Residential and commercial natural gas consumption is the great exception. The US Shale Gale has fostered a manufacturing renaissance, a surge in gas-fired generating capacity, a move toward natural gas-fueled heavy-duty vehicles, and many proposals to export LNG. But residential/commercial natural gas consumption has been stagnant and has yet to show a vigorous response to the new accessibility of moderately priced natural gas. Much prevailing natural gas regulation governing residential and commercial use was developed in a time of perceived scarcity and is being reconsidered in light of today's natural gas realities.

1) What are obstacles to expanding retail markets for natural gas? 2) How are regulatory policies changing to enable expanded residential and commercial markets? 3) What are the implications for future natural gas demand, markets, and infrastructure investment?

Mary Barcella, IHS Energy Director, chaired the Wednesday morning Strategic Dialogue "Residential and Commercial Natural Gas Consumption: Rethinking Regulation Post the 'Shale Gale.'" Panelists discussed the need to update policies that were written during an era of gas scarcity to reflect the current state of gas abundance.

Dave McCurdy, President and CEO, American Gas Association, described the IHS study for the American Gas Foundation entitled Fueling the Future with Natural Gas: Bringing It Home. Mr. McCurdy emphasized three points from the study. First, natural gas is a foundation fuel, not a bridge fuel, and will be available for decades. Second, because of the vast supplies of natural gas, expanded residential and commercial use is compatible with increased use in power generation, manufacturing, and transportation. Third, energy policies and regulation need to be realigned to be more consistent with the new availability of natural gas made possible by unconventional production technologies.

Keith White, Vice President of Business Development and Energy Supply/Chief Strategic Officer, Northwest Natural Gas, made three observations from his company's perspective as a natural gas supplier. Demand for natural gas, particularly in the company's core business of residential and commercial use, is rising again after slumping during the recession, he noted. Second, new growth and demand creation require new technologies to develop products aimed at markets such as transportation and multifamily housing. Lastly, education is important to help end users understand the positive story of shale gas and address concerns about hydraulic fracturing.

Andrew Sunderman, Chief Financial Officer, Direct Energy, gave his perspective on serving retail energy markets. His company believes that the needs of the customers are best met in a competitive market where customers have choices. Mr. Sunderman expressed a concern that the myriad parts of the natural gas value chain have competing agendas that are not aligned with the agenda of the end user which is around price, choice, and ease of doing business. Mr. Sunderman also expressed concern that the lack of infrastructure limited consumers' energy access and choices.

Colette Honorable, President, National Association of Regulatory Utility Commissioners, and Chairman, Arkansas Public Service Commission, spoke on her role as a regulator. Chairman Honorable emphasized the need for new regulations in this era of abundant gas supply. She spoke about her priority for pipeline safety and the need to replace old pipelines that are no longer fit for service. Chairman Honorable described the success story of how regulators and policymakers, in partnership with industry and other stakeholders, have replaced millions of miles of cast iron pipe with plastic pipe or cathodically protected steel pipe. Many states have used creative rate methodologies to accelerate pipeline replacements. Paula Gant, Deputy Assistant Secretary, Oil and Natural Gas, US Department of Energy, provided the Administration's perspective as the country shifts from a mindset of scarcity to one of abundance. Dr. Gant highlighted the environmental benefits of this new resource, which has enabled the United States to reduce greenhouse gas emissions. Other benefits of the expanded natural gas resource base include energy security and trade. She said that exporting our technology abroad to help other countries develop their resources is in our national interest. The final aspect surrounding this new gas resource is the economic growth it has provided. Ms. Gant said that the Administration is focused on developing policies that promote the building of infrastructure and maximize benefits to local economies.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.