1/ Current Law for Median Geology/TRENDLONG (Unadjuste, is the AAR Series C projection.

2/ Synthetics are shown negative to derive a total f delivered to these sectors.

ail natural c

Excerpt from Analysis Memorandum AM/IA-7802, June 14, 1978

1/ Current Law for Median Geology/TRENDLONG (Unadjusted) is the AAR Series C projection.

1/ Synthetics are shown as negative to indicate that they are net producers of gas.

August 2, 1978

Excerpt from Analysis Memorandum AM/IA-78-17, July 31, 1978

Department of Energy
Washington, D.C. 20461

ANALYSIS MEMORANDUM

AM/IA/78-17

FURTHER EVALUATION OF NATURAL GAS
PRICING PROPOSALS

This analysis was prepared at the request of Representative John D. Dingell, Chairman of the Subcommittee on Energy and Power of the Committee on Interstate and Foreign Commerce. The assumptions, unless otherwise noted, are those contained in the letter of request or are described fully in Analysis Memorandum A1/IA-7802, "An Evaluation of Natural Gas Pricing Proposals."

Prepared by

Frederic H. Murphy

Office of Integrative Analysis
Applied Analysis

Energy Information Administration

EXECUTIVE SUMMARY

Representative John D. Dingell, Chairman of the Subcommittee on Energy and Power of the Committee on Interstate and Foreign Commerce, requested EIA to study certain specified aspects of the energy legislation before Congress. This paper in responding to that request presents an extension of the previous EIA analysis of the impact of several natural gas pricing proposals currently before the Congress, as compared to continued current regulations on natural gas markets.

Selected scenarios from the Analysis Memorandum "An Evaluation of Natural Gas Pricing Proposals" (No. AM/IA-7802, dated June 14, 1978) are included in this paper to provide the comparisons. The principal new focus is on a different assumption about the way natural gas is priced to consumers under the Senate bill (H.R. 5289). The earlier analysis used the assumption that incremental pricing provisions legally imposed on interstate pipelines would be passed through by distribution companies to users. This analysis uses the assumption that the incremental pricing provisions do not go beyond the pipeline, and that prices of new supplies are "rolled-in." (Indeed, due to technical features of the model, the roll-in is modeled as occurring at both the pipeline and distribution company levels). The two analyses may be regarded as giving upper and lower limits to the actual outcome, which presumably would entail some roll-in and some passthrough, rather than being 100% one way or the other.