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PSC Adopts Settlement Among Suppliers, Utility Regarding Compliance Penalties, Tariff Changes

November 25, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A Maryland proposed order adopting a settlement among Washington Gas Light and several retail suppliers became a final order by operation of law on November 24 after the proposed order was not appealed

The settlement, now approved by the Maryland PSC, addresses penalties related to delivery obligations during the 2014 polar vortex, as well as tariff changes.

As first reported by EnergyChoiceMatters.com, WGL had originally assessed penalties on the suppliers for failure to adhere to a Delivery Matrix. Suppliers said that WGL could not impose the penalties for non-compliance with the matrix as the matrix is not contained in WGL's tariff.

Similar settlements have been filed in WGL's other jurisdictions

The settlement stipulates that penalties assessed to settling retail suppliers across all of WGL's three jurisdictions shall be $1.4 million, with the share allocated to Maryland suppliers equaling about $555,000. The stipulated penalty amount is substantially reduced versus the penalties WGL had originally assessed on the suppliers, which suppliers had contested.

Signatories to the stipulation which will pay a pro-rata share of the settlement amount include Integrys Energy Services - Natural Gas, LLC, Compass Energy Gas Services, LLC, Direct Energy Services, LLC (on behalf of several of its companies), NOVEC Energy Solutions, Inc., Bollinger Energy, LLC, and Stand Energy Corporation.

Individual penalty amounts for each supplier were confidential

If WGL has collected any penalties from suppliers for service in Maryland in excess of $555,000, the funds will be credited to Maryland firm service ratepayers through the Purchased Gas Charge/Annual Cost Adjustment (PGC/ACA). If WGL has collected an amount from suppliers that is less than the $555,000 allocation, the balance will be assessed to firm ratepayers through the PGC/ACA. It is the understanding of PSC Staff that the amount in penalties collected from suppliers exceeds the Maryland allocated amount of $555,000. Therefore, these extra funds will be credited to the Maryland PGC/ACA

Key changes to the WGL tariff and procedures under the settlement include that the penalty for violation of the "Delivery Matrix" parameters (delivery volumes) used by WGL to assess suppler obligations is $25 per dekatherm (dth) to be assessed for each dth in violation of the Delivery Matrix.

The settlement provides that, on any day when WGL's forecasted system send-out for the day is equal to, or more than, 600,000 dths, each supplier will have a "safe harbor" amount of 100 dekatherms per day to which WGL's six-tiered Pipeline Delivery Matrix does not apply

The settlement also modifies the penalty structure for Daily Required Volumes (DRV) by each supplier operating under the Washington Gas tariff. If a supplier under-delivers the daily volume of commodity for its customer obligation, the supplier will be assessed a penalty of the higher of (a) $25 per dth, or (b) the highest index price listed on the Platt’s Gas Daily for the following pricing points – Columbia Appalachia, Dominion South Point or Transco Z6NNY, multiplied by a factor of 1.5, which shall be applied to the difference between the DRV and the actual gas volume delivered by the supplier. Where a supplier over-delivers the natural gas commodity, the penalty shall be $25 per dth

The settlement states that if a supplier incurs penalties for failure to deliver the DRV, the supplier shall not also be subject to a penalty for failure to comply with the Delivery Matrix, for the same delivered volumes.

Under the tariff changes, when a Critical Day condition is called by WGL, suppliers must supply the required DRV or suffer a penalty of $50 per dth for under-delivery of gas volumes

The settlement also requires delivery service tolerance bands which allow a +/- 15% tolerance band for DRV volumes, where no penalty is incurred within the tolerance bands on a DRV as long as WGL has not issued an Operational Flow Order (OFO) or a balancing curtailment order. The +/- 15% tolerance band is applicable to Rate Schedule No. 6 only (for service to interruptible distribution service customers)

Washington Gas agrees to communicate to suppliers on a monthly basis the volume of capacity that will be assigned to the supplier by Washington Gas on the designated interstate pipeline during an applicable month, if a supplier does not choose a specific pipeline. WGL will bill each supplier for its capacity assignment that is not accepted on the pipeline during the applicable month at the pipeline's monthly reservation charges, plus $1.00 per dth

The settlement also established a process to examine potential implementation of a daily imbalance trading program

Case 9364

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