Environmental Engineering Reference
In-Depth Information
and replacement sales volumes when platform production is interrupted by
hurricanes or other factors.
CustomerSegmentsSummary
Order 636 caused little change in the gas business. The same producers
are selling gas in the market. The same pipelines are transporting it to
the same end users. Some issues have changed. Who
controls the pipe-
line capacity? How is it billed? Who is selling the value-added services
available from storage (or comparable paper constructs sometimes called
“virtual storage”)? What are the rules for trading gas, pipeline, and storage
capacity? Most importantly, who is ultimately responsible for gas service
at the residential level? State level unbundling is challenging these factors
and may constitute a far more compelling issue for the evolution of the
storage industry over the next 10 years than federal regulatory change. The
likely impact will be to make LDCs more peak-sensitive, require balancing
across more shippers, result in continued disaggregation of utility loads,
and shift gas supply responsibilities back to suppliers. In the meantime,
the uncertainty of outcomes will likely preclude significant investment by
LDCs in storage assets and may result in the growth of large suppliers and
aggregators.
EconomicsofStorage
Underground natural gas storage presents a variety of economic justifica-
tions, depending on the perspective of the entity attempting to value a facil-
ity or service. In traditional rate making, the value attached to natural gas
storage service was determined by the avoided cost economics of alternatives
such as no-notice service. While avoided cost still plays a role for utilities, the
value of natural gas storage is now evolving to valuing the services realized
from expanded gas sales.
In general, as we see in the Figure 8.7 graph, high gas prices are typically
associated with low storage periods. Usually when prices are high early in
the refill season (April to October), many storage users adopt a wait-and-see
attitude and limit their intake in anticipation that the prices will drop before
the heating season (November to March). However, when that decrease does
not occur, they are forced to buy natural gas at high prices. This is particu-
larly true for local distribution and other operators that rely on storage to
meet seasonal demands of their customers. On the other hand, other users
