Regulation of Natural Gas Distribution Using Policy Benchmarks
成果类型：
Article
署名作者：
Muthuraman, Kumar; Aouam, Tarik; Rardin, Ronald
署名单位：
University of Texas System; University of Texas Austin; Al Akhawayn University; University of Arkansas System; University of Arkansas Fayetteville
刊物名称：
OPERATIONS RESEARCH
ISSN/ISSBN：
0030-364X
DOI：
10.1287/opre.1070.0507
发表日期：
2008
页码：
1131-1145
关键词：
摘要：
Local distribution companies (LDCs) play the role of purchasing and delivering natural gas to their consumers, and state regulators oversee the pricing of natural gas to consumers. The common method of regulation, based on the cost of service, provides arguably little incentive for the LDC to optimally manage their procurement activities. In the light of recent deregulation and other changes, benchmarking-based regulatory schemes are being increasingly perceived as the right direction to pursue. Various states are experimenting with simple benchmark mechanisms that have inherent deficiencies and are often criticized. In this paper, we propose and characterize a new kind of benchmark that we call a policy benchmark as a mechanism for regulation. Using variance as the measure of risk, we formulate the regulator's and the LDC's problems as multiple-objective optimizations. We provide rigorous characterizations of the dominance frontiers for a two-stage model. We also provide multistage formulations that take into account various natural gas market microstructures. We compute solutions under parameters estimated from relevant real-world data and illustrate that the structures of the dominance frontiers remain unaltered from the characterizations provided by a stylized two-stage model.