Gas Retail Rate Design. In a move toward equalizing rates of return between customer classes, the Oregon PUC authorized Northwest Natural Gas Co. to increase base rates by...
of your most important customers opt to bypass your distribution system altogether. What steps can you take to counter this looming risk?
a) Join with neighboring LDCs that face a similar bypass threat to launch a campaign to build public and political opposition to the new pipeline.
b) Ask the PUC for flexible rates (em especially for industrial customers (em to put you in a stronger position to compete with the pipeline.
c) Start a capacity-brokering program that allows your customers more direct access to producers by "buying" a portion of the interstate pipeline capacity you control.
#13 (em New Markets
You know that just defending your market isn't enough; in the new gas market, you have to grow or die. But how do you start building new markets and, maybe even more important, where?
a) There are plenty of untapped local markets, and new gas technologies promise to create even more, so it makes sense to focus your expansion efforts on the area you know best: your home territory.
b) Gradually build your market in "concentric circles," starting with local customers in and near your territory, then moving into regional markets, and eventually becoming a national player.
c) Pull together resources to become a national marketer as quickly as possible; competition at the national level is getting stiffer every day, and customers with nationwide operations want a gas supplier that can deliver to all of their outlets.
#14 (em Moving Overseas
Some companies, like Southern California Gas (SoCalGas) and CMS Energy, see aggressive moves into international energy markets as promising avenues for growth. Energy utilities around the world are privatizing, and energy demand in some countries is soaring much faster than in the United States. At the same time, moving overseas can be risky. What can Total Gas do to get a piece of the international action while minimizing risk to its bottom line?
a) Sell your management and technical expertise to newly privatized foreign LDCs.
b) Establish an international presence by buying a gas LDC in another country.
c) Negotiate product distribution or technology exchange agreements with foreign energy companies.
#15 (em Diversification
One of your priorities is to increase profits by building new revenue streams, but you want to stay focused on Total's strength: energy. How do you find new sources of revenue while sticking to the same basic business?
a) Follow the "Baby Bell" telephone companies; they built revenues by
creating new services like call waiting and "Star 69." You can develop new service "extras" (em gas appliance maintenance insurance or specific service-appointment times, for example (em that you can offer to customers for a fee.
b) You can expand markets by aggressively promoting new gas technologies (em like gas air conditioning and natural gas vehicles (em in your service territory and beyond.
c) Total Gas has decades of valuable energy expertise. Offer that expertise to large customers to help them buy and use energy as efficiently as possible.
As you have probably figured out, no single answer lies waiting for any of these challenges. Each LDC has