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PSC "Expects More To Come" From Utility In Improving Retail Choice Program, In Approving "Incremental" Enhancement

December 18, 2015

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

The New York PSC said that it, "expects more to come," from Consolidated Edison in improving the utility's retail natural gas market, in approving a new pilot winter supply and balancing program (Managed Supply Service, MSS) at ConEd, which the PSC described as an "incremental" improvement

While retail suppliers supported the Managed Supply Service, suppliers noted that the program would provide only limited access to ConEd's winter storage supply -- at a level that is far below that enjoyed by the Company's firm sales customers

ESCOs sought broader changes to ConEd's choice program, noting that utilities continue to reserve their most valuable assets to serve their own sales customers while offering nominal amounts to the ESCOs. This places all gas marketers (ESCOs) at a severe competitive disadvantage and is inconsistent with the Commission's nondiscriminatory, mandatory capacity release rules, ESCOs said.

Among other changes, ESCOs have sought are daily nominations, a pro-rata share of all of the utilities' releasable assets -- including storage and release of peak day capacity

The PSC said that it, "recognizes," the ESCOs' request for the Commission to implement broader changes to ConEdison’s retail access program, but said that, "the Commission considers Con Edison’s filing to be an incremental move and expects more to come."

To ensure that ConEdison continues the process of updating its retail access program, the PSC directed ConEd to file, by July 1, 2016, updates to its MSS program, or submit a report explaining why the MSS program should not be continued.

However, the PSC also stressed that, "It is also important to understand that Con Edison is the 'supplier of last resort' and is therefore responsible for the operations and reliability of its gas system and therefore must retain certain pipeline and storage assets to ensure this reliability and, accordingly, there will always be some differences between the asset portfolios used to serve Retail Access customers and gas sales customers."

The MSS program provides ESCOs with additional flexibility in scheduling their daily gas supply, as well as additional access to physical storage and associated pipeline assets. In addition, the MSS program allows for the gas marketers to minimize end-of-month cash-outs due to large imbalances, by netting under deliveries by MSS volumes, reducing the financial impact of the cash-outs.

Under the adopted pilot 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.

The PSC also approved ConEd's new Winter Bundled Sales Service (WBSS) pricing, which will now be based on ConEdison’s actual cost of natural gas injected into storage, which is how the company prices gas for its own sales customers. This new WBSS weighted average pricing methodology for WBSS allows gas marketers to be more competitive with the company, the PSC said

Case 15-G-0578

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