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Utility's Default Service Rate Falling Due To Reconciliation Balance Despite Higher Wholesale Prices

June 26, 2018

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

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The New Hampshire PUC has approved new electric default service rates at Liberty Utilities (Granite State Electric), for the six-month period August 1, 2018, through January 31, 2019, resulting from a recent competitive procurement

For the residential and small commercial customer group (Small Customer Group), the default service (energy service) rate will be 8.299 cents per kWh for the period beginning August 1, 2018. This rate reflects the inclusion of the RPS adder, the reconciliation factors, and a reversal of prior-year accruals

For comparison, the current all-in Small Customer Group rate is 8.931 cents per kWh

While wholesale energy prices in the most recent procurement were higher, the default service rate is decreasing due to the Energy Service Adjustment Factor (ESAF), and the Energy Service Cost Reclassification Adjustment Factor (ESCRAF).

The PUC noted that, "Liberty testified that the ESAF and ESCRAF included several significant prior period adjustments which had been over-collected by more than $5 million. The adjustments were made to address issues that were discovered during an internal review of these accounts."

For the Large Customer Group, the monthly default service rates will be (cents per kWh):

August 2018       5.941 
September 2018    6.223 
October 2018      7.009 
November 2018     7.210 
December 2018     9.323 
January 2019     11.976 

The PUC said that Liberty Utilities stated that in future filings it would remove the one-day payment processing and bank float lag used in the working capital calculation related to energy service.

"Concerning the use of lead lag study results in future solicitations, we agree with Staff that the Company should use the results of its most recent distribution rate case lead lag study (updated with recent information and adjusted for energy service, where applicable). If a payment processing and bank float lag no longer exists, we see no reason to continue to reflect such a lag in the Company’s working capital calculation," the PUC said

NextEra Energy Marketing, LLC was selected to serve 100% of the requirements for the Large Customer Group for the three-month period August 1, 2018 through October 31, 2018, and 100% of the requirements for the Small Customer Group for the six-month period August 1, 2018 through January 31, 2019

Vitol, Inc. was selected to serve 100% of the requirements for the Large Customer Group for the three-month period November 1, 2018 through January 31, 2019.

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