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New York PSC Decreases ESCO's ZEC Compliance Obligation

July 17, 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 directed the New York State Energy Research and Development Authority (NYSERDA) to suspend 55% of AP Gas & Electric (NY), LLC's and 16% of AP Gas & Electric (TX), LLC's monthly Zero-Emission Credit (ZEC) compliance obligation payment for the April 1, 2018 through March 31, 2019 ZEC compliance period.

The Commission denied APG&E’s request for an accelerated refund or, alternatively, to receive credits for potential ZEC overpayments for the April 1, 2017 through March 31, 2018 ZEC compliance period.

On March 8, 2018, AP Gas & Electric (NY), LLC (APG&E NY), AP Gas & Electric (TX), LLC (APG&E TX), and AP Gas & Electric (NJ), LLC (APG&E NJ) (collectively, APG&E Companies) had submitted a petition requesting a refund for overpayments made under the Zero-Emission Credit (ZEC) compliance program.

APG&E in its petition had said that the companies experienced a material drop, greater than 50%, in its retail load in New York State since April 2016. As a result, APG&E had stated that the combined payments it was required to make to NYSERDA for both APG&E NY and APG&E TX pursuant to the November 2016 Order exceeded its actual ZEC obligation for the 12-month period ending March 31, 2018 by more than $500,000. Additionally, the APG&E Companies had indicated that they expect their obligation for the ZEC compliance period ending March 31, 2019 to be 90% higher than their actual NYISO load share ratio.

The APG&E Companies had said that they recognized that the overpayment will be refunded in September 2018, but argued that the overpayments for the first two compliance periods creates actual interest expense to APG&E that will not be recoverable and puts a significant strain on its cash flow and liquidity. The petition requested the Commission accelerate an adjustment to its ZEC obligation based on actual or more recent sales data, and immediately refund the overpayment for the 12-month period ending March 31, 2018.

According to the PSC's order the APG&E had stated that they will be scaling back operations in New York and do not plan to add new small commercial or residential customers from which they could recover these costs.

In its order the PSC stated, "Based on data provided by the APG&E Companies, which was supported by data provided by NYGATS, APG&E NY experienced a 55% reduction in load for the ZEC compliance period ending March 31, 2019, when comparing the base year (July 2016-June 2017) used by NYSERDA to calculate the current obligation to the latest available 12-month period (calendar year 2017) of settled load data from the New York Independent System Operator, Inc. (NYISO). For the same period, applying the same data comparison, APG&E TX has experienced a 16% reduction in its load from the original base year calculation. Due to these material losses in load, the APG&E Companies’ requested relief to reduce their ZEC payment obligations is reasonable."

"Considering the decline in the APG&E Companies’ load, the Commission finds that the reduction in their ZEC obligation for the April 1, 2018 through March 31, 2019 compliance period is warranted. Therefore, the Commission approves the requested relief and directs NYSERDA, beginning with the ZEC payment due in July 2018, to reduce APG&E NY’s monthly ZEC compliance payment by 55%. APG&E NY shall continue making monthly payments to NYSERDA at 45% of the original ZEC amount. Similarly, the Commission directs NYSERDA, beginning with the ZEC payment due in July 2018, to reduce APG&E TX’s monthly ZEC compliance payment by 16%. APG&E TX shall continue making monthly payments to NYSERDA at 84% of the original ZEC amount," the PSC stated in its order

"Further, the Commission directs NYSERDA to absorb the ZEC revenue shortfall that would result from the suspension of a portion of the APG&E Companies’ April 1, 2018 to March 31, 2019 ZEC obligation until the ZEC reconciliation occurs in September 2019," the PSC stated in its order

"However, the APG&E Companies’ request for an immediate refund for ZEC payments made to NYSERDA for 2017-2018 compliance period is denied. Due to the administrative process required by the NYISO to confirm and settle LSEs’ load in their systems, there is a five-month lag following the end of any given month before the NYISO can report verified (V2) data into the NYGATS platform. Due to this delay, like all other LSEs, the APG&E Companies’ load data for March 2018 will not be available in NYGATS until August 2018. Once that data is received, NYSERDA will recalculate the actual load share percentages for each LSE and calculate a new, actual LSE obligation, factoring in the number of ZECs purchased by NYSERDA from the existing zero-emissions nuclear generating resources. As a result, it is not possible for NYSERDA to accurately determine the amount of APG&E’s refund until the reconciliation is completed and refunds are processed in September 2018. Therefore, the Commission denies APG&E’s requests for relief relating to the use of its possible ZEC overpayment for the April 1, 2017 to March 31, 2018 compliance period, including an immediate refund," the PSC stated in its order

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