Firm and Interruptible Pricing Patterns: Public versus Private Gas Distribution Utilities

Statistical tests are provided for the effect of municipal and private ownership forms on firm and interruptible gas prices. To test for ownership effects, the systems of demand, price, and cost equations are estimated for 6 customer groups served by natural gas distribution utilities. The statistic...

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Bibliographic Details
Published in:Southern economic journal 1990-10, Vol.57 (2), p.371-393
Main Author: Hollas, Daniel R.
Format: Article
Language:English
Subjects:
03 NATURAL GAS
030600 - Natural Gas- Economic, Industrial, & Business Aspects
294003 - Energy Planning & Policy- Natural Gas
Average cost
Business ownership
Cost allocation
Customers
Economic models
Economic regulation
Effects
Electric utilities
ENERGY PLANNING, POLICY AND ECONOMY
ENERGY SYSTEMS
Gas
GAS UTILITIES
Hypotheses
Industrial regulation
LOCAL GOVERNMENT
Market prices
Natural gas
Natural gas distribution
NATURAL GAS DISTRIBUTION SYSTEMS
Natural gas utilities
OWNERSHIP
Peak load pricing
Price regulation
PRICES
Public policy
PUBLIC UTILITIES
Regulation
REGULATIONS
STATE GOVERNMENT
Statistical analysis
Studies
Utility rates
Variables
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Summary:Statistical tests are provided for the effect of municipal and private ownership forms on firm and interruptible gas prices. To test for ownership effects, the systems of demand, price, and cost equations are estimated for 6 customer groups served by natural gas distribution utilities. The statistical results support the hypothesis that unregulated municipal ownership lowers firm rates, thus encouraging peak usage. Concerning residential customers, there is strong evidence that unregulated municipals charge lower rates than regulated privates. Additional evidence supports the hypothesis that other unregulated municipal firm customer rates are lower relative to those charged by regulated private gas distributors. Interruptible rates are lowered by state regulated municipals alone. The change in net social welfare caused by municipal operation may be negative as municipal costs are higher than private costs, with regulatory effects held constant.
ISSN:0038-4038
2325-8012
DOI:10.2307/1060618