Transportation charges in the gas industry

UribhT Policy 1994 4 (3) 191-197

Transportation charges in the gas industry

Catherine Price

British Gas was privatized in 1986, a monopoly with no direct competition and only very light regulation of the tariff market. The regulator had an obligation to enable competition to develop in the unregulated, large-quantity, contract market. Competitors required access to the BG-owned transportation network The government has recently rejected the recommendation of divestiture of the supply business, but has accelerated the advent of competition to the domestic market. This paper considers the role of BG’s transport charges in these developments, using its past behaviour as a guide, and identifying the issues for future regulation and development of the gas market.

iCewords: Gas; Network industries; Regulation

The gas industry has attracted more debate over its structure, potential competition and access to its network than any other privatized UK utility. British Gas (BG) was privatized early in the Government’s programme as an intact vertically integrated monopoly. BG owned all the gas pipes for public supply, and was the only supplier of piped gas until 1990 (four years after privatization). The debate has centred on the most effective way to introduce appropriate competition. for which access to the national network is necessary.

BG was at privatization essentially a wholesaling operation. It bought gas from oil companies and consortia operating in the North Sea and conveyed it via a national transmission network, regional net- works and low-pressure pipes to final consumers. Figure 1 is a schematic representation of the industry. Most of the transmission network is common to many categories of consumers, and it is a classic case of a natural monopoly, with average costs falling as the network is used for greater throughput. When

Catherine Price is in the Department of Economics, University of Leicester. University Road, Leicester LEl 7RH, UK.

0957-l 787/94/030191-07 @ 1994 Butterworth-Heinemann Ltd

the industry was privatized as shown in Figure 1, the industry’s regulator OFGAS’ was invested (jointly with the Secretary of State) with a duty to

enable persons to compete effectively in the supply of gas through pipes at rates that, in relation to any premises, exceed 25 000 therms a year.’

Other functions included promoting the efficiency and economy of those authorized to supply gas and protecting the interests of consumers. In the latter group the regulators

should take into account. in particular, the interests of those who are disabled or of pensionable age.

We shall see that the relationship between these obligations to encourage competition and protect particular groups of consumers became crucial in later debates.

In December 1993, seven years after privatization, the President of the Board of Trade, Michael Hesel- tine, rejected a recommendation by the MMC” that the industry should be vertically segregated and divested, and determined that the ‘small tariff market’ (that is, for domestic consumers) be opened up to competition. However, this was after a lengthy struggle between regulator and industry and a number of changes to the market as originally privatized.

The number and significance of developments in the industry between the 1986 Gas Act and the crucial decisions at the end of 1993 reflected the obstacles to achieving competition inherent in the structure of BG.

Background

From 1972 to 1986 the gas market was dominated by BG, which bought gas (with monopsonist rights) at the beach-head and delivered it via national and regional transmission and local distribution to cus- tomers in domestic, industrial and commercial markets. Attempts to introduce competition after 1982 by enabling competitors to use BG’s pipelines at a negotiated price (if necessary arbitrated by the De-

191

Transportarion charges in the gas uldlrstr_v

North Sea

tariff

market

contract market

Figure 1. Schematic representation of the gas industry.

partment of Energy) had failed, and BG was privatized with a de facto complete monopoly in piped gas

supply. BG’s monopoly was legally protected in the tariff

market, supplying those who used less than 25 000 therms per year; this market comprised the domestic market and small to medium-sized commercial and industrial consumers. The tariff was published and geographically uniform so that every consumer paid a standing charge and a single running rate for all gas used. (After 1990, lower commodity charges were introduced for consumption levels of between 5000 and 2.5 000 therms per year.) Average revenue in the tariff market was subject to a cap and could not rise by more than X% in real terms in any year.

regulator, OFGAS; and the Office of Fair Trading. Where the identity of a particular regulator is significant it is named; otherwise the word ‘regulator’ may refer to any of these bodies.

