Natural Gas

1
Natural Gas What parts of the natural gas
industry have been deregulated? Producer
Pipeline LDC Industrial
user Residential user
Bundled service supply transportation
according to tariff
2
Natural Gas What parts of the natural gas
industry have been deregulated? Producer
Pipeline LDC Industrial
user Residential user
Bypass buyer purchases supply of gas
transportation services in separate contracts,
often from separate sellers.
3
Natural Gas Producer Pipeline
LDC Industrial user
Common carrier just and reasonable PBR

• How are pipeline (transportation) services
  priced? Are those prices regulated?
• Firm vs. interruptible transportation
• Capacity release market

4
Distribution of transportation service types
Released Capacity
No-Notice Service
Interruptible Transportation
Firm Transportation
Sales
5
Natural Gas Producer Pipeline
Industrial user LDC
How are gas sales priced? Are those prices
regulated? What is the gas spot market? Whats
wrong with reliance on spot markets? What are
options? Futures? Forward contracts? What are
their purposes?
6
Natural Gas Todays Market
7
Natural Gas What causes natural gas price
volatility? SUPPLY DEMAND
Capacity shortages or bottlenecks Supply
interruptions or shortages Technological change
Weather Environmental regulation Economic growth
8
Pipelines in the Northeast
9
Natural Gas Producer Pipeline
LDC Industrial user Residential
user How are retail rates set? Are they
regulated?
10
Natural Gas What future do you see for natural
gas consumption? What do you make of Judge
Cudahys warnings about our ability to make
predictions like this? Is restructuring of the
natural gas industry a good idea? What exactly
are its benefits? Does everyone benefit from it?
What were the original purposes of regulation in
the first place? Are any of those goals at risk
in a restructured natural gas industry?