Wednesday, November 16, 2005

Phone Lines and Energy Pipes

In the US in the 1990s, phone lines had regulations that allowed competitive phone companies to use the lines from the incumbent service provider. The incumbent provider (owner of the copper) was paid a monthly fee for use of the copper. (This regulation has recently been restructured.) The competitive phone provide would provide new service packages and often cheaper service to the consumer.

In Canada, the natural gas pipes to homes are owned by the pipe infrastructure provider. Users can contract with any gas provider to provide gas through the pipe, which is measured at the residence. The user pays a pipe transmission fee along with the gas usage fee. The gas provider can provide different plans, such as locking in a gas rate before price rises in the winter.
In the US, a regulated utility provides the gas along with the pipe. Allowing other companies to rent the transmission pipe from the incumbent provider would allow other companies to provide choice to the consumer. This would lead to more innovative pricing (such as price hedging).

No comments: