Two Views of Pipeline Risk
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In Chapter 6, we sketched the recent history of the interstate gas pipeline industry. That history is developed more fully in Appendix B. We doubt that anyone reading that history would disagree with the conclusion that the natural gas industry, and particularly its pipeline segment, has experienced a much higher degree of risk since the Natural Gas Policy Act passed in 1978. Legal and regulatory standards and contractual and business relationships have been in flux. Pipelines have had losses of billions of dollars from take-or-pay contract litigation and settlements. Competition for what once were protected markets not only is growing, but is being actively encouraged by the regulatory agency in control, yet regulatory jurisdiction over rates remains in force.
KeywordsEconomic Principle Capital Asset Price Model Regulatory Risk Spot Market Discount Cash Flow
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