NGV Infrastructure Model Report Released

This week, the American Gas Foundation released a report that evaluates the business models available to natural gas local distribution companies for developing natural gas vehicle infrastructure and for promoting the expanded use of NGVs. The SAIC-prepared report provides an overview of the three primary business models: (1) utility rate-based programs; (2) non-rate based utility programs; and (3) commercial development. According to the report, an increasingly larger number of natural gas utilities are interested in developing programs to facilitate the development of natural gas infrastructure. In addition to describing the different business models available, the report gives examples of current utilities program already in existence. The report also describes the various risk factors involved in deciding whether or not to develop an NGV program.

Some of the key findings included in the report:

1. Rate-based NGV program may do much to jump-start NGV adoption, and may be an essential component of early development efforts;
2. Where commercial operations already provide significant NGV investments, utility programs can advance the market by focusing on less targeted markets, providing incentives for vehicle or infrastructure development, and supporting educational efforts;
3. The decision of whether to rate-base or not depends on a number of factors including the load objectives of the utility, the level of commercial development, and the support of policy makers and regulators;
4. The risk-rewards of developing NGV programs should be carefully assessed and the common components included in developing the right model for a particular utility include completing the following tasks: collection of regional market information; market segmentation analysis; market competition assessment; LDC goals and customer identification; and customer preparation;
5. Commercial development by non-regulated likely must take hold if natural gas is going to become a mainstream transportation fuel.

The report is available from the American Gas Foundation by clicking here.

Taken from the NGVAmerica Newsletter - September 28, 2012, Volume 15 Edition 38