• necessary tO lay ouc cwo premises. Firstly, ehe development ofa gas induscry is socially desirable, has social benefıts and is supporced by ehe Nacional Governmenc, which wishes tO see chese benefics available ro rlıe wider communiry. Secondly, rlıe developmenr is parcially or corally privare secror, and chis secror will not invesr unless it can be reasonably assured ofa rerurn on rhar invesrmenr. So, we have an underraking rhac is socially desirable but which musr make money. We can see cherefore rhar rhe privace secror may seek cerrain (economic and ocher) privileges forwhich ic must in rerurn perform cerrain (socially desirable) ducies. This is ehe framework in which mosc gas induscry regulacion is couched. To see how ali rhese facrors incer-relare and tO decermine whac is relevanc roagreenfield developmenc it is useful tO look ar hisrory. The fırsc gas sysrems in ehe world were laid in London and ocher Bririslı cicies in ehe early pare of ehe 19th cencury. There were enormous social benefics ro be had from rhis new cechnology, providing as it did, screec lighcing and lighcing for privace premises. This had a pronounced impacc on screec erime, (ciries being plagued wiclı muggers) and on peoples working and lıome environmenc. Lacer innovarions, for example rlıe incroduccion of labor saving devices and new induscrial processes, had similar wi<lc-ranging benefics. In ehe fırscfewdecades ofchis new induscry,any privacc company could commence busincss asa gas supplier. Mains laying could proceed, provided pcrmission was obcained from ehe loca! auchoricy ro open public choroughfares, roads, foocpaclıs, ece. In [ine wiclı growing capiralisc and competition principles some loca! auchoricies viewed compericion of cwo or chree gas undercakings in one discricr as likely ro lead ro screnuous compecicion. In ehe developing induscry, rlıis cercainly was ehe case, wirlı many undisciplined pracrices developing. Tlıe inevicable happened. Racher chan capical being minimized,capical in syscemswas in somecases doubled or even eripled. The resule was clıac ehe syscem caused inefficiency and higher prices, rarlıer clıan ehe reverse, an undesicable ouccome for consumers. Alcernatively ofcourse, compecicion could become so in rense chac underraking could not recover clıeir capical and wenc buse, a clearly undesirable ourcome for ehe invesror. In chese sicuacions you could end up wich high priced gas or no gas. Ic became clear ebat monopolies tO supply gas in auchorized discriccs was economically ehe mosc efficient. ® DOĞAL GAZ DERGİSİ SAYI 38 Parliamenrary legislacion was cherefore enacced ro provide for ehe esrablishmenc of gas monopolies in geograplıically exclusive zones. Loca! auchoricies generally welcomed such undercakings. Legislacion provided companies wieh special righcs, for inscance tO break open roads and ro cake land compulsorily. Prices were defined and ehe undercaking was placed in a very scrong posirion in cases where consumers fell inro arrears or were not prepared tO sign ehe necessary agreemencs in relacion co a supply. In view ofclıescsubscancialpowers and privileges, ehe gas undercaking had certain obligacions imposed upon rlıem, for example, ehe undercaking could not refuse ro supply a consumer (alclıough cercain exempcions were made)and if ehe premises were wirhin a cercain discance ofa main, ehe gas undercaking could not refuse at ali. Addicionally, ehe gas supplied had ro be of a cercain illuminacing or calorific value. Finally, ehe capical raised was hedged wich cercain rescricrions, particularly ehe recurn allowed. Ali Accs ofParliament auchorizing gas companies had poincs in common-via a Model Bili (or License), wlıiclı provided for consisccncy of approaclı. Ulcimacely, ucilicy regulacion has evolved in many jurisdiccions co have a number of common feacures. • Economies of scale-cusromers receive lower prices ifa single fırın provides ehe service and capcures economies ofscale. • Exclusivicy and capical risk-ehe gas induscry is characcerized by high fixed coscs and immovable assecs. Regulacion provides for a greacer assurance ofa recurn, adeguace ro encice firms tO provide a service but also secs pricing limics ro avoid unfair pricing. • Price concrol-gas prices ro cercain cacegories offinal consumers can be set eicher by reference tO ehe cosc ofproviding ehe services or through a cap or limit on price increases. • Dury tO supply-regulacion provides forexclusive franch ises, but wich an obligacion ro provide economic services wirhouc undue discriminacion. • Public convenience and necessicy-Unconcrolled compecicion can lead ro duplicacion and inconvenience tO ehe public. In order ro reduce inconvenience, exclusive franchises are allocced ro a single provider of service. In exchange regularory aurhoriry is required before planc and equipmenc can be insralled by ehe franchisee. • Scandards-regulacion provides forcercain ceclınical, reliabilicy and safecy scandards tO be
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