|
|
|
|
|
SHOCK: New York Caps Default Service Rates, Mitigates Non-Shopping Customers' Exposure to Wholesale Price Spikes
In an action which brings back memories of the dark days of retail choice where fledgling markets were hemorrhaging left and right after Hurricanes Katrina and Rita and natural gas prices raced to record highs, the New York PSC has capped the default service electric rates at Niagara Mohawk for February, such that they do not exceed the current January rates.
The PSC, in an emergency One Commissioner Order, approved a waiver filed yesterday by NiMo, under which NiMo will essentially maintain flat mass market default electric service rates for February by deferring approximately $30 million in commodity costs (plus about $3 million in delivery costs, for approximately $32 million total, reflecting rounding).
The impetus for the sought waiver was the, "significant financial hardship," facing customers from the tariffed process to set default rates based on forecast wholesale prices, which have spiked due to cold weather and other market conditions.
"The waiver would allow the Company to adjust the February Mass Market Adjustment (MMA) to lower February per kWh rates to equal January's per kWh rates through a credit in the commodity portion of the bill. The Company believes that this waiver is necessary to mitigate customer bill impacts by smoothing commodity prices over several months and prevent financial harm to customers," NiMo said.
Specifically, NiMo will compare all billed per kWh rates for January and all forecast billed per kWh rates for February for each of the company's six zones. A downward credit adjustment from the Mass Market Adjustment (MMA) will then be made by zone to stabilize customer bills and protect against the bill impacts from the forecast increased commodity rates.
The Mass Market Adjustment (MMA) is part of NiMo's default service reconciliation charge which is applicable to mass market customers receiving commodity service from NiMo, and therefore is bypassable. Mass market customers include residential (SC-1) and small commercial (SC-2ND) customers.
The adopted MMA credit adjustment will be reflected on customers' bills in the bypassable Electricity Supply Reconciliation Mechanism.
According to NiMo, if the February commodity and commodity reconciliations were calculated based on the forecasted commodity prices for February per the tariff (without mitigation), the total typical 600 kWh residential bill would increase by $13.37, $16.47 and $29.74 in the West, Central and East zones
NiMo proposed that the deferral, estimated to be $32 million, be collected in future months in a surcharge through the MMA on customers' bills by zone and equal to the amount that each zone was credited in February bills. NiMo recommended that this recovery occur over a six-month period beginning in May 2014.
However, the PSC did not adjudicate the method of cost recovery at this time, opening the door for future socialization of cost recovery for this benefit enjoyed solely by default service customers (although, as noted above, NiMo proposes collection through the MMA which would limit recovery to the same customer types that received the benefit).
"Carrying charges will be applied at the applicable other customer deposit rate," the PSC said of the deferral.
Additionally, "[g]iven the electric supply price hikes that the Company has experienced, Staff will be reviewing the reasonableness of National Grid's procurement practices and retail rate mechanisms," the PSC said.
Case 14-E-0026
ADVERTISEMENT Search for more retail energy careers: Copyright 2010-
January 29, 2014
Email This Story
Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Senior Pricing Analyst
• NEW! -- Sr. Dir./Director of Online Marketing -- Retail Provider -- Houston
• NEW! -- Regional Sales Manager -- Retail Supplier -- Texas -- Houston
• NEW! -- Director of Supply - Risk Manager -- Retail Supplier
• NEW! -- Channel Sales Manager -- Retail Provider
• NEW! -- Contract Analyst (aka Pit Crew) -- DFW
• NEW! -- Regional Sales Manager -- Retail Provider -- NY, PA, & IL
• NEW! -- Writer/Content Producer -- Energy Consultant/Manager -- Houston
RetailEnergyJobs.com
|
|
|
|