Energy Choice
                            

Matters

Six New York LDCs Undercharged Default Service Costs By $41.5 Million For Annual Period

Reconciliation Surcharges Will Be Up To $0.57/Mcf

Annual Customer Swing In Bills Up To $42

December 20, 2017

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

Staff of the New York Department of Public Service have filed a report concerning the annual reconciliation of LDC gas supply costs (the largest component of default service) which shows that, for the nine LDCs with meaningful levels of residential migration (Central Hudson, Consolidated Edison, KeySpan New York, KeySpan Long Island, National Fuel Gas Distribution, Niagara Mohawk, NYSEG, Orange & Rockland, and Rochester Gas & Electric), the LDCs in aggregate under-collected gas costs by $36.5 million for the 12-month period ending August 31, 2017

Of the nine LDCs listed above, six under-collected gas costs, requiring a surcharge on bills, and three LDCs over-collected gas costs, requiring a refund.

The six LDCs which under-collected gas costs did so by an aggregate of $41.5 million

The under- or over-collection by LDC is listed below, as is the surcharge that is to be applicable to reconcile the amount.

LDC        Undercollection     Surcharge
          (Overcollection)     (Refund)
           Millions of $
CenHud          4.3          $0.57039/Mcf
ConEd          17.1          $0.19570/Dth
KEDLI           5.8          $0.08040/Dth
KEDNY           3.5          $0.03970/Dth
NFGD            9.6          $0.19330/Mcf
NiMo           (3.2)        ($0.06070)/Dth
NYSEG          (1.5)        ($0.06301)/Dth
O&R            (0.3)        ($0.03100)/Mcf
RGE             1.2          $0.04973/Dth

The estimated annual reconciliation impact for a typical residential heating customer from previous year's bill is shown below. The calculation for the annual reconciliation impact assumes consumption of 100 Mcf or Dth per year, with an average cost of gas of $4.50/Mcf or Dth.

The estimated impacts reflect the elimination of the previous year’s annual reconciliation rate (the surcharge or refund billed during calendar year 2017) and the introduction of this year’s annual reconciliation rate (the surcharge or refund to be billed during calendar year 2018).

LDC       Estimated Annual Reconciliation 
          Impact for Typical Residential 
          Heating Customers from 
          Previous Year's Bill
CenHud          $6.21
ConEd          ($8.37)
KEDLI           $7.66
KEDNY         ($47.68)
NFGD           $42.22
NiMo           ($7.16)
NYSEG           $7.22
O&R           ($37.10)
RGE            $10.55

In comparison to last year’s annual GAC reconciliation, the most significant bill increase for large LDCs this year is expected for National Fuel Gas Distribution Corporation (NFGD) residential heating customers. Compared to the refund rate of $0.21620 per thousand cubic feet (Mcf) last year, NFGD’s reconciliation produces a surcharge rate of $0.19330 per Mcf in 2018. Considering this shift, the typical NFGD residential heating customer is expected to realize an annual increase in their total gas bill of approximately $42.22 (or 4.05%).

In comparison to last year’s annual GAC reconciliation, the most significant bill decrease for large LDCs this year is expected for The Brooklyn Union Gas Company d/b/a National Grid NY (KEDNY) residential heating customers. Compared to the surcharge rate of $0.50130 per dekatherm (Dth) last year, KEDNY’s reconciliation this year produces a surcharge rate of $0.03970 per Dth. Because of this lower surcharge rate, the typical KEDNY residential heating customer is expected to realize an annual decrease to their total gas bill of approximately $47.68 (or 4.08%).

Among all LDCs (including large LDCs with little active residential customer migration and small LDCs), the statewide aggregate net surcharge due to the aggregate under-collection is approximately $39.2 million. The $39.2 million under-collection represents approximately 2.2% of the total statewide purchased gas expense, Staff reported

The annual reconciliation includes the current period reconciliation, prior period reconciliations, the impact of lost and unaccounted for gas (LAUF), other revenues (off system sales, supplier refunds, etc.), and interest.

Staff reported that the largest factors contributing to under-collections for most LDCs were the warmer than expected weather conditions coupled with the differences between forecasted and actual supply costs of gas. The warmer than normal weather created imbalances between the actual and forecasted sales volumes, which contributed to most of the gas LDC under-collections. Had some of the LDCs not implemented an interim GAC rate, under-collections could have been significantly higher, Staff reported. Through correct implementation of interim GAC rates, many LDCs were able to reduce the year end imbalance, which ultimately led to lower bill impacts during this annual reconciliation.

Similar to last year, Staff will be contacting the LDCs in early January 2018 to determine if interim GAC adjustments are appropriate to minimize any potential August 2018 imbalances.

The Commission’s regulations at 16 NYCRR §720-6.5 authorize the use of gas adjustment clauses (GAC) in tariffs to reflect increases or decreases in the cost of purchased gas in consumer rates. The regulations require the use of current or estimated supplier prices on the basis of estimated sales volumes in determining monthly gas cost adjustments. However, actual supply mixes and/or related price differences and changes in sales patterns from estimates affect the ability of the GAC to recover, with complete precision, a utility’s actual gas costs on a monthly basis.

Thus, the Commission’s regulations require gas utilities to reconcile, on an annual basis, their actual gas costs and related recoveries for the 12 months ended August 31, and file such results with the Commission by October 15 of each year. Any over- or under-recoveries can then be refunded or surcharged, respectively, to customers over a twelve-month period beginning with the first billing cycle in January of the subsequent year.

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Analyst Billing and Transaction Services, Retail Operations -- Retail Provider -- Houston
• NEW! -- Commercial Energy Advisor -- Dallas
• NEW! -- Business Development Manager -- Retail Supplier -- Houston / Dallas
• NEW! -- Director, Retail Energy Supply and Pricing -- Retail Supplier -- Houston
• NEW! -- Operations Analyst -- Retail Supplier
• NEW! -- Sales & Marketing Manager -- Retail Supplier
• NEW! -- Retail Energy Account Manager -- DFW
• NEW! -- Director of Affiliate Business Development -- DFW
• NEW! -- Commercial Lead Generation Specialist -- Retail Provider
• NEW! -- General Counsel/ Sr Attorney, Retail Electricity and Gas -- Retail Supplier -- Houston
• NEW! -- Operations Manager/Director -- Retail Supplier -- Houston
• NEW! -- Analyst/Senior Analyst, Energy Management and Marketing -- Retail Supplier -- Houston
• NEW! -- Pricing and Structure Analyst -- Retail Supplier
• NEW! -- Retail Sales Specialist, Telemarketing /D2D/Mass Markets -- Retail Supplier -- Houston