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Utility Proposes Changes to Retail Choice Program to Protect Customers, Muses Risk Could Be Further Reduced Through Elimination of Choice Program

July 22, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Consumers Energy has proposed changes to its gas customer choice (GCC) program as part of a newly filed rate case in order to protect default service customers from cost shifts.

Specifically, Consumers is proposing to calculate a single, aggregate monthly Daily Delivery Obligation (DDO) for each supplier, thus eliminating the A and B pools, and also proposing to apply the Supply Equalization Charge (SEC) to all GCC Supplier deliveries.

Currently, each supplier is provided with a monthly DDO for each of its pools. In June 2015, there were 539 price categories and almost 1,100 pools.

Under Consumers' proposed change, instead of calculating a DDO and managing the imbalance for each pool, the imbalance will be managed at the supplier-level, and each supplier will be provided with a single, monthly DDO for the entirety of its price categories.

"Managing the GCC Program in the aggregate rather than at the pool level should provide a clearer picture of each GCC Supplier’s imbalance in total," Consumers said

Under the Consumers' proposal, the price utilized in the monthly remittance to each GCC supplier under the company's GCC buy-sell program would be calculated using an average actual GCC price. This average actual GCC price would equal the total amount billed to each of the supplier’s customers for the bill month divided by the total quantity in Mcf delivered to the supplier’s customers in that bill month. The monthly remittance paid to each GCC supplier would equal the average actual GCC price (capped at 110% of the GCR), multiplied by the quantity of gas delivered in the calendar month by the GCC Supplier, not in excess of the monthly DDO.

Consumers' proposal will eliminate a current mismatch by calculating both the monthly GCC remittance and the annual GCC reconciliation in the aggregate.

Additionally, Consumers is proposing to apply the SEC in the aggregate, using the average actual GCC price billed to the supplier’s customers each month compared to Consumers' weighted average cost of purchased and produced gas. If a supplier is underdelivered on a cumulative basis, and the average actual GCC price billed to the supplier’s customers in the month is less than the weighted average GCC price, the SEC would be calculated by multiplying the price difference by the increase in the cumulative underdelivery for the month.

Consumers' discussion also includes a discussion of other measures previously proposed in the wake of the polar vortex to protect default service customers, stating such actions would not be appropriate.

For example, it has been suggested that the PSC could eliminate Consumers' role as Supplier of Last Resort for GCC customers. In addition, the PSC could also increase GCC Suppliers’ program responsibility through more extensive tariff changes, making the GCC Program more like the End-User Transportation (EUT) Program. These changes could include monthly (or even daily) balancing of GCC customer load and GCC supplier deliveries, the elimination of GCC customer billing by Consumers, and shifting responsibility for GCC supply planning to the GCC suppliers.

"Such changes would result in less cost responsibility for GCR customers, but increased risk and costs for GCC customers and for the system as a whole resulting from increased uncertainty regarding GCC supplies," Consumers said

Consumers then added, "If the Commission desires to reduce the GCR customers’ risk related to the GCC Program even further, the GCC Program could be eliminated in its entirety and all customers could be brought back to GCR sales."

However, Consumers noted that both the GCC and EUT program, "have worked well, and the GCC Suppliers and marketers have operationally performed as expected."

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