131 Restructuring and Competition

The natural gas industry historically divided into three segments represented by three different types of companies — producers, pipelines, and local distribution utilities. The producers extracted and produced the gas, sold most of it to the pipeline companies, and held back some percentage for direct sale to large consumers within their production areas. The pipelines transported and sold the gas to distribution company customers and to some large industrial and electric generation customers located along their pipeline routes. The distribution companies then delivered and sold gas to their retail customers of all sizes.

This functional pattern began to change in the early 1990s as gas pipelines were ordered by the FERC to become common carriers and give up their historic merchant function. While the companies maintain their original functions today, the production and distribution companies, along with gas marketers, have assumed the merchant void created when the pipelines were prohibited from buying and selling gas. Now producers sell gas directly to the pipeline companies, past (historic) customers, or gas marketers. Pipelines, with minor exceptions, transport gas from producing areas to designated locations along their lines. They do not resell gas. Distribution companies buy gas from producers and marketers, take deliveries from the pipelines, and make deliveries and sales to their customers. The next step in this restructuring may turn distributors into common carriers for their retail customers who choose to buy gas elsewhere. It is not yet clear how far this latter trend will go, since the public utility regulators for each state must ultimately decide on this change.

Consequently, the fundamental restructuring of the natural gas industry in the last decade (and continuing today) and the emerging restructuring of the electric utility industry are creating an extremely competitive energy marketplace. Both the electric and gas industries are essentially commodity businesses, which promote competition for price and product variety. The rapidly evolving Btu market increases fungibility between energy sources, and financial mechanisms will continue to evolve to reduce the risk of price volatility for those who choose greater predictability of supply costs.

Solar Stirling Engine Basics Explained

Solar Stirling Engine Basics Explained

The solar Stirling engine is progressively becoming a viable alternative to solar panels for its higher efficiency. Stirling engines might be the best way to harvest the power provided by the sun. This is an easy-to-understand explanation of how Stirling engines work, the different types, and why they are more efficient than steam engines.

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