Phase 1: 1986-1989 - Privatization to implementation of first MMC recommendations

At privatization the contract market (large industrial and commercial organizations purchasing more than 25 000 therms a year), where the regulator was to ‘enable competition’, was supplied under indi- vidually negotiated and confidential contracts. Dis- gruntled consumers complained to the regulator and to the Office of Fair Trading (OFT), which in turn referred the issue to the MMC, resulting in the first MMC report on gas.” This report, and its successor in 1993, changed both the environment in which BG operated and its responses, and provide a division of the post-privatization era into three phases to reflect these changes. Within each of these we concentrate on the role of transportation charges in BG’s strategy, and that of the other major players in the market, though we shall refer to other aspects of the industry where relevant. In particular it is important to note the variety of legislative and regulatory bodies involved in the industry: the government as designator of monopoly extent and arbiter of MMC recommendations; the MMC itself; the industry

In this period BG enjoyed a de facto monopoly in both the (price capped) tariff and the unregulated contract market. Criticisms that the absence of gas- to-gas competition indicated the need for more rigorous regulation, particularly of the contract market, were countered prior to privatization by the claim that there was vigorous inter-fuel competition, which limited BG’s market power. This was probably justified in some markets. particularly in parts of the interruptible market where BG had the right to interrupt supplies at times of heavy system demand. The regulator’s duty to enable competition in this market was cited as another argument against direct regulation of its prices, as price capping would be a disincentive to such competition.

In these circumstances BG reacted much as might be predicted. It was required to produce indicative access charges. It did so with some reluctance after persuasion from the regulator. It produced only two indicative charges, and these suggested that the cost for competitors’ access to the transmission network would be prohibitively high. Competitors were de- terred from entering the market, and the regulator, through the MMC, was asked to investigate the discriminatory charges in the contract market. The regulator’s response included one of the strategies that theoretical models would suggest:’ that BG

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Transportation charges VI the gas industry

contracts, and failure to entice entry might be further punished. Competitors acted on the increased information and lower charges by substantial entry from 1990, mainly to the new electricity-generation market created by privatization of the electricity supply industry.

The structure of transportation charges also changed during this time. The schedules were based on a per-therm charge comprising two elements: a constant charge per therm and a charge based on distance carried from beach-head to off-take. OFGAS made it clear that regulation of this sector (and indeed the industry as a whole) would be based on rate of return. As early as October 1989 the Director General suggested a rate of return of 4.5% for the transportation business, emphasizing the importance of this measure. So long as the allowed rate of return exceeds the cost of capital such messages induce over-capitalization of the industry6 and provide incentives for undercharging (and therefore encouraging expansion in demand for) capital- intensive demand. If allowed rate of return is less than the cost of capital the company would eventual- ly become unprofitable and would close.

The structure that BG chose for its initial access charges reflected just such a bias. with the distance- and peak-related elements disproportionately low, and in some cases below marginal costs.’ This suggests that it could not be justified on grounds of differential demand elasticities (Ramsey pricing); in any case it seems unlikely that peak demand is any more responsive to price changes than is off-peak demand. If anything, peak demand would be less price-sensitive and Ramsey pricing would suggest a bias in the opposite direction. As the schedules were revised there was a slight correction of this bias, but it remained a strong feature of the transportation charges.

Charges for access to the network are closely linked to those for final products, both for the incumbent and for the potential entrant. Schedules for the contract market - the only one in which competition was allowed at this stage - had themselves only just been published. These replaced first-degree price discrimination between consumers with second-degree price discrimination, basing charges on the quantity of gas bought, the number of premises, whether the gas was firm or interruptible and length of contract. From December 1989 a seasonal element was introduced for firm-contract gas (the cheaper rates for interruptible gas already represented a form of peak charging). However, the seasonal element within the firm-contract price underestimated the marginal costs of supplying

should be rewarded according to the extent of entry into the market for which access to its transportation system was required. Thus the implementation of the ‘MMC 1’ recommendations included monitoring of the contract market by the OFT after three years to see that adequate market entry had occurred (though ‘adequate’ in this sense was never defined). BG hoped that the price schedules in the contract market could be abandoned if entry into the market were sufficient, so this monitoring of access could result in either a carrot (abandonment of contract price schedules) or a stick (further intervention) for BG. Moreover, BG felt itself unfairly handicapped in a market where it was bound to publish prices but new entrants could undercut these on a confidential and discriminatory basis.

Phase 2: 1989-1993 - From the first MMC report to the second MMC report

When the government accepted the MMC’s 1988 recommendations the regulator set in place the regime described at the end of the previous section. Contract and transportation schedules were published in Spring 1989, and both were subject to frequent revision. BG knew that it risked a further referral to the MMC if entry was not judged significant after three years.

