Abstract
The highly competitive situation that has evolved in energy markets and in the gas industry itself has made regulations impractical. In anticipation of this situation the Canadian Petroleum Association (CPA) formulated an Alternate Energy Policy to cope with the rapidly changing market conditions and to avoid the confusion resulting from ambiguous regulations. The policy was also designed to be adequate for the complexities of gas marketing and to meet the challenges of other energy forms by competitive pricing.
As a result of the intricate nature of the operations of the Canadian natural gas industry the process of deregulation has been lengthy and difficult. Nevertheless significant changes have taken place. By the fall of 1986 some 400 billion† cubic feet or 35% of the eastern Canadian market was served by renegotiated prices under Competitive Marketing Programs started in November 1985.
A deregulated natural gas industry will be characterized by multiple buyers and sellers, negotiated wholesale prices free of restrictions and a non-discriminatory gas transportation system.
Issues of deregulation still to be resolved include: conflict between honoring contracts and the needs of changing market circumstances; review of the surplus test which governs export quotas; elimination of the export floor price. There are also concerns in the industry about the hindrances to finding other markets and the elimination of provincial taxes.
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