluation Sheet that will contain a final ranked number for each of the Bid Packages, where number 1 is the first choice, number 2 is second choice, etc.; and
2. Upon request, the Commissioners shall have access to individual scores and rankings by Staff members;
(c) The Commission Staff shall, at a minimum, review and evaluate the following:
1. Whether the rates offered to serve Group 1 customers are just and reasonable and offer a benefit to customers who are eligible for Group 1 service;
2. Whether the rates offered to serve Group 2 customers provide a realistic option for customers who are eligible for Group 2 service;
3. The amount of the proposed deposit requirements;
4. The proposed price structure;
5. The proposed customer service charge;
6. The proposed cost recovery methodology;
7. Whether the proposal has complied with the terms of the Commission-issued RFP; and
8. The proposed costs of transition to a new Regulated Provider.
(4) The Request for Proposal shall provide for the Selection Process that will be utilized in evaluating the Bid packages .
(a) The Commission shall utilize the following Selection Process for the Regulated Provider:
1. The Commission shall select the winning Bidder by such date as to allow adequate time for the Commission Staff and the winning Bidder to develop a Consent Order to be considered by the Commission;
2. Upon the selection of a winning Bidder, the Commission Staff and the winning Bidder shall develop a Consent Order for the Commission's consideration. The Consent Order shall contain, at a minimum, a) the rates, terms and conditions for Group 1 and Group 2, b) the terms and conditions for a transfer from Group 1 to Group 2, c) the terms and conditions for a transfer from Group 2 to Group 1, d) the number of days between bill date and due date, and e) the amount of money to be collected from the USF per Group 1 customer;
3. If the Commission Staff and the winning Bidder cannot agree on the terms for the Consent Order, the Commission shall resolve the outstanding issue(s); and
4. The Commission shall consider the adoption of the Consent Order by such a date to allow for an adequate transition to a new Regulated Provider.
(b) The Commission shall consider each proposal in a manner that does not disclose the contents of the proposal to competing Bidders. The Commission reserves the right to reject any and all proposals made pursuant to this RFP, to request the submission of a best and final offer, and to amend or supplement this RFP at any time.
(c) The Commission reserves the right to determine that any and all proposals are not acceptable or that it is otherwise in the public interest not to accept any of the bids submitted in response to the RFP.
(5) The Request for Proposal shall provide for the transition process that will be utilized, as further detailed in 515-7-13-.07.

Rule 515-7-13-.07 Regulated Provider Transition Process

(1) If the Commission issues an Order selecting a new Regulated Provider, the incumbent Regulated Provider and the newly selected Regulated Provider shall meet to negotiate the transfer of customers, accounts receivable, any computer system transfers, storage volumes, and any other issues that should be addressed. The parties shall provide updates to the Commission at no less than thirty (30) day intervals after the issuance of the Commission's Order selecting a new Regulated Provider.
(2) The incumbent Regulated Provider and the winning Bidder shall negotiate the terms of Accounts Receivable transaction (including any flat fees, discounted rates, date(s) for transactions, etc.). If the parties cannot negotiate acceptable terms within a pre-determined timeframe, the Commission shall determine the terms for the transaction. For purposes of this rule, the pre-determined timeframe shall be no longer than forty-five (45) days after the Commission issues an Order selecting a new Regulated Provider.
(3) The newly selected Regulated Provider shall send at least two (2) notices by mail or by using the consumer preferred method of communication to all Regulated Provider customers notifying the customers of the change in the Regulated Provider.
(a) The notices shall be reviewed and approved by the Commission Staff prior to sending to customers. The notices shall contain, at a minimum, the following language:
1. "Beginning on [effective date of transfer], your Regulated Provider natural gas service will be provided by [new Regulated Provider]."
2. "Your Group 1 [variable/fixed] rate will be as follows $[amount] per therm, and your customer service charge will be $[amount]" or "Your Group 2 [variable/fixed] rate will be as follows $[amount] per therm, and your customer service charge will be $[amount]."
3. "You are still required to pay any remaining balances or past due amounts to the previous Regulated Provider, [Incumbent Regulated Provider]."
4. "Your last bill from the previous Regulated Provider, [Incumbent Regulated Provider] will be due within xx days of receipt."
(b) The first notice shall be sent sixty (60) days in advance of the transition and would provide detailed information on the date the new Regulated Provider will begin billing customers, any changes to the terms of service and new contact information.
(c) The second and final notice would be sent thirty (30) days in advance of the transition and would include the new Regulated Provider's welcome kit and a message from the incumbent Regulated Provider advising customers that this would be the last bill from the incumbent Regulated Provider.

Rule 515-7-13-.08 Utilization of the Universal Service Fund

The Universal Service Fund shall be utilized in the manner prescribed by O.C.G.A. § 46-4-166.

Rule 515-7-13-.09 Bankruptcy of the Regulated Provider

In the event that the Regulated Provider files for bankruptcy, and fails to maintain the ability to adequately serve Regulated provider customers, all of the customers of the Regulated Provider shall be randomly assigned to all certificated marketers, pursuant to Commission Utility Rule 515-7-4 unless prohibited by the Federal Bankruptcy Code 11 U.S.C. Sec 101 et seq., or by order of the Federal Bankruptcy court.