Professor Kelly has chosen a topic that is both timely and challenging. The major reforms in federal regulation that occurred in the 1980s have created a dynamic, competitive market in natural gas. State regulators confront a daunting task in attempting to devise appropriate changes in their methods of regulating local distribution companies (LDCs). The many difficult problems facing them have a single source: gas is a commodity, but gas service is not. An MMBtu of gas in the ground in Texas is currently worth less than a dollar. An MMBtu of gas at a particular plant site or residence at a particular moment in time can be worth two dollars, five dollars, ten dollars, or even more. Getting the gas to a particular location at a particular time is a costly, complicated, and capital-intensive process. It requires use of multiple, immobile, idiosyncratic assets, including production and gathering facilities, high pressure pipelines, storage fields, and low pressure distribution lines.
Richard J. Pierce Jr.,
Intrastate Natural Gas Regulation: An Alternative Perspective,
Yale J. on Reg.
Available at: http://digitalcommons.law.yale.edu/yjreg/vol9/iss2/4