The natural gas delivery chain comprises three groups: upstream (generally associated with the production aspect of the industry), midstream (generally associated with the transmission aspect of the industry), and downstream (generally associated with the distribution aspect of the industry). The downstream sector consists of entities that distribute and sell gas supplies and gas-related services to end-use consumers. The graphic below shows parts of the delivery system that are considered to be downstream.
Following is a description of each market participant in the downstream sector.
Local distribution company (LDC): Local distribution companies are regulated distribution companies that move natural gas from the interstate pipeline to end-use customers. LDCs commonly also provide supply services to residential and small commercial customers. Some LDCs own peaking storage facilities that are used to provide gas supply on peak demand days.
Marketers: In most regions, large commercial and industrial customers have the alternative of purchasing natural gas supply from an entity other than the LDC. And in some regions, residential and small commercial customers also have this option. For customers with supply choice, competitive supply is provided by marketers.
Energy services companies (ESCOs): ESCOs are companies that provide services relating to consumers’ energy usage such as energy efficiency and usage monitoring. In some cases ESCOs may also offer supply services.