Natural gas transmission pricing and investment

The US natural gas industry has been restructuring for the past twenty years, since phased wellhead gas price decontrol eras prescribed in the Natural Gas Policy Act of 1978. Today, natural gas production is completely deregulated, interstate pipelines are regulated by the Federal Energy Regulatory Commission (FERC) and local gas distribution companies are regulated by state and local utility commissions. Regulation of gas pipelines and distribution companies is based on the belief that these companies are natural monopolies with increasing returns to scale. Since electric industry restructuring is proceeding along similar lines, the experience of the natural gas industry may suggest possible outcomes for the electric industry-and pitfalls to avoid