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New York PSC Offers Tepid Support for Expanded Hourly Pricing; Stresses Required Showing of Benefits
June 15, 2012
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Copyright 2010-
The New York PSC said that a contemplated expansion of mandatory hourly pricing for electric default service must be coupled with, "a review of the benefits of such a step."
The PSC's finding came in an order on a joint proposal in Orange & Rockland's rate case (11-E-0408).
As first reported by Matters, the joint proposal had contemplated lowering the mandatory hourly pricing cutoff to 100 kW. The current hourly pricing cutoff at O&R is 500 kW, and a prior order approved the lowering of the cutoff to 300 kW effective May 2013.
The expansion of mandatory day ahead hourly pricing (MDAHP) to 100 kW, contemplated for the spring of 2015, would have impacted 230 customers, of which 68 are currently on default service.
After the joint proposal was executed, the parties clarified on the record at the evidentiary hearing that it was not their intent that the PSC approve in the rate case order, regardless of cost, the expansion of the mandatory hourly pricing program.
Rather, the parties said that the PSC will be able to determine at a later date, based upon a future O&R implementation plan detailing the process to expand hourly pricing, whether to approve, modify or reject O&R's expansion plan and estimated costs for that expansion.
In response, the PSC said that, "We continue to support the goal of MDAHP, namely, reducing the electric system’s peak period demand by encouraging customers to shift load to less expensive off-peak time periods."
"Nevertheless, we believe that any review of the costs associated with lowering the MDAHP threshold to 100 kW must be coupled with a review of the benefits of such a step, including those we articulated in our MDAHP Order. Therefore, [O&R's implementation] filing must also include a description of the benefits, intangible or tangible, of lowering the MDAHP threshold," the PSC ordered.
In prior instances where the hourly pricing threshold has been approved via rate case joint proposals, a follow-up hourly pricing implementation plan, detailing costs of expanded hourly pricing as well as a timeline for interval meter installation and customer education process, has been required, and expanded hourly pricing was contingent on PSC approval of that implementation plan filing. However, in recent expansions of hourly pricing, there has not been the same emphasis on the benefits of expansion, and approval of the specific implementation plans, after prior general approval of expanded hourly pricing in a rate case joint proposal, has been perfunctory (in that the implementation filings were not contested).
The emphasis on a showing of the benefits of expanded hourly pricing for the new expansion at O&R is unique among recent expansions, and perhaps novel (or at least not seen since the initial introduction of hourly pricing or initial expansions).
Though the PSC made no reference to it, the emphasis on a showing of the benefits of expanded hourly pricing is consistent with a recent consultant's report, exclusively reported on by Matters, that recommended that hourly pricing no longer be expanded to lower demand thresholds at Consolidated Edison, citing a lack of benefits (click here for prior discussion).
The PSC also said that, "we would find it helpful when evaluating the Company’s [hourly pricing expansion] plan to have information regarding the number of each type of customer (e.g. manufacturing, recreation, schools/colleges) that would be included in the expanded program and those included in the Company’s expansion of the program from 500 kW to 300 kW. With this information we will be better able to identify if new types of customers would be introduced to MDAHP. Therefore, the Company must include the foregoing information in its filing."
The PSC noted that O&R had reported that lowering the hourly pricing threshold to 100 kW could result in at least two ratepayers who are billed under a non-residential tariff for multi-family buildings becoming subject to MDAHP. The PSC directed O&R to describe any possible impacts that the lowering of the hourly pricing threshold may have on multi-family building owners’ incentive to sub-meter buildings.
Copyright 2010-
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