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NiMo Electric, Gas Rate Case Settlement Addresses Backout Credits, ESCO Fees, Supply Matters, Capacity Release, Nominations

January 19, 2018

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

A joint proposal in the electric and natural gas rate cases of Niagara Mohawk (the "company") currently before the New York PSC address a variety of ESCO and supply-related matters.

Signatories to the JP include, among others, NiMo, Department of Public Service Staff, Multiple Intervenors, Great Eastern Energy, Mirabito Natural Gas, Blue Rock Energy, Inc., and Direct Energy Services

Terms of the joint proposal which remains subject to the PSC approval, include:

Electricity - Billing Backout Credit

The updated billing charges to ESCOs to issue a consolidated bill will be $0.98 to an ESCO that supplies electricity to an electric-only customer and $0.49 to an ESCO that supplies electricity to a dual electric and gas customer. The customer backout credit will equal the ESCO billing charge

Gas Billing Charge

The Company’s gas billing charges will be as follows: $0.98 to an ESCO that supplies gas to a gas-only customer and $0.49 to an ESCO that supplies gas to a dual gas and electric customer.

Gas Backout Credit Updates

The billing backout credit to gas only customers is updated to $0.98. The billing backout credit to a dual gas and electric customer that is supplied gas by an ESCO is updated to $0.49.

Retail Choice Program Capacity Modifications

Commencing in the winter of CY 2018/19, Niagara Mohawk will establish a capacity release program to release to gas marketers/ESCOs a pro-rata share of all of the Company’s gas supply assets (i.e., provide a "slice of the system"). Allocation of the Company’s capacity will be adjusted among ESCOs to meet East Gate and West Gate customer supply needs. Niagara Mohawk will release or assign to each ESCO its pro-rata share of each of the Company’s pipeline and storage assets (regardless of whether the ESCO’s customers are located in the east or west). The Company will also allocate a portion of its city gate peaking supplies to ESCOs to be managed by the Company, and provided to ESCOs, as needed. The details of the capacity release program will be described in the Company’s GTOP manual.

For Dominion Transmission’s City Gate Swing Customer program to work with the Company’s new slice of the system approach to capacity releases, ESCO deliveries on pipelines other than Dominion Transmission will be considered "first through the meter." The remaining deliveries will be allocated to, and balanced on, Dominion Transmission.

Prior to March 1, 2018, the Company will provide ESCOs with details on the Company’s proposal to implement the expanded capacity release program. ESCOs and other interested parties will have the opportunity to provide comments and feedback on the Company’s proposal, and the Company will consider that feedback in developing the final implementation plan. Within 60 days of the Effective Date, the Company will hold a special technical meeting to coordinate with ESCOs and other interested parties on the final implementation plan. Following implementation of the capacity release program, the Company will address any ESCO issues resulting from the new program at the Company’s annual winter supply meeting (to take place no later than April 15, 2019). To the extent necessary, an additional collaborative session facilitated by the Company and Staff will be held to discuss the capacity release programs and address any implementation issues. If the parties cannot resolve any issues in the collaborative after consultation with Staff, the parties retain the right to petition the Commission for resolution.

Allocation of the Proceeds of Asset Management Agreements

Consistent with current practice, Asset Management Agreement ("AMA") credits derived from upstream transportation and storage assets used to serve sales customers only will be allocated solely to those sales customers. Any credits derived from assets serving both core sales and core transportation customers, such as storage services and peaking services (reliability assets) that are not released under the retail choice program, will be shared by sales customers and transportation customers’ ESCOs equally on a volumetric basis calculated using distribution volumes. The amount of revenues/credits provided to ESCOs will be equivalent to the ESCO customers’ proportionate responsibility for the costs of the upstream storage services provided by the Company that are the subject of the AMAs that result in the revenues/credits. This excludes sharing of credits for assets that are retained solely to serve sales customers after ESCOs have received their "slice of the system" share of the Company’s assets.

Long-Term Capacity Planning Changes for East Gate and West Gate

Niagara Mohawk will segregate its planning for the needs of the East Gate and West Gate service areas to provide transparency between demand forecast and capacity planning needs for both gates. Albany, New York weather data will be used for the East Gate, and Syracuse, New York weather data will be used for the West Gate.

Delivery Nomination Procedures for East Gate Constraint

To address capacity constraints on the East Gate, beginning in the winter of CY 2018/19, Niagara Mohawk will establish transporter nomination procedures for all transport customers served in the East Gate region during times of capacity constraint on the East Gate. These nomination procedures will require that a percentage of each East Gate transportation customer’s nominations be delivered to the Company’s system on Tennessee Gas Pipeline ("TGP") when forecast temperatures are at or below designated temperature triggers. The TGP delivery percentage and temperature trigger will be set forth in the Company’s GTOP manual and will be reviewed annually and revised, as necessary. Niagara Mohawk may enter into individually-negotiated contracts with customers that may provide alternative means for addressing capacity issues on the East Gate. These contracts would not necessarily require customers to nominate deliveries on TGP, provided that they reasonably address the capacity constraint. Additional details are as follows:

TGP Nomination Procedure:

• Overview: Beginning in November 2018, all East Gate Daily Balanced gas transportation customers and all Monthly Balanced/Customer Choice customers will be required, by a standing nomination procedure, to deliver some portion of their supply on TGP when temperatures are forecast to fall below a designated temperature threshold.

