✍ Scribed by Benham, William T.
No coin nor oath required. For personal study only.
ur last article in Natural Gas (August) 0 concerned gas cost incentive mechanisms (GCIMs) and ended with the observation that GCIMs could cause marketplace distortions that would not serve the interests of either suppliers or consumers. So let us continue on that tack.
First, it is perhaps instructive to point out that the GCIM approach is fundamentally designed to cause a regulated entity to act like an unregulated entity with respect to a major input (i.e., gas supply) into its overall service responsibility to its customers. What makes crafting something like a GCIM so tricky is that it addresses transactions (LDC gas purchases) that are hybrid in nature. On one side of the deal, you have suppliers, operating in a vigorously competitive environment, selling gas and related services at decontrolled prices.
. -. G C l M so tricky i s that it a d d r e s s e s transactions (LDC g a s purchases) that a r e hybrid in nature.
On the other side you have LDC buyers still under regulatory oversight, whose decisions will tend to be judged not on whether they are the most rational response to market conditions, but whether they are consistent with behavior that advances the "public interest" notion that "least-cost" supplies are almost always preferable. This situa-Willlam 1. Benhamis vicepresi-tion leads to dent for regulatory affalrs of problems with Amoco Production Company in GCIMs. n e y are Chicago. He is responsible for intended to be a regulatory and legislative policy development at both the federal 'Onand state levels.
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