The American Gas Association (A.G.A.) has issued A Strategic Guide to IRP and DSM for Natural Gas Companies, prepared by Hampton Strategies, Inc. Because the evolution of IRP and DSM initiatives for electric and gas companies will be greatly affected by increased competition, the report contends, natural gas companies need to be familiar with issues and practices surrounding DSM cost recovery and profitability incentives. It adds that recovery of direct program costs, lost revenues, and profitability incentives from ratepayers remains an effective source of revenue that electric utilities can use to enhance their competitive position. The report urges the gas industry to consider similar funding scenarios.
Some obvious and not-so-obvious competitive threats and opportunities arise from electric utility-sponsored IRP and DSM programs. Obvious threats include incentives for electric heat pumps and water heaters, but the report warns that gas utilities must also prepare to deal with more subtle threats, which include internal and trade ally infrastructure building, informational programs that "slant" the message to favor electricity, and information gathering through monitoring and evaluation.
The electric industry spent a record $2.3 billion on IRP and DSM programs in 1993, according to the Energy Information Administration (EIA). EIA also points out that electric-to-gas fuel-substitution DSM programs can be an effective method to achieve both electric and gas load-shape goals. It notes that 13 states already use fuel-substitution programs; Oregon, Vermont, and Wisconsin have the regulatory requirements in place for such programs. A recent study by the Gas Research Institute finds gas IRP mandated in 11 states and the District of Columbia; utilities in 13 states have submitted gas DSM plans.
To enhance their competitive positions, the A.G.A. report concludes, gas utilities should pay attention to fuel-cycle versus end-use efficiency, fuel substitution, cost-effectiveness tests, and the environmental impacts of resource decisions.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.