Transport schedules were introduced in June 1989, then revised in March 1990, September 1990, and annually thereafter. The prices charged for transport represented a sharp drop in level from the indicative 1986 charges. One of these had concerned carriage of 60% load factor gas from Bacton to Wolverhampton and the charge for such a contract had halved in real terms by September 1992 com- pared with the 1986 suggestion. The main reduction occurred when price schedules were first introduced in June 1989, with further substantial reductions in March 1990, but there was a continued small fall in level of charges throughout this phase (numerical comparisons at each review are complicated by changes in the form of the access charges presented by BG). Despite this drop, charges remained con- siderably above estimated marginal costs of supply. This is hardly surprising in an industry with substantial economies of scale, operating as a private mono- polist not subject to direct regulation in this area and with at least some incentives to deter potential competition in supply.

The reduction in level of charges suggests that BG was responding to the anticipated monitoring of entry into the contract market, knowing that such entry might be rewarded by reversion to confidential

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Transportatron charges in the gas industry

peak. Most of the capital costs of the system are attributable to peak demand given that this deter- mines the size of the transportation network. This division between peak and commodity charges is an area of conflict between BG and OFGAS, which remains to be resolved.

Even more striking than the understatement of peak costs is the complete postalization of contract prices, with no geographical differentiation in charges made to contract consumers. However, BG must base access prices at least partially on distance carried, so its competitors in the contract market will face differential costs in supplying different parts of the country. (So of course does BG, but it has always denied that these are significant.) There is no geographical differentiation in tariff prices, nor any evidence that such differences in contract prices existed before they were published. Thus faced with a charging policy and practice for gas supply that ignores geographical cost differences it is not surprising that BG understates these cost differences in access charges to its competitors.

This raises the question of where BG would have liked to see competition develop, given the need to encourage some entry. In the short term BG would want to retain its most profitable markets. With uniform prices these are the low-cost consumers, with a high load factor (small contribution to peak) and close to a beach-head. In the longer term the incumbent might have felt such temporary profits were worth sacrificing if the competitors who en- tered were unlikely to pose a serious threat: that is, if they could either be induced to collude or would

leave the industry at a later date. The problem for BG was that its own profitable

markets were simultaneously the most attractive to competitors, particularly while it continued to prac- tise geographical cross-subsidy (the access charge probably reflected the peak subsidy sufficiently to impose BG’s seasonal pricing pattern on its competitors’ costs). Competitors did enter the market, and initial entry was geographically concentrated near to beach-heads where transportation costs were low but BG’s contract prices were not. Later, competition spread to other areas, particularly for electricity generation. This market shows the importance for resource allocation of appropriate access pricing in both industries, as the location of gas-fired generation plants would be determined by minimizing total costs, including those of gas and electricity trans-

port. However, competition was not evenly spread

across markets. There was substantial entry into the new market, in which BG also competed. to supply

gas to electricity generators, and into the medium- quantity high-load-factor firm-contract market, but very little for small quantities, or very large quantities, and virtually none in the interruptible market. OFT reviewed the development of competition in the contract market as promised in 1991, and found it inadequate. OFGAS and BG agreed that the transportation business and the supply business be separated, with separate accounting and Chinese walls to prevent the transportation and storage arm (BGTS) from using privileged information to benefit the part of the company involved in gas trading (BGT). BG had recently accepted OFGAS’ significant tightening of the tariff price cap at the first quinquennial review, and agreed with some reluctance to this accounting separation.

Arguments then arose between BG and OFGAS about the appropriate rate of return for the transportation sector. In the meantime the government had announced a reduction of the monopoly threshold, allowing competitors to supply the tariff market above 2500 therms per annum (about 14% of the tariff market by volume). During 1991 and 1992 the regulator (in one guise or another) had thus tightened the tariff cap, introduced competition into the tariff market and imposed separation of transport from retailing. These changes and arguments resulted in the industry’s second referral to the MMC in July 1992. This was a much more wide- ranging remit than the first referral, and reviewed thoroughly developments in the industry since 1988.

There was little significant change in pricing levels for access or gas supply by BG during the delibera- tions of the MMC, though the debate about the appropriate form of transport charges continued. BG had suggested that these be based on an entry/ exit charging system that was better able to reflect the complex nature of system balancing than the previous distance-related charges. The appropriate rate of return that these charges should recover (that is, their level) had been part of the disagreement between BG and OFGAS leading to the MMC referral, but the two proceeded with a joint consulta- tion process about their structure.

