Access to pipelines in competitive gas markets

In this paper we provide the normative benchmark characterizing the optimal allocation of resources in a gas network. By duality, we determine the consumer and producer prices, at each node of the network, which decentralize this allocation with competitive actors. From the nodal prices we derive optimal transportation charges which turn out to be related to distance, but not always in a straightfoward manner. We also consider the issue of pricing on secondary markets for capacity when pricing schedules for the transportation of gas consist of two terms: a capacity charge and a quantity charge. Finally, we explore the role of uncertainty in the planning of network capacity.