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The 1998 Gas Industry Executives Forum Mapping the Universe of Natural Gas: Closed, Shrinking or Expanding?

Fortnightly Magazine - May 1 1998

to be able to say, "Well, I'm paying $2 now, but if we hadn't had choice I might be paying $3"?

It's always difficult, looking back, to say what the prices would have been with or without a so-called free market. So it's going to be very difficult for consumers to evaluate whether or not they saved what they expected to save.

However, I don't think we have a choice. Once you let that genie out of the bag, so to speak, and you offer people choice, everyone has great expectations. Whether those expectations are fulfilled or not, I think choice is going to happen. Just as when we started [changing] the telecommunications and airline industries, these things were promised, people wanted them. I don't believe that all the promises met the people's expectations.

A PIPES COMPANY? I think for the next five to seven years many states are going to require that LDCs stay in the merchant function. We will want to see how the market is working, who's going to be responsible for [the] customers who may not have a choice.

On the whole, I believe that unless LDCs are allowed to make a profit on the commodity, they're going to want to get out of the merchant function¼ because they see it as a no-win situation. They have to prove every purchase they make and they might be able to recover or they might not, depending on their state public utility commission. But at least in Illinois, at least for the next few years, I think they'll be mandated to stay. One of the big questions we're going to have as a public utility commission is to decide whether they should be allowed perhaps to eliminate their PGA and take their chances on either a loss or a gain in the commodity.

TECHNOLOGY TRENDS. I think one of the great markets the industry is overlooking is gas air conditioning. We built a new home a year ago and put in a unit that does both gas heating and cooling. My cost this past summer for cooling was so low (em I probably saved 50 to 60 percent by using gas air conditioning. The only drawback was the up-front cost (em it's very high but will drop as more units are built and sold.

Also, I think LDCs are going to look at this and say: "This is an area we can benefit from and customers can benefit from, because pipelines will be kept full in the off-season." It is an advantage to electric utilities in that their peak may be shaved so they won't need new generation.

I think the gas industry would like to have more gas-fired generation. A lot's going to depend in the next century upon how nuclear energy may be accepted, or not accepted, by the public and by the various governments. Certainly from my perspective, living in Illinois, nuclear is clean and reliable; I think it's safe. And I think if we were to go to a cookie-cutter approach as France has done, I