1. Quantifying Risk with Selection of the Natural Gas Maximum Daily Quantity.
- Author
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Swanson, Matthew M.
- Subjects
- *
NATURAL selection , *NATURAL gas , *COMPRESSED natural gas - Abstract
Many large-scale natural gas consumers are required to select the Maximum Daily Quantity (MDQ) of natural gas they will be able to consume at a "firm" rate as a part of their natural gas contract; they are then charged a "capacity" fee that is proportional to the MDQ selection. This charge is analogous to the capacity demand charge that electrical customers may experience, but differs in that the customer selects the value ahead of time instead of being billed on past usage. Selection of the appropriate value of the MDQ represents an interesting mathematical and economic problem that can have significant financial implications for the customer. The work performed in this study resulted in a savings of ~$600,000 annually (for a 6 to 8 million dollar annual bill) for the customer and a better quantification of risks related to selection of the MDQ. This article provides a detailed description of the problem and a mathematical approach to quantifying the cost and risk tradeoff for a single large-scale natural gas user in the Midwest. [ABSTRACT FROM AUTHOR]
- Published
- 2020