Two Fundamental Questions
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Chapter 8 concluded that pipelines’ transportation service is definitely growing in risk and that pipelines are a risky industry. The level of take-or-pay risk was down from the level of a few years ago, but a transition to sales comparability reopens this issue. This does not imply that pipeline rates of return can be left at, let alone reduced from, the level of the mid-1980s, because those rates of return clearly were not compensatory for the risks the industry faced at the time. Nor do the regulatory and business changes the industry is going through imply pipelines are now a low risk industry. Very substantial risks remain, particularly from uncertain regulatory rules and growing competition, certainly more than existed in the pre-NGPA days.
KeywordsEconomic Principle Regulatory Risk Regulate Company Asymmetric System Contingency Enhancement
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