Study On Pricing Mechanism Of The XYZ Gas Pipeline

The pricing mechanism of natural gas transportation services,which are provided by a natural monopoly gas pipeline company,is study to achieve a fair and reasonable price level.Because of the natural monopoly characteristic,pricing of the natural gas transportation services is usually regulated by the government,which including price level and rate structure.Pricing mechanism of the gas transportation services could be summarized in three aspects: mode of regulation,tariff pattern and rate structure.This paper systematically reviews the theory foundation of the pricing mechanism of the gas pipeline,and summarizes the development and reform experiences of the mechanism in the US and the EU.Furthermore,combined with the current condition of China's natural gas industry,a new two-part pricing model was formulated.In this model,rate calculation is based on the annual cost of service,and two control parameters are introduced,the fixed cost allocation factor ?,which could be used to regulate the relative values of the usage rate and the capacity rate of the firm transportation service,and the discount factor k,which are used to regulate the relative the level of the firm and interruptible service.Take the proposed XYZ gas pipeline as case study,rate of return and price level etc.are compared between the new pricing model and the traditional one.In addition,based on the pricing model proposed in this paper,the following related issues are studied:(1)when using different depreciation period,the degree of cross subsidy between users in different years;(2)the effect of the incentive mechanism that the rate of return depends on pipeline load factor;(3)the variation trend of the different users' gas transportation cost with the cost allocation factor;(4)the alternative effect between firm transportation service and gas storage services.