With the average retail price for all grades of gasoline and diesel fuel holding above$3.50per gallon for most of this year,Georgiautility regulators approved Tuesday a plan developed by Atlanta Gas Light that incents the private sector to invest in Compressed Natural Gas (CNG) vehicle fueling stations.

The Georgia Public Service Commission (PSC) approved investments of$11.57 millionin CNG fueling infrastructure for up to 10 stations that could be constructed over the next five years, based on the size of each station. The new CNG stations may be located throughout metroAtlantaand along major transportation corridors in the state depending on demand. AGL will provide a new CNG service under a commission-approved rate to retail station owners. A portion of the proceeds from the program would also allow AGL to offer affordable low-cost leases of home refueling appliances to individuals that own CNG vehicles.

"Georgiais positioned geographically to be the hub for CNG fueling station expansion in the Southeast, and this new program will enable AGL to partner with private CNG investors to meet the region's growing demand for CNG," saidIan Skelton, Director of Atlanta Gas Light's natural gas vehicle program. "Fleet owners and vehicle manufacturers recognize the significant price advantage CNG holds over petroleum and now AGL will be ready to serve the market as theseGeorgia-based commercial and municipal fleets switch to CNG."

The AGL CNG Program is the product of months of market studies and public hearings followed by action by the General Assembly. After filing a conceptual plan last September at the urging of PSC CommissionerDoug Everett, two public hearings were held inNovember 2010andJanuary 2011to refine the plan. In March, the Georgia General Assembly gave expressed authorization for Universal Service Funds (USF) to be utilized for natural gas fueling infrastructure for motor vehicles. Governor Deal signed the bill into law in April.

The AGL program is designed to stimulate private investment in fleet vehicles and CNG stations by allowing AGL to invest in CNG equipment at each new station using proceeds from the Universal Service Fund. Station costs can range from$600,000to approximately$1.5 millionto build.

In order to qualify for funding, applicants must demonstrate they can secure the real estate for the station, develop the site consistent with local zoning, fund 100 percent of the CNG station costs, and hold contracts with fleet customers to utilize what amounts to approximately 30 percent of a proposed station's capacity.

Retailers would purchase natural gas from certificated marketers and resell it as CNG to the public. The initial station locations will be largely determined based on proximity to commercial fleet customers who would use the stations.

Public Access Stations will allow any CNG customer to obtain refueling services using fleet management cards or standard credit cards. Limited Access Stations can be set up to serve municipal, county, state or other governmental fleets where no public access is practical. Leases for home refueling appliances are estimated to cost customers approximately$50-$60per month.

AGL will own and maintain the CNG equipment connected to its traditional natural gas distribution system and provide utility services to station owners. Transportation delivery charges and actual costs associated with operations and maintenance will be collected from the retailers. Revenue collected from a separate equipment utilization fee will be placed in a reserve account to fund a portion of the cost of leasing home refueling appliances, constructing additional CNG facilities, and making replacing major components of the CNG equipment.

Firm ratepayers, including residential and commercial customers, are not at risk for paying the cost of the program. The capital used to seed the market would be appropriated from the Universal Service Fund (USF), which is funded from rates paid by industrial customers, proceeds shared by energy asset management firms and refunds from pipeline suppliers. AGL annually requests funds from the USF for line extensions to serve new customers and new regions of the state. The recessed economy has stalled normal USF line extensions that come with growth, leaving sufficient proceeds in the fund that can be used to foster this market development.

Contracts between AGL and potential CNG retailers will occur following a request for proposal (RFP) process that will begin early next year. The RFP process should last into the third quarter of 2012 with construction proceeding later in the year.

Construction and maintenance of CNG facilities is not new to Atlanta Gas Light. The company installed its first CNG equipment at a public station in downtownAtlantain the early 1990s. In 1996, AGL began providing CNG service to MARTA (Metropolitan Atlanta Rapid Transit Authority) when the transportation agency converted its bus fleet to CNG in advance ofAtlantahosting the Summer Olympics. Currently, the company owns equipment at 10 private access CNG stations located on customer-owned premises and has installed numerous others. The company also provides maintenance services to about 30 additional fleet customers who own their own CNG stations.