N.Y. ALJs Would Maintain NiMo Electric POR as Non-Recourse Email This Story November
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).