Regulatory strategies and market entry
This paper discusses the intertwining influence of regulation, the pursuit of social goals, and market entry. The authors focus on the California natural gas distribution system, showing how the California Public Utilies Commission increasingly exercised its authority to set rates so as to meet social goals. Among these goals were lower fuel oil use, lower residential rates, and greater small power production. However, by calling on large users to pay substantially above their costs to subsidize these programs, the system was left open to cream-skimming entry. When a major new market for natural gas in the Kern County oil fields arose, several groups applied to the Federanl Energy Regulatory Commission to build an interstate gas pipeline - Califronia's first- dedicated to serving those customers. The proposals are being considered because of past pricing trends, because of the desire to avoid state regulatory oversight of their operations, and because they can be used to evade federal price regulations on natural gas. However, from a societal economic standpoint, all of the pipelines would be exceedingly expensive. The case demonstrates the unexpected and often the perverse consequences of pursuing social goals within a regulatory framework.
- Research Organization:
- Dept. of Management, College of Business Administration, Univ. of Oregon, Eugene, OR (US)
- OSTI ID:
- 6531104
- Journal Information:
- Energy Syst. Policy; (United States), Vol. 12:2
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
CALIFORNIA
NATURAL GAS DISTRIBUTION SYSTEMS
NATURAL GAS
MARKET
PLANNING
PIPELINES
COST
PUBLIC UTILITIES
REGULATIONS
ENERGY SOURCES
ENERGY SYSTEMS
FEDERAL REGION IX
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
NORTH AMERICA
USA
030600* - Natural Gas- Economic
Industrial
& Business Aspects
320603 - Energy Conservation
Consumption
& Utilization- Municipalities & Community Systems- Public Utilities- (1980-)
031000 - Natural Gas- Legislation & Regulations
032000 - Natural Gas- Transport
Handling
& Storage