Fueling opportunities
The newly restructured natural gas industry is providing greater opportunities for independent energy producers searching to match fuel supply contracts with project needs. Order No. 636's unbundling of the services offered by pipelines completed the deregulation of the gas industry started by the Natural Gas Policy Act of 1978, which began a phased deregulation of wellhead natural gas prices. Traditionally, the pipelines aggregated gas from numerous producers, transported it, stored it if necessary and sold it to a local distribution company or major customer, such as an electric generator. Order No. 636 separates pipeline transportation, sales and storage services and provides open access to pipelines. Customers are now subject to balancing requirements, scheduling penalties and operational flow orders, but there are new flexibilities in purchase and receipt of gas. The capacity release provisions allow those with excess transportation capacity entitlements to market that capacity. The order also favors the straight fixed-variable rate design which increases demand charges by including all fixed charges, including a pipeline's return and taxes, in the demand component of the rate. Under the previous modified fixed-variable methodology, a pipeline's fixed-cost recovery and earnings depended at least in part on maintaining throughput. Critics say the change will reduce the pipelines' incentive to operate efficiently and to market gas aggressively to power generators.
- OSTI ID:
- 7203834
- Journal Information:
- Independent Energy; (United States), Journal Name: Independent Energy; (United States) Vol. 24:2; ISSN 1043-7320; ISSN IDPEEW
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
030600* -- Natural Gas-- Economic
Industrial
& Business Aspects
031000 -- Natural Gas-- Legislation & Regulations
ENERGY SOURCES
ENERGY SYSTEMS
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
NATIONAL ORGANIZATIONS
NATURAL GAS
NATURAL GAS DISTRIBUTION SYSTEMS
PRICING REGULATIONS
REGULATIONS
US DOE
US FERC
US ORGANIZATIONS