Three issues are of interest: the nature and trans- parency of the charging system; how the charging structure relates to costs; and the level of those charges. BG’s proposals reflect its present position.

BG was faced with the separation and possible divestiture of its retailing arm (referred to as BGT). During the MMC enquiry it made clear its prefer- ence, in the event of separation, for being left with the transportation and storage element, which com- prises most of the assets. Its main incentive was to



of these changes. All affect the access price. So long as BG is maximizing benefits for both BGTS and BGT its decisions on transport pricing will be differ-

ent from, those of an independent transport company. The only reason for maintaining the two in joint ownership would be if BGT had private information about the market that other competitors did not have, and which it would be useful (for the general welfare) for BGTS to share.

At first sight the domestic consumer database might appear to constitute such information. However, amongst the eager competitors waiting to enter the domestic market are regional electricity companies, who have an even more extensive database, and who can easily replicate the information contained within BGT. (In arguing to the MMC and the DTI, potential competitors to BG produced estimates of their own likely costs of supply, drawing on their own information of the markets.) The argument for divestiture therefore seems strong, based on the ability and incentive for BGTS to bias access pricing in the interests of BGT if they are not separated.

In theory the present arrangement of separate accounting and Chinese walls should ensure fair access prices, as BGTS must charge BGT the same as competitors for carrying gas. However, costs of each operation are not separately observable, and BG has private information about its costs, which are difficult for the regulator to check. Moreover, the natural monopoly element of the transportation network means that some arbitrary cost-recovery mechanism is required if average costs are to be covered. In these circumstances it is difficult to see how the regulator can detect and prevent cost- allocation practices that in effect overcharge the access price to reduce downstream competition. The difficulty over cost allocation has been present throughout BG’s privatized history; was commented on by the first MMC report, which noted inconsis- tencies in cost allocation for different purposes; and resulted in a joint cost-allocation exercise between BG and OFGAS. This has been largely completed (though not published), with disagreement over costs of the local distribution system still remaining.

Restructuring the industry, if the government implemented it, would be tantamount to admission that the original privatization structure had been wrong. This would not only mean a loss of political credibility, but might prejudice the proceeds of future privatizations if potential investors thought the government would renege on the ‘privatization bargain’ after the sale. This raises a question about how binding such bargains are. Evidence suggests

assure the long-term profitability of this sector. In the short term it wished both to protest the ‘inno- cence’ of its retail arm, and to gain as much as possible in the event of divestiture. As current shareholders had a stake in both parts of this enter- prise, those who retained shares in BGTS if separation were imposed would need compensation for loss of the BGT arm. Such compensation should presum- ably be higher the greater recent and expected profits, so BGTS, deprived of the opportunity of boosting the profits of BGT through its own behaviour, would at least like to maximize compensation for its loss. (Of course the fact that an integrated BG may raise profitability by monopoly exploitation is part of the regulator’s argument for divestiture.)

However, so long as BG remains intact it would like to minimize competition, particularly now that competition has been extended to the tariff market, where the issues are a little different from the contract market. One way to do so is to introduce uncertainty for potential competitors, by introducing a more obscure pricing system. Particularly if they believe such prices are subject to retaliatory manip- ulation by BG. competitors will be wary of commit- ting significant resources to entry. This may affect investments offshore (if these are dependent on access to the onshore system) as well as onshore commitments for connection to the system, such as location of electricity-generation plants.

Phase 3: 1993 - After the second MMC report

The second MMC report’ recommended changes not only in the competitive environment but also in the structure of BG. It concluded that fair competition could not occur so long as BG was vertically integrated, as the actions of the transport and storage arm could benefit the trading arm. It saw accounting separation and Chinese walls as insuffi- cient guarantee against abuse of BG’s privileged position. Extension of competition further into the tariff market (below 2500 therms to where the government had already reduced the monopoly threshold) should be delayed until the trading arm had been divested from the transport and storage section to ensure that the incumbent had no unfair advantage. The choice seemed to be between restructuring BG and rapid extension of competition, and the MMC recommended the former.

