Distributed Generation. California opened a rulemaking proceeding to consider regulatory reforms in electricity distribution service, with a possible focus on distributed...
ARE NATURAL GAS UTILITIES DIFFERENT FROM THEIR ELECtric counterparts? Now that customer choice has become available in a few spots on the East and West coasts, can we expect some of the same opportunities to open up for gas consumers? Or are the industries incomparable, without lessons to learn from each other?
For the Fortnightly's 1998 Gas Industry Executives' Forum, we asked key industry players (em three utility CEOs (one representing his industry association), plus a regulator, a consultant and a consumer advocate (em to share their views and shed some light on the future of the natural gas industry.
Overall, most agree the connection between electric industry restructuring and natural gas unbundling is more than just coincidence. As Craig G. Matthews, president of Brooklyn Union Gas puts it, the worldwide community is in the midst of the idea that "competition is better than trying to have regulators decide what the market wants."
However, choice won't happen overnight. A slow, deliberate move toward a single energy provider is envisioned by several respondents. Vinod Dar, managing director of Hagler Bailly Consultants, sees a time when natural gas will become more of an intermediate product than a final product.
To get a snapshot of the market, we posed these questions:
ELECTRIC DEREGULATION. How will electric deregulation affect the natural gas industry?
HOURLY PRICING. Will hourly pricing in electricity put pressure on gas to revamp its current practice of weekly or daily pricing?
CONSUMER SAVINGS? Can residential and small commercial customers really expect to see savings in gas prices? Or is customer choice more of a philosophical goal?
A PIPES COMPANY? What is the future for the gas utility as a local distribution company? Can LDCs survive as transporters only, without merchant sales?
TECHNOLOGY TRENDS. Where is natural gas technology headed?
David W. Biegler, chairman, American Gas Association, and president and COO of Texas Utilities
ELECTRIC DEREGULATION. Over the long term, electric deregulation should help feed increased demand for natural gas, particularly in utility and non-utility electric generation. However, it's easy for people to become too bullish.
Take a look at the A.G.A. statistics, [which show that] about 60 percent of the new capacity that's been added throughout the '90s will be fired by natural gas. Some of that new capacity will be highly efficient gas generation (em backing out old, inefficient gas generation with a net effect of reduced gas consumption. It's not a simple equation. Nevertheless, A.G.A. forecasts more growth for natural gas generation between 2005 and 2015, when more nuclear and coal-fired generating units will be retiring.
Another unknown factor is the [current] surplus of generation capacity. Some of the decisions to build new units may not come around until 2007 or later. Over time, however, the bottom line is that it's more economical to build and operate gas-fired plants. So, you'll see the proliferation of these kinds of facilities. There are new breeds of gas-based combined cycle and cogeneration plants being installed today that offer great advantages like short construction lead times, high efficiency and reliability, low pollution levels and modular