Weather Normalization and Natural Gas Regulation

Weather normalization presents a challenge and provides a temptation to regulators, who try to discover from the rate-case evidence the best estimate of the relationship between consumption and weather. The temptation is to select the evidence that supports price increases that satisfy the regulator's objectives, but that are either too small or too large to equalize expected and allowed return on investment. Using data from the New York Public Service Commission in a 1979 Brooklyn Union Gas Co. rate case, the authors explain the Commission's decision in this context. They conclude that degree-day relationships do change over time. 2 references, 1 figure, 5 tables.