Capacity Reallocation Proposal: The Back Door to Market Power?
✍ Scribed by Smith, William H.
- Publisher
- John Wiley and Sons
- Year
- 2008
- Weight
- 318 KB
- Volume
- 8
- Category
- Article
- ISSN
- 0743-5665
No coin nor oath required. For personal study only.
✦ Synopsis
term, steady, dependable revenue flow to the pipelines. This kind of pricing would seem irrational in other utility service or in an unregulated market. Retail gas customers are able to adjust usage levels for any reason and thereby to lower billing levels. So are electric customers.
With gas, much pipeline firm capacity goes unused by the LDC buyer, both on a seasonal basis and through downswings in each economic cycle. The cost of that resource becomes a drag on the LDC buyer, because it is fixed but must be recovered from reduced end uservolumes. The value of the resource is diverted to the intermptible-enduser market and to the pipelines in the form of revenues for those services. Only a small portion, if any, reverts to the benefit of the firm customer who has already paid for it.