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New York PSC Approves Change In Purchase Of Receivables (POR) Reconciliation Mechanism

July 16, 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 approved changes to the purchase of receivables (POR) reconciliation mechanism at Consolidated Edison (ConEd) for natural gas service, and directed that similar changes be filed for electricity service

By petition filed December 5, 2017, BBPC, LLC (d/b/a Great Eastern Energy), Direct Energy Services, LLC, East Coast Power & Gas, LLC, Robison Energy, LLC and Robison Energy (Commercial), LLC sought revision to the methodology used by Consolidated Edison Company of New York, Inc. (ConEdison or the Company) to reconcile the purchase of receivables (POR) discount rate that is charged to energy service companies (ESCOs).

The ESCOs had stated that under the current methodology used by ConEdison, the reconciliation, whether positive or negative, is flowed through to all customers through the Monthly Rate Adjustment (MRA). According to the ESCOs, the reconciled amounts should instead be returned to, or collected from, ESCOs as they are the entities from whom the discount rate is applied to their receivables. The ESCOs proposed that POR discount rate imbalances, whether positive or negative, be included in the subsequent year’s POR discount rate, rather than the MRA.

ConEdison's POR discount rate applied to gas accounts receivables is the sum of four components. One of these four components reflects ConEdison’s cost of credit and collection and theft (C&C) associated with customers taking ESCO service under the POR program (the C&C rate). The C&C POR target dollars for each rate year were established by the Commission in its 2017 rate order for ConEdison’s gas business. The C&C POR rate is dependent on the C&C POR target dollars as well as an estimate of gas commodity costs; therefore, the Company updates the C&C rate component of the POR discount rate each year. At the end of each rate year, the Company reconciles the actual revenues collected through the C&C portion of the POR discount rate to the C&C POR target dollars set pursuant to the 2017 Rate Order.

Currently, any over or under collection is credited or surcharged to both firm full service and firm transportation customers through the Transition Adjustment for Competitive Services component of the MRA. The Company notes that under the ESCOs' proposal, such over or under collections would be credited or surcharged to ESCOs through the C&C component of the subsequent years’ POR discount rate instead of being credited or surcharged to the firm full service and firm transportation customers. ConEdison had stated that the ESCOs are correct that ESCOs incur the costs of the target C&C dollars, so it is appropriate that any reconciliation to actual C&C dollars be collected or credited to ESCOs through the subsequent year’s C&C rate component.

The PSC granted the ESCOs' petition

"The Petitioners’ request is reasonable because ESCOs are paying the C&C related costs through the POR discount rate. Therefore, any variations from the target dollars should be credited or surcharged to the ESCOS, and not through the MRA. Firm full service and transportation customers would also benefit from this change should the actual revenues collected from ESCOs through the C&C portion of the POR discount rate fall short of the C&C POR target dollars in any given rate year, as these customers would be charged for any shortfall. In addition, such a change is permissible under the 2017 Rate Order as it is a revenue neutral change. For these reasons, the Petitioners’ request is approved," the PSC said

The change in the natural gas POR reconciliation methodology shall become effective on January 1, 2019.

Additionally, ConEdison was directed to make similar POR reconciliation tariff changes, which will be noticed for public comment, for its electric business.

Case 17-G-0794

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