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N.Y. ESCOs Again Protest Against "Pricing Inequity" Reflected in Default Service Rates
Several ESCOs have renewed their protest at the New York PSC concerning the "pricing inequity" which the ESCOs alleged is embedded in the default service rates charged by KeySpan New York and KeySpan Long Island.
While the utilities have previously attempted to address th ESCOs' concerns with changes to the methodology used to calculate the pricing for Tier 2 Winter Bundled Sales Service and Tier 3 storage charges applicable to ESCOs, the ESCOs said that such changes have failed to solve the problem.
The ESCOs said that pricing data for February, "engenders significant concerns regarding the propriety with which ESCOs are treated."
"For this month, KEDLI reported a Weighted Average Unitized Commodity Cost of Gas (WAUCCG) of 36.5911 cents per therm applicable to SC 1, 2, 3, 15, 16, 17. KEDNY reported a WAUCCG of 42.8023 cents per therm applicable to SC 1A, 1AR, 1B, 1BI, 1BR, 1B-DG, 2-1, 2-2, 3 & 21," the ESCOs said.
"However, the recent NYMEX closing settlement price was $5.557/dth or about 56 cents per them. In other words, the KEDNY utility commodity price was approximately 15 cents per therm lower than the comparable NYMEX closing settlement commodity cost for the same period, and the KEDLI utility commodity price was approximately 21 cents per therm lower than the comparable NYMEX closing settlement commodity cost. The pricing differential is even more attenuated because in addition to the WAUCCG the utility must also incur and recover the charges [for] variable transportation and fuel costs," the ESCOs said.
The ESCOs further said that KeySpan New York's recently filed Retail Marketer Program (RMP), February 2014, Capacity Release & Final Rates, "engenders even further and more compelling concerns."
"As presented in the RMP, for Tier 2 Bundled Sales, the Weighted Average City Gate Delivered Commodity Price for February 2014 is $6.0084 per dth. This represents a weighted average of all pipelines deployed by the Company including Transco Z4-Z6, Texas Eastern M2-M3, Northeast 07, Transco Leidy Line & Dawn. This is purportedly the same pipeline configuration used by the Company to provide commodity to sales customers. Even if one assumes a reasonable level of storage to meet customer requirements at $3.50 per dth it is difficult to conceive how the KEDNY GAC filed commodity cost of $4.28/dth can be derived based on a mix of $6.0084/dth pipeline gas and $3.50/dth storage. In fact, to [] achieve a $4.28 average one would have to assume that storage accounts for 70% of the mix. Even more egregious is the situation for KEDLI where the GAC commodity cost was filed at $3.659/dth and the Tier 2 pricing charged ESCOs is quite similar to that for KEDNY. There does not appear any justifiable basis for such disparate pricing treatment for ESCO versus customer commodity charges," the ESCOs said.
"[T]he current known facts ... reveal that while ESCOs are subject to a commodity charge of about 60 cents/dth, the commodity customers of the Company are charged considerably less for the exact same period ... ESCOs are paying an excessive price for supplies and the markup is used to further reduce utility sales prices against which customers compare their price for savings," the ESCOs said.
"This obvious and continuing pricing disparity which in the view of [ESCOs] is unrelated to market factors requires an immediate and comprehensive explication by the Company. Based on this current data it does not appear that the recent ameliorative actions undertake[n] by the Company have adequately addressed the concerns raised by [ESCOs] in this pending complaint, and additional immediate corrective [actions] may be required to address what appears to be a continuing and unresolved pricing inequity," the ESCOs said.
"It is also worthwhile to note that Niagara Mohawk Power Corporation, a sister company to KEDNY and KEDLI, in its Monthly Cost of Gas Statement effective February 1, 2014, reported that the Monthly Average Commodity Cost of Gas was $0.388722 per therm. This price is also well below comparable market prices and fails to reflect market conditions in any rational manner. At this point, it strains the bounds of credulity to view this consistent pattern of below market pricing as a mere coincidence," the ESCOs said.
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February 10, 2014
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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