Restructuring local distribution services: Possibilities and limitations

Technical Report · Mon Aug 01 04:00:00 EDT 1994

DOI:https://doi.org/10.2172/10182554· OSTI ID:10182554

Duann, D J

The restructuring of local distribution services is now the focus of the natural gas industry. It is the last major step in the ``reconstitution`` of the natural gas industry and a critical clement in realizing the full benefits of regulatory and market reforms that already have taken place in the wellhead and interstate markets. It could also be the most important regulatory initiative for most end-use customers because they are affected directly by the costs and reliability of distribution services. Several factors contribute to the current emphasis on distribution service restructuring. They include the unbundling and restructuring of upstream markets, a realization of the limitations of supply-side options (such as gas procurement oversight), and the increased diversity and volatility of gas demand facing local distribution companies. Local distribution service is not one but a series of activities that start with commodity gas procurement and extend to transportation, load balancing, storage, and metering and billing of services provided. There are also considerable differences in the economies of scale and scope associated with these various activities. Thus, a mixture of supply arrangements (such as a competitive market or a monopoly) is required for the most efficient delivery of local distribution services. A distinction must be made between the supply of commodity gas and the provision of a bundled distribution service. This distinction and identification of the best supply arrangements for various distribution service components are the most critical factors in developing appropriate restructuring policies. For most state public utility commissions the criteria for service restructuring should include pursuing the economies of scale and scope in gas distribution, differentiating and matching gas service reliability and quality with customer requirements, and controlling costs associated with the search, negotiation, and contracting of gas services.

• Research Organization: National Regulatory Research Inst., Columbus, OH (United States)
• Sponsoring Organization: National Association of Regulatory Utility Commissioners, Washington, DC (United States)
• OSTI ID: 10182554
• Report Number(s): NRRI--94-13; ON: TI94018691
• Country of Publication: United States
• Language: English

Related Subjects

03 NATURAL GAS
030600
031000
ECONOMIC, INDUSTRIAL, AND BUSINESS ASPECTS
ECONOMICS
GAS UTILITIES
LEGISLATION AND REGULATIONS
MODIFICATIONS
NATURAL GAS DISTRIBUTION SYSTEMS
NATURAL GAS INDUSTRY
PLANNING
REGULATIONS