Natural Gas Deregulation
Over the past 15 years, the structure of the natural gas industry has changed dramatically. Before, the industry structure was simple, with limited flexibility and few options for natural gas delivery. Exploration and production companies explored and drilled for the gas, and sold it at the wellhead to large transportation pipelines. The pipelines then transported gas to a local distribution company (LDC), who distributed and sold gas directly to end users.Since deregulation, due to a number of regulatory changes mandated by the Federal Energy Regulatory Commission (FERC), the market has significantly changed and is much more open to competition and choice. Prices are no longer regulated, which means that pricing is dependent on supply and demand interactions. Pipelines offer only the transportation component of natural gas. LDC's continue to offer bundled products to their customers in many states, although the retail unbundling that is taking place in other states allows for consumers to have choice with the presence of marketers. Marketers serve to facilitate the movement of gas from the producer to the end user, and can offer either bundled or unbundled service to their consumers.
