Abstract
This paper argues that firm and interruptible natural gas prices are comparable to peak and off-peak prices in the electric-utility industry, and the observed patterns of firm-interruptible natural gas contracts are not a random occurrence, but are a function of systematic variation in factors which characterize or delineate the various natural gas distribution systems, and that these factors are economic in nature. One of the most-important economic factors is the presence and effectiveness of government regulation. More specifically, through a proxy test, the hypothesis is analyzed that peak prices are reduced by rate-of-return regulation. Although there probably are net welfare gains from rate-of-return regulation, the decision to add additional storage capacity is quite sensitive to regulation, thus largely offsetting the consumer surplus gained from a lower peak-price under regulation.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
