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The Gas Storage Market: What Does it Tell Us?

Fortnightly Magazine - April 15 1996

served on the Illinois Commerce Commission (ICC) since 1983. Commissioner Kretschmer serves as chair of the ICC's Gas Policy Committee, and is a member of the Electric and Transportation Committees. She is also chair of NARUC's Committee on Gas. Agustin Ros is an advisor to the ICC's chairman. Dr. Ros received his BA in economics from Rutgers University, and his MS and PhD in economics from the University of Illinois at Urbana-Champaign.

A New Lease on Storage

Northern Illinois Gas Co. leads the crowd as the first Illinois LDC to lease storage space to end users. The LDC's Standard Rider 26 provides for auctioned bidding of seasonal storage capacity. Auction revenues are split 50/50 between shareholders and the company's jurisdictional revenues.

From the Rider:

"Rider applicable to any Customer transporting Customer-owned gas under the Company's Rate Schedules...to store Customer-owned gas in the Company's storage facilities.

Contract specifies (1) the Seasonal Storage Capacity (not to exceed 120 times the Customer's Maximum Daily Contract Quantity) the Customer requests, and (2) the Capacity charge the Customer bids for the capacity in cents per therm per month.

Allocation of Seasonal Storage Capacity will be determined by bid, with the highest bid being accepted first and so forth until all eligible requests for Seasonal Storage Service are accepted or until available capacity is exceeded.

* * *

Seasonal Storage Capacity Charge: The Amount per therm for each therm of Seasonal Storage Capacity determined and awarded by Auction Bidding, with minimum being .08 cents per month."

From the First Auction:

Total Capacity Awarded

152,056,258

Total Monthly Capacity Cost

154,092

Average Cost per Capacity

1013 cents

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