Consumer Choice in Natural Gas: A Hard Look at Savings

Fortnightly Magazine - October 1 1998
This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.

TO DATE, RETAIL NATURAL GAS UNBUNDLING HAS proven to be only marginally successful. In political terms, state legislators and utility commissioners can point to significant progress in passing initiatives to mandate local utility unbundling. Many utilities have developed and won approval of new rate structures that enable small industrial, commercial and even residential customers to purchase natural gas from non-utility suppliers. As a result, many customers now technically have a choice: They can choose to purchase natural gas from non-regulated suppliers or remain with the utility and continue to receive regulated bundled service. In reality, however, relatively few customers procure their natural gas from non-regulated suppliers. Most energy customers are either so satisfied with their utility service that they see no reason to switch, or they find that purchasing gas from non-regulated suppliers is economically unattractive.

Many natural gas utilities structure transportation rates for residential and commercial classes to preclude real customer choices. As such, most current rates serve as a profound impediment to the successful transformation of the retail gas industry.

Some Progress, in Political Terms

As of late August, some six states had already issued some type of political order requiring their local distribution companies, or LDCs, to initiate rate changes that will result in choice for their natural gas customers. At least 26 other states either have introduced limited open access for commercial customers or are considering proposals to unbundle their gas utilities.

This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.