Summary: American consumers and commercial users spent $45 billion in 1996 on natural gas to heat and cool homes and offices, cook food, and provide power to other household and business appliances. Under the Natural Gas Policy Act of 1978, homes and small businesses can choose their natural gas supplier, much as they now choose their long-distance telephone provider. Under a customer choice program, nonutility gas suppliers, called gas marketers, buy gas and arrange for its transportation to the local gas utility. Local gas utilities, while no longer buying gas directly for their customers, continue to deliver it to home and businesses. Proponents of customer choice programs believe that allowing choice will mean competition, thus leading to lower gas prices and greater service options for consumers. Others are concerned about the reliability of service and the possible market power of gas suppliers if regulated gas utilities are no longer responsible for buying gas on behalf of their customers. This report discusses (1) initial participation in customer choice programs and (2) the effects of these recent customer choice initiatives on residential and small commercial consumers.
