| Article ID: | iaor19992990 |
| Country: | United States |
| Volume: | 28 |
| Issue: | 5 |
| Start Page Number: | 1 |
| End Page Number: | 12 |
| Publication Date: | Sep 1998 |
| Journal: | Interfaces |
| Authors: | Knowles Thomas W., Wirick John P. |
| Keywords: | energy |
A gas utility's profits depend on its portfolio of gas supply and storage contracts and their effective utilization. The Peoples Gas Light and Coke Company serves the Chicago market. Demand for natural gas depends on temperature, which is difficult to forecast. We developed an optimization model that considers multiple weather scenarios in determining a supply portfolio. We originally developed it to support filings of integrated least-cost supply plans with the Illinois Commerce Commission. With deregulation of the natural gas industry, the company has used the model to restructure supply portfolios, saving more than $50 million annually.