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Natural Gas Deregulation


Sources: GAO report, titled Energy Deregulation – Status of Natural Gas Customer Choice Programs; An Overview and History of Gas Deregulation compiled by the LIHEAP Clearinghouse, April 1990 –

Prior to 1978, gas producers sold gas to interstate pipeline companies, which in turn sold it to local gas utilities, which then sold the gas to end users, such as residential customers and small businesses. A series of federal government initiatives, beginning with the 1978 Natural Gas Policy Act, changed all that.

Natural gas deregulation allows certain gas customers to save money by purchasing gas commodity supplies directly from third parties...

The price at which producers could sell their gas to interstate pipelines and the price at which interstate pipelines could sell their gas to local gas utilities were regulated by the federal government. State authorities regulated the price that gas utilities charged to their end users. Gas utilities held long-term contracts with the interstate pipeline companies, while the latter held long-term contracts with producers. Both types of contracts were typically for 20 years or longer and were based on regulated prices.

Under the Natural Gas Policy Act of 1978, Congress began a process that ended federal control over the price of gas at the wellhead. This process also set in motion a series of public policy changes by the Federal Energy Regulatory Commission and state regulators that has culminated in “customer choice” programs for residential and small commercial natural gas users.

Under these programs, homes and small businesses can choose their supplier of natural gas, much as they now choose their long-distance telephone provider. Under a customer choice program, non-utility gas suppliers, called gas marketers, purchase gas and arrange for its transportation to the local gas utility. Local gas utilities, while no longer purchasing gas directly for their customers, continue to deliver it to homes and businesses.

Large commercial and industrial users in many states were the first to buy natural gas directly from a supplier of their choice, rather than as part of a bundled supply and delivery service provided by a regulated utility. Now residential and small business consumers are beginning to enjoy the same freedom of choice, which in most cases means lower prices.

Lakeshore currently offers customer choice programs in Michigan and Ohio.

Click the following link for additional information on choice programs in your area: