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LDCs: That Giant Sucking Sound

The consequences of short-sighted rate making.
Fortnightly Magazine - July 2005

weather-sensitive usage consistently was lower in each year in this decade compared to a year with comparable weather in the 1990s (with the data labels showing annual estimated weather-sensitive usage (in Ccf) per customer). 5

The Arkansas residential usage trend, combining both base load and weather-sensitive usage, is summarized in Figure 6. This figure provides estimated weather-normalized annual usage per customer in each year from 1987 through 2004. 6

The usage of CenterPoint Energy's small commercial customers in Arkansas show a similar generally declining usage pattern, both base load and weather-related, as summarized in Figure 7. 7

Endnotes

  1. Direct Testimony of F. Jay Cummings, Arkansas Public Service Commission, Docket No. 04-121-U , December 2004, p. 34. The best-fit residential regression produced an adjusted R2 of 0.98, with weather and usage trend variables each significant at a 99 percent confidence level.
  2. AGA, "Patterns in Residential Natural Gas Consumption, 1997- 2001" Feb. 11, 2000, p. 7 and AGA, "Patterns in Residential Natural Gas Consumption, 1997-2001" June 16, 2003, p. 5.
  3. The best-fit regression for the small commercial class produced an adjusted R2 of 0.95, with weather and usage trend variables each significant at a 99 percent confidence level (Direct Testimony of F. Jay Cummings, December 2004, page 36). CenterPoint Energy's current small commercial class definition became effective in January 1993. As a result, 1994 is the earliest year ended in June that is included in the analysis for this class.
  4. Id., Exhibit FJC-7.
  5. Data used in the figure are contained in Id., p. 35.
  6. Estimates developed using the methods explained in  Id., p. 35.
  7. Id.

 


Case Study 3 Texas Gas Service Finds Usage Declines Despite Small Base

Declining usage trends appear even in a service area with a small customer base. Take for example Texas Gas Service Co.'s South Jefferson County Service Area, an area near the Texas gulf coast with approximately 30,000 residential customers. 1 Based on the period from July 1995 through December 2002, the statistical analyses showed that annual residential use per customer, after taking into account weather variations, fell approximately 1.05 Mcf per year over this period. 2 The Texas Gas Service result is quite similar to, although somewhat smaller than, the finding for the other LDC in the South that was examined and results reported in AGA in Case Study 2. Based on the data used to establish this trend and the measure of normal weather used in the rate case, Figure 8 provides estimates of South Jefferson County, Texas residential weather-normalized annual usage per customer in each year from 1996 through 2002.

Endnotes

  1. In addition to analyzing usage patterns in this Texas area, I conducted an earlier study of annual residential per customer usage in Southern Union Gas Company's (now Texas Gas Service Co.'s) El Paso Service Area, with approximately 154,000 residential customers at the time. I found a statistically-significant residential usage per customer trend that showed a 1.33 Mcf per year decline over the twenty-year period of 1977 through 1996 (Direct Testimony of F. Jay Cummings, Railroad Commission of Texas, GUD No. 8178,