U. S. gas market adapting to commoditization; electricity likely to follow similar course
- KCS Energy Risk Management Inc., Edison, NJ (United States)
With the final implementation of Federal Energy Regulatory Commission Order 636 in 1994, the US natural gas industry fully entered the third phase of an evolution from regulation to deregulation and, finally, commoditization. Now, the only major segment of the natural gas industry left to fully deregulate is that of local distribution companies behind the city gate with smaller customers. A model for that type of deregulation exists in Canada, where in the Province of Ontario homeowners can choose from whom to buy gas. Other industries, such as long-distance telephone service and airlines, have recently gone through his evolution. The effect of commoditization is similar to that of Order 636, which unbundled the transportation and sales services of US interstate gas transmission pipelines. Commoditization has unbundled the risks inherent to the gas industry. The paper discusses deregulation, increased risks, risk management steps, financial instruments, and electricity deregulation.
- OSTI ID:
- 6583989
- Journal Information:
- Oil and Gas Journal; (United States), Journal Name: Oil and Gas Journal; (United States) Vol. 93:11; ISSN OIGJAV; ISSN 0030-1388
- Country of Publication:
- United States
- Language:
- English
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