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Claiming "Adders" Charged To Customers As A Result of Purchase of Receivables, Group Seeks Changes To New York ESCO Billing, Removal of POR "Obligation"

September 11, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Coalition of Renewable Energy Users and Developers (CORE) requested that the New York PSC fast track the treatment of a billing issue associated with implementation of the Value of Distributed Energy Resources (VDER) for C&I customers purchasing supply from an ESCO

According to CORE, "The issue of concern regards the inability of commercial and industrial (C&I) customers that are supplied by third-party energy suppliers to apply metered renewable energy credits against their third-party energy bills absent agreeing to use a prohibitively expensive 'purchase of receivables' billing procedure. This procedural limitation effectively decreases the value of Value of Distributed Energy Resource (VDER) energy credits and monetary remote net metering (RNM) when a customer is purchasing its power requirements from a third party energy supplier ('ESCO') since excess renewable generation can only offset the fixed delivery charges on the interconnected utility’s bill. The limited application of the credits unnecessarily restricts the ability of customers to offset their full fossil energy exposure with renewable energy supply."

According to CORE, "Where a C&I customer purchases power from a third-party energy service company or other supplier ('ESCO'), the customer is unable to apply its billing credit against both the interconnected utility and ESCO charges without incurring substantial unrelated adders. These adders are based on the requirement that the ESCO use a 'purchase of receivables' or POR methodology. The POR method reduces the renewable energy savings to the customer by a 'discount' factor paid to the billing utility based on the assumption that the billing utility is taking on risk of customer non-payment. This is not the case where either 1) the ESCO or customer assumes the risk of slow- or non-payment and/or 2) the customer has a strong billing history or credit rating. The price reduction under these circumstances does not reflect an actual cost or risk to the billing utility. The billing charges nevertheless often exceed 3 percent of gross sales revenues per month. In many cases, the surcharge renders uneconomic the installation of a renewable energy facility."

According to CORE, "These [POR discount] costs are passed on to the customer, resulting in a 2-4% adder per month to receive a 'consolidated bill,' regardless of the payment or credit history of the customer or ESCO."

CORE sought adoption of the billing framework described below, which, "does not require the billing utility to purchase the ESCO’s receivables, although the POR method can remain an option, but not an obligation, to renewable energy users and suppliers."

The key part of CORE's proposal would be as follows for consolidated bills (the main difference from the current UBPs being the addition that the billing party allocate "credits" as well as payments, and other provisions related to net metered credits):

Application of Payments and Credits

1. The billing party shall allocate customer payments and credits to the following categories of charges on the bill or contained in a notice that are not in dispute in this order of priority of payment: (1) amounts owed to avoid termination, suspension or disconnection of commodity or delivery service; (2) amounts owed under a deferred payment arrangement (DPA), including installment payments and current charges; (3) arrears; and (4) current charges not associated with a DPA. The billing party shall pro-rate payments and credits to the charges within each category and to each supplier in proportion to each party's charges in that category.

2. In the case of remote net metering, credits shall be applied first to the host account and then to any other satellite accounts designated by the customer.

3. Credits shall be calculated using volumetric or monetary crediting depending upon the customer’s service classification and the utility’s specific tariff.

4. After application of payments and credits in a category, assuming available funds or credits, the remainder of the payment or credit shall apply to the next highest category according to the priority of payments and credits in the same manner as described above until the payment or credit is exhausted. Any surplus credits shall be carried forward and applied to the next billing cycle and applied in the above order of priority, or cashed out in accordance with the utility’s applicable tariff.

5. Upon request, the billing party shall provide the non-billing party with a verified copy of the posting log of payments and credits received and transferred to the non-billing party during any calendar month specified by the non-billing party.

6. Distribution utilities supplying delivery service for both natural gas and electricity to customers receiving consolidated bills shall apply the receipts to the separate services in accordance with their regular procedures. Where a consolidated bill displays delivery charges for separate gas and electric distribution utilities, the customer’s payments shall be first prorated between the utility accounts in accordance with the amount each is due compared with the total amount due both distribution utilities, provided, however, that renewable energy credits shall be applied only to charges for electrical supply.

CORE provided the following examples:

Examples of Consolidated Billing:

1. Customer purchases 500 kwh from the interconnected/billing utility at the Host site and 500 kwh from the non-billing third-party/ESCO at the Satellite site(s), each at a rate of 6 cents per kwh (including fixed charges). Customer generates 800 kwh from a BTM renewable energy facility located at the Host site during the same billing cycle.

    a. The customer receives a monetary credit of $48 (6¢*800 kwh), $35 of which is applied against all of its interconnected utility bill at the Host site, and $13 of which is applied against (i) the demand and other fixed charges of interconnected utility bill and (ii) the energy charges of the ESCO supplier, respectively, in proportion to their charges at the satellite site.

2. Customer purchases 500 kwh from the interconnected/billing utility at the Host site and 500 kwh from the non-billing third-party/ESCO at the Satellite site(s), each at a rate of 6 cents per kwh. Customer generates 1500 kwh from a BTM renewable energy facility located at the Host site during the same billing cycle.

    a. The customer receives a monetary credit of $90 (6¢*1500 kwh), $35 of which will offset all charges at the Host site and $35 of which will offset charges at the Satellite sites, resulting in a zero bill.

    b. The excess $20 will be carried forward to the next billing period.

As under current procedures, any under- or over-charges will be reconciled through the energy cost recovery (ECR) mechanism.

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