1. Discuss the criteria to consider in specifying the structure and features of CGCs new system. 2....

1. Discuss the criteria to consider in specifying the structure and features of CGC’s new system.

2. Identify the data that should be incorporated into CGC’s new system to provide adequate planning capability. Explain why each data item is important and the level of detail needed for the data to be useful.

Citizen’s Gas Company (CGC) provides natural gas service to 200,000 customers. The customer base is divided into the following three revenue classes:

Residential customer gas usage is highly correlated with the weather. Commercial customer usage is partially weather dependent. Industrial customer usage is governed almost entirely by business factors. The company buys natural gas from 10 pipeline companies in the amounts specified in contracts that run for 5 to 15 years. For some contracts, the supply is in equal monthly increments; for other contracts, the supply varies according to the heating season. Supply over the contract amounts is not available, and some contracts contain take-or-pay clauses. That is, the company must pay for the gas volume specified in the contract, regardless of the amountused.

Transcribed Image Text:

Sales in Class Residenti 160,000 80 blion S160 llion Commercial 38,000 15 bon S 25 million Industrial2,000 50 bon S 65 million Totals Customers Cubic Feet Revenues 145 billion S250 million