The rate structure of the natural gas pipeline industry

Abstract

Many economists have urged regulatory commissions to pay closer attention to the rate structures of public utility companies. Tele-communications, rail transportation, and electric power are all said to be practical areas of rate structure experimentation. However, the rate structure of the natural gas pipeline industry, a regulated sector of the economy, has received limited comment. This is particularly disappointing since natural gas is significant in the nation's pattern of energy consumption. The purpose of this article is to identify the current rate structures and practices of the natural gas pipeline industry in the United States. In addition, the rate burden for certain buyers of natural gas service should become more apparent. To determine the current rate structures and practices, the roles of eight natural gas pipeline companies, 1 which together serve most regions of the United States, are studied. Only those tariffs are examined where service is not subject to any interruptability up to the ...