The President of the Board of Trade had three decisions: whether to split BGT from BGTS; whether to introduce competition into the tariff market below 2500 therms; and the speed and order

UTILITIES POLICY July 1994


that after the first major utility privatization (BT in 1984) investors realized that privatized utilities were subject to general competition laws both of the EC and the UK, and would be treated accordingly.’ Changes in the competitive environment were anticipated by investors after BT’s privatization. But a restructuring would mean a political volte-face at a time when the government had to weather a variety of political crises, including one over employment in the soon to be privatized coal industry, already adversely affected by the way in which gas and electricity had been sold.

Michael Heseltine rejected the MMC recommendations, preferring swifter introduction of competition for all gas consumers with no divestiture of BG. The capital markets reacted adversely to his decision and gas shares fell relative to the general share index. ‘”

Competition in the tariff market is likely to develop in a different way than in the contract market. In the contract market there have been a variety and a large number of competitors. For domestic consumers the market needs more careful management: at present BG has an obligation to supply, which would need to be divided between competitive companies. It is difficult to see other than a limited number of companies franchised to supply a particular geographical area. In other words, a monopoly would be replaced by a local oligopoly. It is not clear that BGT would necessarily survive in every locality, and issues about structure and development of the market become crucial. At present, specialist know- ledge about the domestic market resides with BG and the RECs. The RECs are to lose their monopoly over the domestic electricity market in 1997, and not surprisingly they are looking for symmetric opportu- nities for entry into the gas market. However, immediate opening of the gas market may create a duopoly that can successfully block other entrants, rather than a market that is in principle contestable with a number of credible entrants. Moreover, as BGTS will still be connected to BGT, there is an opportunity for an (informed) entrant to cry ‘foul’ if it dislikes BGT’s behaviour. While BGT and BGTS are still in common ownership there would be a prima facie case against them whenever the entrant chose to complain. While this might produce benefits for the entrant, there would be more market benefit (for consumers and producers) if entry were more ordered and access charges were determined by an independent company. The delay involved in such restructuring might enable more companies to be credible entrants, to the benefit of the market, if not the RECs. It is interesting that the main propo-

nent of rapid entry without divestiture is the potential competitor, United Gas, which is part-owned by a group of RECs and seems in the best position to enter the domestic market. This will be opened in parts (5% in 1996, 10% in 1997), and we have already seen that the market is likely to sustain only a small number of competitors. This gives rich rewards for early entrants, but in choosing the ‘quick competition’ solution the government may prejudice the long-term benefits of such entry.

BG opposed the introduction of competition into the domestic market by claiming that cream- skimming would end the present cross-subsidies to users of small amounts of gas, who are often poor and elderly. The regulator’s duty to protect the interests of the disabled and elderly made this a particularly serious allegation. BG’l claimed that introducing competition to the 18 million domestic consumers would leave only one third better off at the expense of the remaining 12 million.

Domestic competition therefore needs to be care- fully structured to allocate obligations and rights amongst suppliers, so that cream-skimming is not at the expense of needy consumers. These are just the same issues as will arise when the RECs lose their electricity franchises, and would seem to be amen- able to the same solutions. The income- distributional implications of competition, which would force the removal of present cross-subsidies, have been an important part of BG’s anti- competitive campaign. Baumol’s efficient compon- ent pricing ruleI is particularly relevant to this issue. If the government/regulator wishes to continue sub- sidizing some groups of consumers, then entrants must compensate the incumbent for forgone profitability in those sectors that presently generate these subsidies. The compensation should be the differ- ence between price and marginal cost for each consumer, making the calculation of marginal costs particularly crucial. Unfortunately, the cost alloca- tions have a large arbitrary element. BG’s figures allocate ‘non-marginal’ costs on a per-consumer basis, disadvantaging the consumer of small amounts of gas. However, alternative methodologies might yield different outcomes, In particular, the level of prices will be subject to the behaviour of competitors, not just the decisions of BG, and the cost levels might fall if competition provided sufficient incentive to efficiency.

The DGGS must therefore decide not just about entry to the domestic market, but obligations and conditions of entry and exit after the market is opened up. Would horizontal integration be allowed, for example with one utility supplying both


gas and electricity (and perhaps other utilities) in a particular area? Would vertical integration be possible, perhaps involving generators of electricity or other suppliers of energy? Given the significance of this market for households and its consequent political sensitivity it is important that the regulator establishes the conditions of the market sufficiently beforehand to take maximum advantage of the competitive possibilities.

