N.Y. ALJs Would Maintain NiMo Electric POR as Non-Recourse

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November 18, 2010

Two New York ALJs have recommended that the New York PSC deny Niagara Mohawk's proposal to use a true-up mechanism for commodity-related uncollectibles and to true up the Purchase of Receivables discount rate to reflect the actual uncollectible experience, in a recommended decision in NiMo's electric rate case (10-E-0050).

As only noted by Matters, NiMo proposed to true-up the Merchant Function Charge revenues it collects and to reconcile them on an annual basis, including the uncollectibles component (10/11).  Furthermore, NiMo proposed that the POR discount rate be subject to an annual true up to reflect the actual uncollectible experience.

Staff opposed both proposals, stating that the true-up would remove NiMo's incentive to vigorously pursue collections.  ESCOs also opposed the true-up, arguing that it would transform the POR program into a "with recourse" program.

The ALJs recommended that there not be any true-up mechanism for uncollectibles related to commodity services.  "We do not believe that the Company has demonstrated that the true-up is essential for its operations and we are cognizant of Staff's concerns about the abundance of deferrals and true-ups for this Company and the ill effects one might have in this expense category," the ALJs said.

Furthermore, as to Niagara Mohawk's proposal to true up the POR discount rate in successive periods, "we are persuaded by RESA/SCMC that a true-up mechanism runs contrary to the way ESCOs do business in the competitive market," the ALJs added.

"The Company's proposal, if adopted, would impede their [ESCOs'] business practices and be adverse to their competitive market offerings.  We, therefore, do not recommend the Company's proposal," the ALJs said.

The ALJs agreed with Staff that NiMo's uncollectible rate should be set using the twelve months ended September 2010.  Furthermore, the ALJs recommended that an updated study which allocates uncollectibles among electric and gas service be applied in the instant electric rate case, even though NiMo's most recent gas rate case used a different study in allocating uncollectibles to gas rates.  The ALJs' recommendations would result in a lower uncollectibles rate than what NiMo was originally seeking.

The ALJs denied, however, the request from ESCOs to remove the current all-in/all-out requirement (by customer grouping) imposed on ESCOs participating in POR.

"With respect to RESA/SCMS's proposal to alter the status quo for this company to allow ESCOs to choose, customer-by-customer, to use the consolidated billing option and the POR program that it provides, it appears to us to be entirely reasonable to require ESCOs to choose between dual billing and consolidated billing for each of their customer groups as is the current practice.  While Consolidated Edison has apparently agreed to a different approach, Niagara Mohawk remains opposed to it and we do not recommend that the Company be mandated, at this time, to make more liberal the selection of options for ESCOs," the ALJs said.

The ALJs recommended adoption of a stipulation among several parties which would defer NiMo's proposed changes in the design of commodity rates for 2012 (see 2/1 story) until a separate proceeding after the rate case.  Changes to the pricing of capacity, including the use of capacity tags for hourly priced customers, are also to be deferred to a later proceeding.

A stipulation recommended by the ALJs would also reduce the threshold for mandatory hourly pricing from a demand of 500 kW to a demand of 250 kW (Matters, 7/15).

   
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