Challenges facing the natural gas industry and its regulators

The author of this article, the chief executive officer of a holding company whose subsidiaries include a natural gas distribution company, urges some fundamental changes in the structure and operating practices of the gas industry in order to distribute business risks more equitably among the primary parties. Formulation of public policy does not rest solely with legislators, however, as regulatory practices - particularly those of the Federal Energy Regulatory Commission - determine to a large extent the economic signals sent throughout the gas market. A thorough reexamination by the FERC of pipeline rate design, minimum bill provisions, take-or-pay and price escalation provisions, and treatment of pipeline tax investment credits is recommended as a most-important first step toward resolution of the end-use market problems posed by current natural gas policies.