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Burnertip and Beyond

Fortnightly Magazine - September 15 1995

one pipeline system to your house or business. Similarly, the supply of gas and the sale of pipeline transportation capacity is probably an unregulated business. If a transition period can be established to protect existing LDC shareholders, customers will ultimately benefit from having suppliers compete fairly for their business.

The challenge to true burnertip competition is in the transition to a competitive marketplace. Information technology and the momentum of current marketer and brokers will influence this transition. The risk is in not trying and, as a result, weakening competition and harming customers fundamental position.

Gary G. Ely

Vice President, Natural Gas

Washington Water Power Co.

Customers in gas distribution markets have had alternative choices in other fuel energy options for a significant period of time. Burner access would not necessarily favor pipelines, distributors, or marketers. Price competitiveness and service, including reliability, will give the edge once burnertip access is available. The risks for each industry segment lie in their respective abilities to develop competitive alternatives and services to customers, and to do so in a timely manner.

R.E. Terry

Chairman & CEO

The Peoples Gas Light and Coke Co.

State regulatory commissions need to ensure that distributors have the incentives to open up markets, and the tools needed to compete on the same footing as marketers, brokers, and pipelines.

A significant part of our market is already open to gas supply competition. Peoples Gas and North Shore have offered end-user transportation to all but their small

residential customers since the mid-1980s, with significant unbundled service options since 1991. In addition, Peoples Gas and North Shore have each proposed, in pending rate proceedings, completely unbundled rates for large commercial and industrial customers as well as additional transportation, storage, and balancing service options for end-users and pooling, storage, and balancing services for marketers that provide services to those end users. We are also replacing our existing electronic bulletin board with a state-of-the-art interactive system.

As for expanding these services to include small residential customers, Peoples Gas and North Shore are investigating how best to achieve burnertip sales competition for this class of customers. This effort demands a different approach than for larger customers and must resolve how to 1) avoid making transaction costs prohibitively high; 2) operate simply without unneeded and unwanted complexity; and 3) resolve supplier-of-last-resort, system

reliability, and social program and cost issues so that ratepayers, the utility, and third-party service providers are treated equitably.

If burnertip access is fairly implemented, and the difficult issues I have identified are resolved, any party able to provide competitive services should benefit. Clearly, consumers would benefit.

D. Louis Peoples

Vice Chairman & CEO

Orange and Rockland Utilities, Inc.

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A fundamental requisite to fostering real competition is a truly level playing field. O&R is reluctant to support a regulatory environment in which marketers and brokers can skim a portion of firm customers, for whom long-term costs were incurred, stranding remaining LDC customers with new transition costs. The obligation to serve, the recovery of capital outlays, and the burden of taxes on distribution facilities must be