Risk of the Interstate Natural Gas Pipeline Industry: Summary

Abstract

Our analysis of regulatory risk for gas pipelines began when the Interstate Natural Gas Association of America (INGAA) commissioned the authors¹ to study the risk of the interstate natural gas pipeline industry (hereafter pipeline industry).² INGAA was concerned that there might be fundamental problems with the current system of pipeline regulation. Most particularly for this study, INGAA was concerned that there seemed to be a difference between regulators’ perception of the industry’s risks and the risks perceived by the pipeline companies themselves.

The regulated gas utilities [both pipelines and gas distribution companies] of the Eighties have stood out as being especially vulnerable to business risk — perhaps more than they were during the supply-short period of the Seventies. In the current decade, fuel oil competition has put this industry group through its paces as never before (Value Line 1985, 465).