Scale, scope, and regulation in the Texas gas transmission industry

Ellig, Jerry; Giberson, Michael

doi:10.1007/bf01066315

Cited by 6 publications

(3 citation statements)

References 13 publications

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“…The second category involves the econometric estimation of a flexible functional form -usually a translog specification -to obtain an approximate cost function. Regulation of natural gas pipelines in North America has widely applied this method (Ellig and Giberson 1993;Gordon, Gunsch, and Pawluk 2003;Oliver 2015). The third category gathers the process models that derive analytical production and cost functions from technological information.…”

Section: Possible Regulatory Approaches To Model the Economics Of Co ...mentioning

confidence: 99%

Modeling CO2 Pipeline Systems: An Analytical Lens for CCS Regulation

Nicolle,

Cebreros,

Massol

et al. 2023

EEEP

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HAL is a multi-disciplinary open access archive for the deposit and dissemination of scientific research documents, whether they are published or not. The documents may come from teaching and research institutions in France or abroad, or from public or private research centers. L'archive ouverte pluridisciplinaire HAL, est destinée au dépôt et à la diffusion de documents scientifiques de niveau recherche, publiés ou non, émanant des établissements d'enseignement et de recherche français ou étrangers, des laboratoires publics ou privés.

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Section: Possible Regulatory Approaches To Model the Economics Of Co ...mentioning

confidence: 99%

Modeling CO2 Pipeline Systems: An Analytical Lens for CCS Regulation

Nicolle,

Cebreros,

Massol

et al. 2023

EEEP

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“…The second approach involves the econometric estimation of a flexible functional form -usually a translog specification -to obtain an approximate cost function. This method has become popular in Northern America either to estimate the industry cost function using crosssection datasets (Ellig and Giberson, 1993) or to model the cost function of a single firm using a time series approach (Gordon et al, 2003). So far, data availability issues have hampered the application of this empirical approach in Continental Europe and Asia.…”

Section: Introductionmentioning

confidence: 99%

The technology and cost structure of a natural gas pipeline: Insights for costs and rate-of-return regulation

Perrotton

Massol

2018

Utilities Policy

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This note details a complete microeconomic characterization of the physical relationships between input use and the level of output of a simple point-to-point gas pipeline system and uses it to contribute to the public policy discussions pertaining to the economic regulation of natural gas pipelines. We show that the engineering equations governing the design and operations of that infrastructure can be approximated by a single production equation of the Cobb-Douglas type. We use that result to inform three public policy debates. First, we prove that the long-run cost function of the infrastructure formally verifies the condition for a natural monopoly, thereby justifying the need of regulatory intervention in that industry. Second, we examine the conditions for cost-recovery in the short-run and contribute to the emerging European discussions on the implementation of short-run marginal cost pricing on interconnector pipelines. Lastly, we analyze the performance of rate-of-return regulation in that industry and inform the regulatory policy debates on the selection of an appropriate authorized rate of return. We highlight that, contrary to popular belief, the socially desirable rate of return can be larger than the market price of capital for that industry.

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“…7 The observation that there is pipe-to-pipe competition obviously runs counter to the natural monopoly argument. Here we do not argue the case for or against natural monopoly as done for instance by Ellig (1993), Aivazian (1987) or Hirschhausen et al (2007) but simply take the observation from the literature that there is nascent competition. all interstate commerce.…”

Section: Introductionmentioning

confidence: 99%

Productivity and efficiency of US gas transmission companies: A European regulatory perspective

2008

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On both sides of the Atlantic the regulation of gas transmission networks has undergone major changes since the early 1990's. Whereas in the US the long-standing regime of cost-plus regulation was complemented by increasing pipe-to-pipe competition, most European countries moved towards incentive regulation complemented by market integration. We study the impact of US regulatory reform using a Malmquist-based productivity analysis for a panel of US interstate companies. Results are presented for changes in productivity, as well as for several convergence tests. The results indicate that taking productivity and convergence as performance indicators, regulation has been rather successful, in particular during a period where overall demand was flat. Lessons for European regulators are twofold. First, the US analysis shows that benchmarking of European transmission operators would be possible if data were available. Second, our results suggest that, in the long-run, market integration and competition are alternatives to the current European model.

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Scale, scope, and regulation in the Texas gas transmission industry

Cited by 6 publications

References 13 publications

Modeling CO2 Pipeline Systems: An Analytical Lens for CCS Regulation

Modeling CO2 Pipeline Systems: An Analytical Lens for CCS Regulation

The technology and cost structure of a natural gas pipeline: Insights for costs and rate-of-return regulation

Productivity and efficiency of US gas transmission companies: A European regulatory perspective

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