Hedging programs promise protection against energy-market price spikes, and they can be important to the regulatory goal of sustainable, lowest long-term service cost. But how much price...
Burnertip and Beyond
they can develop solutions that will improve their bottom-line revenues.
LDCs should also begin developing regulatory options that will support transition to this new marketplace. Flexible pricing and service options are two areas where we can work together to facilitate the transition. At the same time, "obligation to serve" and "no shut-off" issues must be addressed in a consistent, constructive, and beneficial way.
Charles E. Zeigler, Jr.
Chairman, President, & CEO
Public Service Co. of North Carolina, Inc.
This question seems to infer that there is currently no competition in the retail energy markets served by natural gas LDCs. However, natural gas is in fierce competition against the electric heat pump, fuel oil, and other energy sources on a daily basis.
Changes in regulation or legislation will probably be required for widespread open access and customer choice to be achieved within the natural gas portion of the retail energy markets. Two factors will determine the winners of this contest: a) the final rules and regulations, and b) the ability to provide the required service at the lowest possible cost. This last point includes the best use of new technology in conjunction with the best work processes. The most significant associated risk is that cost could be driven up and the level of service reduced in order to provide customers a choice. Higher cost and lower service are not what our customers want, and would hinder the growth opportunities our industry should be able to create under FERC Order 636 and its market-based successors.
William E. Davis
Chairman and CEO
Niagara Mohawk Power Corp.
The first step toward real distribution company competition will be for each state to go through a restructuring/unbundling proceeding similar to the one currently underway in New York State. Each state commission must take a fair and objective look at the whole process.
The unbundling should be managed so that the customer will be given a choice as to supplier, but the LDCs will not be stuck with the stranded costs.
One of the inherent risks may be less reliable service, especially if the LDC is no longer obligated to serve. Each commission must consider who is going to plan for the future. Will competition and an open market provide for future facility expansion to meet new load (em as have regulated entities in the past? If the new market entrants are not willing to take those risks, growth in the industry may be stymied.
Corbin A. McNeill, Jr.
President & CEO, PECO Energy Co.
The natural gas industry has seen many years of structural change, starting with the deregulation of wellhead prices in 1978. Now, large industrial consumers have direct access to gas supplies and can make transportation arrangements with pipelines and utilities. Utilities have direct access to gas supplies, with transportation by pipelines, and use that access to competitively source and
aggregate gas supplies for the core market.
Because it is unclear what real efficiency gains would follow from restructuring the natural gas utility industry, it is questionable whether the core market is better served by marketers