Competitors would have LDCs quit the merchant function and restrict
their dealings with affiliated marketers. But is that really good for consumers?
Those who would restrict business dealings between natural gas local distribution companies and their marketing affiliates (em going so far as to ban LDCs from the merchant function (em often overlook one critical downside: what those rules would mean for the small gas customer.
A regulatory policy for a code of conduct and LDC merchant service must improve the position of consumers. A regulatory structure that ultimately prevents utilities from staying in the merchant business and forces all consumers to buy gas from deregulated sellers may not provide the best answer, particularly for small consumers. Likewise, codes of conduct and separation rules that significantly burden the competitive position of utility marketing affiliates may hurt the consumer.
Such regulation will reduce, rather than increase, consumer choices if utilities and their marketing affiliates cannot compete for gas sales. In the short term, gas supply prices for residential and small-commercial users (em set by a market that is somewhere between monopoly and true competition (em may still require some level of regulatory oversight. But that oversight should be more "light-handed" than today's gas cost pass-through mechanisms.