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ESCO: ConEd's Proposed Supplemental Winter Supply And Balancing Program A "Small Step" Toward Improving Retail Access, More Work Needed

October 22, 2015

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

A recently proposed supplemental winter supply and balancing program (Managed Supply Service, MSS) to be offered by Consolidated Edison to natural gas ESCOs was welcomed by Great Eastern Energy as a, "small step towards improving [ConEd's] retail access program, albeit a very small step," the ESCO said in comments to the PSC

As described by Great Eastern Energy, the Managed Supply Service would provide limited access to ConEd's winter storage supply, "but at a level that is far below that enjoyed by the Company's firm sales customers."

"At most, this service will lessen the impact of cash outs during the winter period but not provide the equivalent hedging and other benefits that storage provides the sales customers. This is particularly disconcerting because transportation customers pay a full share of demand charges for storage through the Company's Market Rate Adjustment but are denied equal access," Great Eastern Energy said

"In ConEd's case, its retail access program has not been fully updated since shale gas proved to be a significant factor in the gas market. Utilities continue to reserve their most valuable assets to serve their own sales customers while offering nominal amounts to the retail ESCOs. This places all gas marketers (ESCOs) at a severe competitive disadvantage and is inconsistent with the Commission's nondiscriminatory, mandatory capacity release rules," Great Eastern Energy said

Recapping efforts to improve the retail natural gas market, Great Eastern Energy said, "We have asked for daily nominations, a pro-rata share of all of the utilities' releasable assets-including storage and release of peak day capacity-as well as other changes that would put the ESCOs and sales customer on a level playing field. In an ideal world, we believe ESCOs and sales customers should meet their pool requirements under the same rules. This would be similar to how the retail electric market works via the NYISO. We understand that this model is not workable for gas due to reliability and other concerns but it is something that should be replicated as closely as possible."

"To end on a positive note, recently there has been some movement by ConEd (in large part due to encouragement by Staff) to implement the changes requested by the ESCOs, including the introduction of daily nominations. It is yet to be seen if we will get full access to storage or release of peak day capacity. In its Order on the MSS storage service, we encourage the Commission to take action to have the Company implement broader changes to its gas retail access program that allows ESCOs to “walk in the shoes” of the utilities on an equal basis without compromising reliability," Great Eastern Energy said

ConEd has proposed Managed Supply Service to be available Service Classification No. 20 Marketers serving firm transportation customers in the company's service territory, on a pilot basis for a three-month period during the 2015-2016 winter season.

"The proposed MSS would provide Marketers with an additional tool to balance their customers' loads and thereby mitigate the difference between their customers' gas usage and the Marketers' gas deliveries at the end of each month of the three-month program period," ConEd has said

Under the proposed MSS program, during the period from January 1, 2016 through March 31, 2016, for any day on which a participating Marketer or its Agent projects that its customers' use of gas will be more or less than the combination of its deliveries of gas pursuant to the Load Following Service and purchases of Winter Bundled Sales Service (WBSS), the Marketer or its Agent may designate all or some portion of such over- or under-delivery as MSS gas. The monthly and daily amounts of MSS gas for each Marketer or Agent will be established pursuant to terms and conditions set forth in ConEd's Gas Transportation and Operating Procedures Manual (GTOP). At the end of each month, ConEd will net out MSS designations for over-deliveries with MSS designations for under-deliveries during that month. The Marketer or its Agent will be cashed out for the net difference at ConEd's weighted average cost of gas in storage plus associated charges, as set forth below. Any monthly imbalance beyond the parameters of MSS will be cashed out at market prices as provided in the tariff and GTOP.

Based on the projected utilization of ConEd's gas portfolio, ConEd proposes to offer up to 3.5 million Dths of MSS gas to Marketers collectively for the period January 1, 2016 to March 31, 2016.

In order to qualify to participate in the MSS program, a Marketer must either (i) have an average day peak month volume greater than or equal to 5,000 Dth/day or (ii) select an Agent who meets that threshold to act on its behalf.

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