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Regulator Rejects Changes to Cashout Procedures Opposed By Retail Suppliers

April 14, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Illinois Commerce Commission rejected proposed changes by Ameren to its cashout procedures for transportation customers (Rider T), finding that the change was not supported.

Ameren had said that changes to the cashout procedures were needed because the current gas balancing cashout provisions are flawed and are being used by Transportation Customers to engage in arbitrage to the detriment of Purchased Gas Adjustment (PGA) Customers.

Ameren had stated that the current gas balancing cashout provisions allow Transportation Customers to use their available bank capabilities, as defined in Rider TBS - Transportation Banking Service ("Rider TBS"), and then any customer imbalance up to 20% of the Daily Confirmed Nomination ("DCN"). This amount is cashed out at 100% of the Chicago market (Chicago Citygate) price.

Any imbalance over 20% of the DCN is cashed out at 90% of the Citygate price for over-deliveries, and 110% of the Citygate price for under-deliveries.

Ameren asserted that at most, Transportation Customers are subject to only a 10% discount or premium to the market price for customer imbalances not covered by their banking service. Ameren argued that the current provisions do not create enough of an incentive to deter some Transportation Customers from mismanaging deliveries and creating system imbalances.

Ameren therefore proposed a cashout pricing mechanism through which Transportation Customers would receive the lower of the PGA rate or the market price when the Transportation Customer over-delivers. Conversely, under its proposal, the Transportation Customer would be charged the higher of the PGA rate or the market price when the Transportation Customer under-delivers. Ameren said that the PGA rate applied to cashout would be the rate in effect during the month that the cashout is applied. Ameren proposed to define the market price as the Daily Chicago Citygate Price for daily balanced customer cashouts and the Monthly Average Daily Chicago Citygate Price for monthly balanced customer cashouts.

The Retail Energy Supply Association opposed the changes, arguing that the changes would allow Ameren to recover imbalance transaction charges from Transportation Customers for costs that the Company does not actually incur. RESA stated that the result would result in gas supply subsidies from Transportation Customers to PGA Customers

The Illinois Industrial Energy Consumers noted that Ameren's arbitrage argument is premised solely on the activity of a single Transportation Customer involved in two arbitrage situations in the 2013/2014 heating season

The ICC rejected Ameren's proposal, finding that, "this record does not contain an extensive analysis to support a change in the imbalance cashout provisions for Transportation Customers."

The ICC also accepted a series of uncontested changes to the Ameren gas tariff, one of which is the reduction of Maximum Daily Nomination (MDN) from 200% to 120% of a Rider T Customer's Maximum Daily Contract Quantity (MDCQ), which all parties agreed will help to reduce the opportunity for arbitrage.

"To the extent that a problem remains, the Commission encourages AIC [Ameren] to work with Staff and Transportation Customers to develop an alternative which would not result in cross subsidization between Transportation and PGA Customers. The Commission finds that, as in Docket No. 11-0282, the current cashout provisions of Rider T are sufficient at this time and AIC's proposed changes are rejected," the ICC said

Docket 15-0439

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