Gas Purchasing Strategies for the '90s

Abstract

The purpose of my talk today is to: 1. provide a brief summary of the structural changes which have occurred in the natural gas market over the last several years 2. discuss some of the effects of these changes and some of the potential issues that could result from these changes, and 3. finally to offer some advice on how to develop an effective strategy for purchasing natural gas in the '90s given these changes. To set the stage for my talk today, I need to give you some of the more significant facts relative to our Company and its use of natural gas. Houston Lighting & Power Company (HL&P) is an investor-owned electric utility which serves the city of Houston and the surrounding area. This area is highly industrialized and home to a significant portion of the nation's refining in petrochemical capacity. HL&P has 12,855 MW of generating capacity and sells approximately 25% of Texas' total electric utility sales. As a gas purchaser, HL&P is situated in "pipeline alley" and now has pipeline connections to eight different pipelines and, as a result, access to virtually every major pipeline system that operates within the state of Texas.