skip to main content
OSTI.GOV title logo U.S. Department of Energy
Office of Scientific and Technical Information

Title: Public Utility Regulatory Policies Act of 1978: Natural Gas Rate Design Study

Abstract

First, the comments on May 3, 1979 Notice of Inquiry of DOE relating to the Gas Utility Rate Design Study Required by Section 306 of PURPA are presented. Then, comments on the following are included: (1) ICF Gas Utility Model, Gas Utility Model Data Outputs, Scenario Design; (2) Interim Model Development Report with Example Case Illustrations; (3) Interim Report on Simulation of Seven Rate Forms; (4) Methodology for Assessing the Impacts of Alternative Rate Designs on Industrial Energy Use; (5) Simulation of Marginal-Cost-Based Natural Gas Rates; and (6) Preliminary Discussion Draft of the Gas Rate Design Study. Among the most frequent comments expressed were the following: (a) the public should be given the opportunity to review the final report prior to its submission to Congress; (b) results based on a single computer model of only four hypothetical utility situations cannot be used for policy-making purposes for individual companies or the entire gas industry; (c) there has been an unobjective treatment of traditional and economic cost rate structures; the practical difficulties and potential detrimental consequences of economic cost rates are not fully disclosed; and (d) it is erroneous to assume that end users, particularly residential customers, are influenced by price signalsmore » in the rate structure, as opposed to the total bill.« less

Publication Date:
Research Org.:
Department of Energy, Washington, DC (USA). Economic Regulatory Administration
OSTI Identifier:
5245935
Report Number(s):
DOE/RG-0035/2
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY AND ECONOMY; 03 NATURAL GAS; GAS UTILITIES; RATE STRUCTURE; NATURAL GAS; REGULATIONS; PUBLIC UTILITY REGULATORY POLICIES ACT; DESIGN; EVALUATION; ENERGY SOURCES; FLUIDS; FOSSIL FUELS; FUEL GAS; FUELS; GAS FUELS; GASES; LAWS; NATIONAL ENERGY ACT; PUBLIC UTILITIES; 294003* - Energy Planning & Policy- Natural Gas; 293000 - Energy Planning & Policy- Policy, Legislation, & Regulation; 031000 - Natural Gas- Legislation & Regulations

Citation Formats

None. Public Utility Regulatory Policies Act of 1978: Natural Gas Rate Design Study. United States: N. p., 1980. Web. doi:10.2172/5245935.
None. Public Utility Regulatory Policies Act of 1978: Natural Gas Rate Design Study. United States. doi:10.2172/5245935.
None. 1980. "Public Utility Regulatory Policies Act of 1978: Natural Gas Rate Design Study". United States. doi:10.2172/5245935. https://www.osti.gov/servlets/purl/5245935.
@article{osti_5245935,
title = {Public Utility Regulatory Policies Act of 1978: Natural Gas Rate Design Study},
author = {None},
abstractNote = {First, the comments on May 3, 1979 Notice of Inquiry of DOE relating to the Gas Utility Rate Design Study Required by Section 306 of PURPA are presented. Then, comments on the following are included: (1) ICF Gas Utility Model, Gas Utility Model Data Outputs, Scenario Design; (2) Interim Model Development Report with Example Case Illustrations; (3) Interim Report on Simulation of Seven Rate Forms; (4) Methodology for Assessing the Impacts of Alternative Rate Designs on Industrial Energy Use; (5) Simulation of Marginal-Cost-Based Natural Gas Rates; and (6) Preliminary Discussion Draft of the Gas Rate Design Study. Among the most frequent comments expressed were the following: (a) the public should be given the opportunity to review the final report prior to its submission to Congress; (b) results based on a single computer model of only four hypothetical utility situations cannot be used for policy-making purposes for individual companies or the entire gas industry; (c) there has been an unobjective treatment of traditional and economic cost rate structures; the practical difficulties and potential detrimental consequences of economic cost rates are not fully disclosed; and (d) it is erroneous to assume that end users, particularly residential customers, are influenced by price signals in the rate structure, as opposed to the total bill.},
doi = {10.2172/5245935},
journal = {},
number = ,
volume = ,
place = {United States},
year = 1980,
month = 5
}

Technical Report:

