prices should allow for pass-chrough of al! prudently incurred gas supply coscs, (including ehe coscs of cransporcacion to ehe franchise area). Thus, chere should be in force aminimum price which allows for ehe franchisee co recover at leasc irs fıxed supply coscs. :>6.METHOD OF PRICE CONTROL Finally, on ehe subjecc of price concrol, it is necessary co consider how to most effıciently regulace price. There are cwo basic forms of price concrol in use coday, profıt concrol as used in ehe USA and Canada, or price capping as adopred in ehe UK and noq Argencina. Profıt concrol (or cosc of service regulacion) is monly cricicized as being over-bureauc cra o c m ic, costlyand ineffıcienc. Requesc fora price change cypically resul es in requesrs forcopious amouncs of informacion by ehe regulacory agency, ehe information then being subject to lengchy, decailed and adversarial judicial rev curns are earned on a "race-base" (esise e wn.ciRalely assets employed). The service provider has ev ery incencive co grow rate-base and hence overall recurn, whecher or not chis resul es in ehe mosc effıcienc syscem. There isalso liccle incencive for ehe business co do berter, as any effıciency gains by ehe franchisee are generally soon capcured by ehe cuscomer. The alcernacive is price capping wich periodic review. This seans from ebe same basic posicion, fıxing initial prices so as to give ehe ucilicy a reasonable level ofprofıt. However, it chen allows ehe gas ucility ro charge any rate it wancs up to ehe ser maximum race. The inicial maximum race eben aucomacically adjuscs by operation of a formula over a given period (cypically 5 years). This formula provides for changes in ehe maximum rate, upward for inflacion and downward for any feasib provemenc in effıciency. At ehe end loef iemhe review period ehe formula is reviewed by ehe regulacor, wicb due regard for furcher feasible effıcieny gains and induscry invescmen quiremencs. This approach provides ehe uctilricey wich incencives co be effıcienc, as any gains are caprured uncil ebe (periodic) review ofebe price formula at which time they are passed to ehe consumer. Addicionally it does not encourage over invescmenc in facilicies, racher it promoces optimum invescmenc. It alsa appears co have ehe benefıts of reducing time, bureaucracy and cosc in escablishing a new race. Asa measure of bureaucracic effıciency ehe UK gas induscry which ucilizes price capping employs sonnel in ebe regulacory function. The Ca4li5foprenria ® DOĞAL GAZ DERGİSİ SAYI 38 gas industry, which is of broadly similar size and scruccure co ehe UK induscry uses profıt concrol for gas price regulacion. The California PublicUciliey Commission employs over 1,100 scaff, ofwhich some 30% (330) are involved in gas induscry regulacion. Boch syscems have cheir screngchs and weakness, bur on balance, particuiariy in a scarcup situation, ping wich periodic review appears pp rr iecf ce rc a abp le given ebe adminiscrative effıciency and ehe incentive scyle of regulation. :>7.D U T Y T O S U P P L Y Given theabove argumencs for monopoly priv leges and given ehe public service nacure ofehie undercaking chere needs to be certain duties placed upon ehe gas ucilicy. The provision of essencial or socially desirable services by afran chisee musc be carried ouc wichouc undue discriminacion cowards cuscomers or markecs. However, it is vira! co ger chis ducy righc, because if it is coo onerous, ehe business could be rendered unprofıcable. Des mencs above abouc price conp cr i o ce l, a i l f ! e it he ca anrg bu e demonscraced chat rendering service co a cus comer or group of cuscomers at prevaling regulaced prices is uneconomic, there should be no obligacion co do so. Under ches scances, ifconsumers desire service, ch e e yc isrhcouuml d pay ehe full capical cosc of providing such service, which is afeacure ofehe UK and Argen cine system. There is also ehe quescion of whether ehe fra chisee has suffıcient supplies of gas available n to render service to addicional markecs. Clearly, a gas undercaking should not be placed in ebe position ofcompromising supply to escablished cuscomers when fulfılling ducies co supply gas to new consumers. This could jeopardize ehe safecy and incegrity of ehe sysrem. :>8.PUBLIC CONVENIENCE AND NECESSITY Monopoly providers of gas service generally have to limit disruption co public life when inscalling new facilicies. Typically, cion from ehe industry regulacor a h u a csh o co r izba e sought before cercain new facilicies are inscalled. The regulacor will seek co limit or opcimize ehe size of ehe undercaking, wich due consideracion of course for ehe public service obligacions ehe ucility must fulfıl. Üne importancaspecc of this balance is ehe need for ehe uciliey co have access co public or privace land when carrying ouc irs auchorized conscruccion accivicies. This is of crucial imporcance for a greenfıeld gas under-
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