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New York PSC Approves Tariff Changes At ConEd To Implement Mandatory Pilot For Release Of Certain Allocations Of Physical Storage Assets To ESCOs

March 22, 2018

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

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The New York PSC has approved revisions to the gas tariff schedule, P.S.C. No. 9 - Gas, of Consolidated Edison Company of New York, Inc. (the Company) in which ConEd is modifying its Daily Delivery Service (DDS) Program to implement a mandatory 12-month pilot program for the release of certain allocations of ConEdison’s physical storage assets to gas marketers.

In the approved tariff changes, ConEd will also remove two expired programs from its tariff schedule, the Winter Bundled Sales Service (WBSS) Program and the Managed Supply Service (MSS) Program.

The PSC noted that, "The natural gas market has experienced changes over the past few years and, as a result, Department of Public Service Staff (Staff) and Con Edison have been working with gas marketers to improve the Company’s natural gas transportation and balancing services for its Retail Access Program. As a result of these collaborations, Con Edison proposed, and the Commission approved, a new DDS Program in Case 16-G-0406, under Service Classification No. 20 – Gas Marketers, to provide marketers and their agents with temperature-based, daily delivery quantity requirements to meet the forecasted gas consumption of their respective aggregated customers. The program is currently comprised of three tiers: Tier 1 – Mandatory Capacity Release (Pipeline Capacity); Tier 2 – Managed Supply (Storage); and Tier 3 – Peaking Supplies (Peaking)."

In the December 1, 2017 tariff filing approved by the PSC as filed, Con Edison proposed changes to its gas tariff schedule, P.S.C. No. 9 - Gas, to modify its current DDS program and to eliminate the Company’s WBSS and MSS Programs. The Company proposed to implement a mandatory physical storage pilot program for the 12-month period of April 1, 2018, through March 31, 2019, for the release of a portion of its storage field capacity and associated pipeline capacity to gas marketers. Under the pilot program, the existing Tier 2 Storage capacity will be divided into Tier 2(A) – Virtual Storage (Virtual Storage) and Tier 2(B) – Physical Storage (Physical Storage). The Company will allocate 12% of the existing total Tier 2 Storage capacity to the marketers in the form of Physical Storage, which they will be required to manage daily, and the remaining balance will be Virtual Storage. If a marketer’s Physical Storage release volume does not meet the minimum threshold for releases from the storage field operator, its entire Tier 2 Storage allocation will be comprised of Virtual Storage.

Marketers will be responsible for procuring their own gas commodity from third parties for the daily scheduling of the injections and withdrawals from the Physical Storage fields. The marketers must also abide by the tariff provisions and operating procedures of the storage fields and pipelines. Each marketer’s Physical Storage capacity allocation will remain constant over the 12-month period of the release unless it loses a significant number of customers. In that instance, the Company will reduce or recall the marketer’s Virtual Storage and Physical Storage and associated pipeline capacity. The adjustment will be made first to the Virtual Storage and then to the Physical Storage. Marketers will receive the Physical Storage capacity empty and must return it to the Company empty at the end of the 12-month period. Any residual gas in storage will be purchased at a discount by the Company from the marketers.

The marketers will be responsible for making payments directly to the storage field operators and pipeline companies for any associated charges and those payments will be credited to the Company by the storage field operator or pipeline company. The marketers will pay the same Federal Energy Regulatory Commission (FERC) negotiated rates that Con Edison would have paid had the Company not made the releases to the marketers. If a marketer fails to pay the storage field operator or pipeline company for any charges and Con Edison receives less than its entitled credit, the marketer will have five business days to reimburse the Company for all such amounts plus interest. Con Edison, at its sole discretion, may remove a gas marketer from the Physical Storage portion of the Retail Access Program if the marketer does not remedy the non-payment.

In adopting the changes, the PSC said, "Under the current DDS program, the Tier 1 Pipeline Capacity component is the only tier where gas marketers can meaningfully compete with the Company and each other because the rates for both the Tier 2 Storage and Tier 3 Peaking components are the same for these entities. As such, a major focus of the collaborative was providing the marketers with greater control over the physical assets for which they already pay under the Company’s Retail Access program. Maintaining competitive markets between the gas marketers and the Company is increasingly important since the Commission’s Retail Energy Order. As the Commission ordered, 'energy service companies (ESCOs) may only enroll mass market customers and renew expiring agreements with existing mass market customers based on contracts that guarantee savings in comparison to what the customer would have paid as a full service utility customer or provide at least 30% renewable electricity.'"

The PSC stated, "The proposed tariff modifications include sufficient safeguards to ensure reliability, as the Physical Storage will constitute 12% of the total Tier 2 Storage capacity provided to the marketers, and the Company will have the ability to recall this capacity from any marketer that does not follow the rules provided for in either the Company’s or the storage field operator’s tariff. Additionally, the proposed tariff modifications protect Con Edison’s full-service sales customers from any negative financial impacts of the proposed changes by discounting the price of gas bought from marketers, including interest in payments not credited by the storage field operator or pipeline company, and Con Edison’s ability to remove a marketer from the Physical Storage portion of the program."

"The Company’s proposed modifications achieve an important balance of granting marketers direct control over certain gas storage and associated pipeline assets for which they pay, while simultaneously providing reliability and financial safeguards to protect firm sales customers. In addition, these tariff modifications were developed through an ongoing collaborative process between the Company, Staff and gas marketers with the intent of improving the competitive environment of the Retail Access market, and there is no opposition to the proposed amendments," the PSC said

Under the adopted changes, Con Edison will eliminate the WBSS and the MSS Programs because these programs have expired and are no longer offered by the Company.

The tariff changes are effective April 1, 2018

Case 17-G-0745

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