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Retail Suppliers: 10¢/Therm Default Service Credit Would Improperly Shift The Market In Favor Of The Incumbent Utility

December 3, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The Small Customer Marketer Coalition has asked the New York PSC to not permit Consolidated Edison to implement a 10¢/therm credit for default service natural gas customers, as calculated under ConEd's annual reconciliation proceeding, because, "allowing the credit to be implemented would materially and improperly shift the competitive market in favor of the incumbent utility."

ConEd specifically filed to apply a credit in the unit amount of 10.28¢/therm to default service firm gas customers through the GCF for the calendar year 2015.

"Adoption of the credit requested by Con Edison would result in modifying the gas costs presented to customers through the GCF by 10.28 cents per therm or $1.028 per dKt. This would constitute a dramatic and wholesale revision of the market price in 2015 and reflect a major departure from the credit level applied in the past. In the event actual gas costs are approximately 4.00 per dKt in 2015, application of the credit would act to reduce the market price by 26%. Further it would diverge significantly from previous years when the credit would be 1-2 cents per therm," SCMC said.

"Incorporating the credit now proposed by Con Edison would dramatically exacerbate [an] already untenable pricing structure and make it virtually impossible to convey accurate market price signals to consumers. This will be especially true as Con Edison will diffuse the actual 2015 price by inclusion of a 26% adjustment from a prior year. Further, it will also serve to preclude customers from being presented with an 'apples to apples' price comparison," SCMC said.

"[A]llowing the credit to be implemented would materially and improperly shift the competitive market in favor of the incumbent utility," SCMC said.

SCMC said that the size of the reconciliation, "underscores that Con Edison did not administer the GCF mechanism in a reasonable manner." SCMC noted that part of the balance sought to be reconciled under the credit stems from an over recovery from the period ending 8/31/12 --- more than 2 years ago

"In view of the enormous magnitude of the proposed credit adjustment and potential dramatic impact it would have on the competitive market, prudent utility practice would dictate that the utility monitor the amount of over collection regularly and seek to minimize or spread out its impact. It is illogical to assess a zero credit in the months of February -May 2014 and now seek a credit of $1.028 per dKt," SCMC said.

SCMC asked that the PSC, "should allow Con Edison to apply a credit in 2015 that is equivalent to the average credit applied by Con Edison in 2013 and 2014."

"This would enable the utility to commence an appreciable level of cost recovery," SCMC said.

"Simultaneously, the Commission would direct Con Edison to convene a Collaborative open to all interested parties to consider alternative rate mechanisms that would allow recovery of the remaining charges in a manner that does not impair accurate pricing signals," SCMC said.

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