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Consumer Choice in Natural Gas: A Hard Look at Savings

Fortnightly Magazine - October 1 1998

Marketers must attend more to improving their cost structures. Customers, particularly the large commercial and industrial users that run operations in many jurisdictions, must become far more vocal and demanding in the political process. All these actions will help speed the unbundling process. Absent these actions, however, the process will continue albeit slowly with the consequence that for many consumers - commercial, industrial and residential - the potential benefits of unbundling will remain exactly that: potential, and not much more.

Porter Bennett is President of BENTEK Energy Research, Inc. and BENTEK Information Services Inc.. Over the past 15 years, Bennett has conducted projects for natural gas producers, pipelines, marketers, energy service companies, utilities, end users, trade associations, software vendors and equipment manufacturers. The findings described here are taken from a company study entitled, "Retail Gas Markets: How Open Are They?" and were analyzed using the company's database of utility tariffs, the BENTEK Automated Tariff System.

1 To a less significant degree, the rates charged by LDCs for small-volume industrial customers also preclude savings, thus, do not provide real economic choices for customers.

2 Source: Enron Capital and Trade Web site ( www.enron.com). The six states that have passed legislation or comprehensive PUC orders are California, Georgia, New Mexico, New York and Nevada. States that are considering legislation include Arizona, Colorado, Iowa, Kentucky, Louisiana, Maine, Minnesota, Missouri, Oklahoma, South Carolina, Virginia, Vermont and Washington. The states that have access for some commercial customers include Connecticut, Florida, Illinois, Indiana, Massachusetts, Michigan, Nebraska, New Jersey, Ohio, Pennsylvania, Rhode Island, Wisconsin and Wyoming.

3 New York has approximately 4 million residential and 315,000 commercial gas customers, thus, only about 0.3 percent and 7.0 percent respectively purchase from non-utility suppliers.

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