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Lost and unaccounted-for gas: Challenges for public utility regulators

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  • Costello, Kenneth W.

Abstract

A central tenet of public utility regulation is to have utilities perform at high service levels. One area of performance for gas utilities is “lost and unaccounted-for” (LAUF) gas. Customers of gas utilities effectively pay for more natural gas than they actually consume. Reasons for this discrepancy vary across utilities. Detection and measurement hinder the definitive statistical analysis of LAUF gas. This article provides a background on the definition and causes of LAUF gas and challenges it poses for utilities and regulators. The article also highlights a qualitative survey of 41 U. S. state utility commissions regarding their policies and practices relating to LAUF gas. The article also examines the regulatory policies and tools related to LAUF gas. Evaluating levels of LAUF gas is a regulatory responsibility because of implications for prudence and cost recovery. In establishing performance benchmarks, however, commissions face the daunting task of separating the effects of external conditions, accounting and measurement error, and utility management on the level of LAUF.

Suggested Citation

  • Costello, Kenneth W., 2014. "Lost and unaccounted-for gas: Challenges for public utility regulators," Utilities Policy, Elsevier, vol. 29(C), pages 17-24.
    • Handle: RePEc:eee:juipol:v:29:y:2014:i:c:p:17-24
    DOI: 10.1016/j.jup.2014.04.003
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    References listed on IDEAS

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    1. Douglas N. Jones & Patrick C. Mann, 2001. "The Fairness Criterion in Public Utility Regulation: Does Fairness Still Matter?," Journal of Economic Issues, Taylor & Francis Journals, vol. 35(1), pages 153-172, March.
    2. Sherman,Roger, 1989. "The Regulation of Monopoly," Cambridge Books, Cambridge University Press, number 9780521368629.
    3. Joskow, Paul L. & Rose, Nancy L., 1989. "The effects of economic regulation," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 25, pages 1449-1506, Elsevier.
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    Cited by:

    1. Scott, Ryan P. & Scott, Tyler A. & Greer, Robert A., 2019. "The environmental and safety performance of gas utilities in the United States," Energy Policy, Elsevier, vol. 133(C).
    2. Jacek Jaworski & Paweł Kułaga & Tomasz Blacharski, 2020. "Study of the Effect of Addition of Hydrogen to Natural Gas on Diaphragm Gas Meters," Energies, MDPI, vol. 13(11), pages 1-20, June.
    3. Soltanisarvestani, A. & Safavi, A.A., 2021. "Modeling unaccounted-for gas among residential natural gas consumers using a comprehensive fuzzy cognitive map," Utilities Policy, Elsevier, vol. 72(C).
    4. Jacek Jaworski & Adrian Dudek, 2020. "Study of the Effects of Changes in Gas Composition as Well as Ambient and Gas Temperature on Errors of Indications of Thermal Gas Meters," Energies, MDPI, vol. 13(20), pages 1-23, October.

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