How has BG reacted to these possibilities? It has campaigned both against divestiture and against extension of competition, and has persuaded the MMC and the regulator that loss of market in the high-quantity tariff market justifies a loosening in the tariff price cap from RPI-5 to RPI-4. The use of an average revenue price cap has an odd impact where an industry both lowers price and loses market share, when entry is allowed. The price cap is applied to all tariffs, weighted by the amount of gas purchased from BG at each price level; prices are lower for high-volume consumers. When BG loses these consumers to competitors their lower prices become less heavily weighted, so the ‘average’ price for all consumers apparently rises, even if the tariff for each individual remains unchanged. To keep within the original cap, prices to other consumers have to be lowered. The MMC arguments for con- fining the cap to the tariff market and relaxing the level of the cap embody two principles. The first is that the argument is based on loss of revenue and is therefore a straightforward rate-of-return estimate for the company as a whole; the second is that it is anticipated loss of market share (and revenue) that is taken into account. The MMC argument is also based on the inappropriateness of regulating markets in which competition is established: a view endorsed by the new regulator of OFGAS.

On the access charges themselves the regulator seems clear that a price cap based on rate of return is appropriate. This produces the incentives already mentioned, to maximize the capital base for calculation of return. Underpricing peak and distance satis- fies such an objective. So too does BG’s proposal on the treatment of storage and peak facilities to smal- ler consumers. It is proposed that those with consumption under 100 000 therms per annum are re- garded as core consumers, whose peak demands are bundled together, and their level of security of supply determined by BG. The company is likely to over-provide such security, relative to what such consumers would have chosen faced with the relevant costs, both because of a history of ‘gold

Transportation charges in the gas Industry

plating’ and to enhance the capital base further. It will be important for the regulator to determine conditions of storage properly, and to make a good choice among the different options.

BG has acknowledged its own bias in two ways. It has deliberately tilted the recovery of costs away from the (at least) 90: 10 capacity-to-commodity ratio that it incurs, to one of 50:50,13 again underpricing peak at the expense of commodity, and simultaneously allowing it to overcharge access to the interruptible market, which so far faces no competition. And BG’s definition of marginal costs (now warmly embraced in principle) differs from that of OFGAS in underestimating the extent of the capital costs themselves. This leaves a larger gap between marginal costs and average costs, which must be recovered by (arbitrary) uplift, and therefore more discretion (but no obligation) to under- charge ‘true’ marginal costs if it wishes.

The regulator remains dissatisfied with the BG proposals to calculate charges in this way. She is also unhappy about high charges proposed for access to the low-pressure distribution system, which would deter entry into the domestic market. Now that the government has decided that BG is to remain intact, the regulator’s decisions on structure and level of charges for access to the network become even more crucial to the future health of and benefits from the gas market.

‘The Office of Gas Supply. ‘Gas Act 1986. ‘Monopolies and Mergers Commission. ‘Monopolies and Mergers Commission. Gas, Cmnd 500. October 1988. tiMSO. London. %ee for example .I J Laffont and J Tirole. A Theory of Incentives in Procurement and Regulation, MIT Press, Cambridge. MA, 1993. ‘Averch-Johnson effect; see H Averch and L Johnson. ‘Be- haviour of the firm under regulatory constraint’. American Eco- normc Revtew, Vol 52, 1962. pp 105?~1069. ‘Catherine Price, ‘Privatization and regulation, the effect on the UK gas Industry’. University of Leicester dtscusston paper no. 165, 1991. 8The report was published in four volumes: Gas. Cm 2314; British Gas plc, Cm 2315; Gas and British Gas plc, Vo12. Cm 2316; and Gas and Bntish Gas plc, Vol 3, Cm 2317. All published by HMSO, London, 1993. ‘Richard Green and Catherine Price, ‘Privatization and restructuring: optimal timing. University of Leicester economics discussion paper no. 93/15, September 1993 “‘Financial Times, 22 December 1993. “In evidence to the MMC. “Outlined in W J Baumol. Entrepreneurshtp, Managers and the Structure of Payoffs, MIT Press, Cambridge, MA. 1993. pp 231-235. %ee discussion outlined in Mark Higson. ‘A pricing structure for gas transportation and storage’, OFGAS discussion paper. De- cember 1993.

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Transportation charges in the gas industry

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