• Program Parameters: The temperature triggers, delivery percentages, and nomination procedures will be reviewed and updated prior to each winter season. The Company will amend its GTOP to include a communications protocol for affected customers, which will include, at a minimum, a procedure for communicating these criteria and procedures in an annual pre-winter mailing. The Company will also notify Department of Public Service Staff in advance of any changes to the program parameters.

The Company preliminarily estimates the following parameters:

   -- Temperature trigger: Forecast average daily temperature of 15 degrees

   -- TPG delivery percentage: 8 - 12%

• Monthly Balanced Transportation Customers: the Company will release its TGP capacity to all ESCOs participating in the mandatory capacity/Customer Choice program.

• East Gate Daily Balanced Transportation Customers: a certain percentage of their requirements will be required to be delivered on TGP when the Temperature Trigger is forecast to be reached.

• Cashouts and Penalties: The Company will amend its GTOP/Tariff to incorporate TGP pricing in its Cashout Index, as well as penalty provisions for failing to deliver in accordance with these provisions.

Prior to March 1, 2018, the Company will provide affected transportation customers with details on the Company’s proposal to implement the new transporter nomination procedures. Interested parties will have the opportunity to provide comments and feedback on the Company’s proposal, and the Company will consider that feedback in developing the final implementation plan. These procedures will be discussed in the ESCO collaborative meetings

NYISO ICAP Tag, Weather Normalizing Adjustment

For the purpose of calculating Installed Capacity Tags, the Company will allocate the New York Independent System Operator ("NYISO") weather normalizing adjustment to determine peak factor to reflect that some service classes are more weather-sensitive than others.

The System Peak Factor reconciles the sum of calculated class coincident peaks to the NYISO forecast peak for the capability period. The System Peak Factor is one component of the ICAP tag development that the Company performs annually. Components of the System Peak Factor include load growth, losses, and weather normalization.

Weather normalization is currently allocated by the Company to all service classes in equal proportions based on their coincident peak load. To address the concern that all service classes are not equally weather sensitive and, therefore, should not receive an equal share of the weather normalization quantity as happens in the current process, the Company will revise the methodology to calculate the System Peak Factor and use the Group Method.

The Group Method assigns the service classes into one of three groups depending upon their level of weather sensitivity as a class. The groups for this purpose were determined by weather sensitivity analyses of historical class peak loads and are defined as follows:

Group 1 - Most weather sensitive 
SC-1
SC-1C
SC-2 non-demand
SC-2 Demand
SC3A secondary


Group 2 - Moderate weather sensitive 
SC-3 secondary
SC-3 primary
SC-3 MHP secondary
SC-3 MHP primary
SC-3 MHP sub-transmission


Group 3 - Least weather sensitive 
SC-3 sub-transmission
SC-3 transmission
SC-3 MHP transmission
SC-3A primary
SC-3A sub-transmission
SC-3A transmission

MHP indicates customers billed hourly for commodity, whether mandatory or voluntary hourly priced customer. All SC-3A customers are also hourly priced customers.

In the Group Method, allocation of the weather normalization quantities will vary among the Groups. Weather normalization quantities up to an amount equal to 1% of Corporate Load in the coincident NYISO annual peak hour will be allocated proportionally among all rate classes (Groups 1, 2 and 3). Normalization quantities between 1-3% of Corporate Load in the NYISO Annual Peak hour will be proportionally allocated to Groups 1 & 2. Normalization quantities above 3% of Corporate Load in the coincident NYISO annual peak hour will be shared proportionally only among Group 1.

The Group Method will be deployed for the development of ICAP tags effective with the May 1, 2018 capability period. The Group Method defined above will continue to be used until such time that a service class’s weather sensitivity is demonstrably different from the historic period analyzed above

Miscellaneous

The Company will file with the Commission a study that evaluates alternative methods for calculating the Electricity Supply Reconciliation Mechanism (ESRM) for mandatory hourly-priced customers. The study will include an evaluation of the possibility of reconciling capacity charges for hourly-priced customers separately. The Company will provide Staff, OGS, and other interested parties a draft of the study for comment, and will consider comments from OGS and other parties prior to filing the study with the Commission. The Company will file the study, along with proposals and tariff amendments, if any, within six months after the order setting rates is issued in these proceedings. Any potential change must be cost neutral to the Company.

The charge for ESCO-requested bill calculations will be eliminated on Leaf 88 (electric). The charge for ESCO-requested bill calculations will be eliminated from Leaf 190 (gas).

For electricity, the charges applicable to a disconnection initiated by an energy service company ("ESCO") for non-payment of the commodity charges will be updated to $50.00 at the meter and $209.00 at the pole. For gas, when the ESCO requests that the Company disconnect service to the ESCO’s sales customer for non-payment, the charge to the ESCO is updated to $50.00.

Case 17-E-0238 et. al.

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