Save / Share:
  • The report concludes that, to effectively deal with our national energy problems, gas rate structures should be designed to reflect the costs which the nation avoids if gas is efficiently used and substituted for oil. Current pipeline and distribution company rate structures generally do not meet this test. Although gas is a substitute for oil in many applications, and conserved gas can reduce oil imports, gas rate structures often fail to convey to consumers the fact that, from a national perspective, gas is as valuable as oil. The provisions of the Natural Gas Policy Act of 1978 (NGPA) take amore » strong first step in correcting these problems. But, as clearly recognized in both NGPA and PURPA, these provisions need to be supplemented by updating pipeline and distribution company rate designs to address the problems of the 1980's - rather than the problems of the 1950's. In this regard, NGPA mandates incremental pricing, which raises the average price of gas to certain industrial users only. The Department of Energy (DOE) study suggests an alternate approach: pipeline and distribution rate structures that reflect in their tailblocks, for all customer classes, the economic costs of gas usage. Such rates would convey to all users the costs incurred by the nation as a consequence of their decisions to use or conserve gas. Such rate structures should promote the three purposes of PURPA - end-use conservation, efficient use of utility resources, and equitable rates - to a greater extent than do traditional accounting cost rate designs, which reflect decisions made in the distant past.« less
  • The Public Utility Regulatory Policies Act (PURPA), enacted November 8, 1978, directs the Federal Energy Regulatory Commission to make a comprehensive review of certain matters related to automatic adjustment clauses in electric rate schedules used by public utilities subject to the Commission's jurisdiction. The first requirement is that the Commission review automatic adjustment clauses in utility rate schedules to examine whether the clauses effectively provide incentives for efficient use of resources and also whether the clauses reflect only those costs that are either subject to periodic fluctuations or not susceptible to precise determinations in rate cases prior to the timemore » the costs are incurred. The second requirement is that the Commission review the practices of each public utility under automatic adjustment clauses to insure efficient use of resources under such clauses. In response to these requirements, the Commission instituted a study and a staff investigation to examine the matters specifically identified in the Act. This report describes the progress that has been made in the study during the first two years since the passage of the Act related to the issues involved. The principal types of automatic adjustment clauses appearing in rate schedules subject to FERC jurisdiction are described and the extent of use of the types of clauses is indicated. The nature and results of the efforts made to analyze incentive effects, variability and predictability of certain costs, and the fuel procurement practices of utilities as related to automatic adjustment clauses are discussed. Preliminary staff conclusions from the review and analysis effort are presented.« less
  • Included in this report is a copy of the questionnaire mailed on January 12, 1979 to the Chairmen of the 50 state regulatory commissions plus the District of Columbia and Puerto Rico. Follow-up telephone calls were made to all nonresponding commissions on January 22 and 29. This report summarizes the 46 responses (45 States plus the District of Columbia) received by March 1. A blank copy of the questionnaire and copies of all completed questionnaires are provided.
  • An analysis is made of the rules implementing Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA). The act provides that utilities must purchase power from qualifying producers of electricity at nondiscriminatory rates, and it exempts private generators from virtually all state and Federal utility regulations. Most of the analysis presented is taken from the perspective of photovoltaics (PV) and solar thermal electric point-focusing distributed receivers (pfdr). It is felt, however, that the analysis is applicable both to cogeneration and other emerging technologies. Chapters presented are: The FERC Response to Oral Comments on the Proposedmore » Rules Implementing Sections 201 and 210 of PURPA; Additional Changes Made or Not Made That Were Addressed in Other Than Oral Testimony; View on the Proposed Rules Implementing Sections 201 and 210 of PURPA; Response to Comments on the Proposed 201 and 210 Rules; and Summary Analysis of the Environmental Assessment of the Rules. Pertinent reference material is provided in the Appendices, including the text of the rules. (MCW)« less
  • The Department of Energy's (DOE) Economic Regulation Administration (ERA) had a requirement to report to Congress on determinations made by State regulatory authorities and nonregulated utilities regarding their purposes of Title I and III of the Public Utility Regulatory Policies Act, (PURPA) of 1978. The purposes stated in PURPA are to promote conservation of energy supplied by utilities, efficiency in use of utilities, and equitable rates for utility consumers. In addition, ERA is required to assist State regulatory authorities and nonregulated utilities in carrying out their PURPA responsibilities by implementing information dissemination activities. The technical and administrative support for implementingmore » ERA's information data base to their clientele is discussed. The following segments are discussed as they relate to ERA's information dissemination system: information acquisition dissemination; information analysis and retrieval; information storage; and information maintenance.« less