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Retail Suppliers Object To Sought New Penalties, Fees, Tariff Provisions Applicable To Suppliers At Vectren Ohio

IGS Energy Alleges "Unilateral" Imbalance Trading Changes Have Made It "Nearly Impossible" To Trade Imbalances

Vectren To Require Suppliers To Bill All Customers Under Single Selected Billing Option (Dual or UCB), Seeks To Require LDC Approval Of Supplier's Dual Billing Format

October 31, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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Retail suppliers have filed objections to various new tariff provisions and fees included as part of a rate case at Vectren Energy Delivery of Ohio, in objections to a PUCO Staff report on Vectren's application

Among other things, Interstate Gas Supply (IGS) said in its objections that Vectren's application, "proposed to change the Imbalance Trading terms and conditions applicable to Large Transportation Service Pool Operators (Sheet 51, P. 6.). Specifically, the redlined tariff contained two changes: (1) deleting language prohibiting a Transporter from trading to establish an imbalance in the opposite direction of the original imbalance, (2) requiring imbalance trades to be completed within two business days rather than three days."

IGS alleged that, "Starting in September 2018, Vectren unilaterally modified its Imbalance Trading protocols in a manner that conflicts with not only its current tariff but also its proposed redline tariff. Therefore, IGS must further object to Vectren’s currently in place Imbalance Trading procedures."

IGS alleged that, "In September, Vectren made some changes to the way imbalance trading is treated. First, they lowered it from 3 days to 2 days. More importantly."

Furthermore, IGS alleged that Vectren no longer permits a form of trading which was previously allowed. Previously, IGS said that if one Pool Operator A is 10% short on a day and another Pool Operator B was 20% short on that same day, Pool Operator A could sell Pool Operator B gas to reach the 15% limit.

IGS said that, "Under the new protocols, if Pool Operator A is 10% short, it can no longer sell gas to anyone even though the tariff allows them a 15% tolerance on any given day. In other words, Vectren is only permitting Imbalance Trading if it brings the Pool Operator’s balance closer to zero. Based upon IGS’ experience during September, it has become nearly impossible to trade imbalances under the new paradigm."

IGS said that, "Vectren’s unilateral and unauthorized modification is objectionable for two reasons. First, the purpose of Imbalance Trading is to reallocate gas delivered during the prior month. It simply does not relate to the physical delivery of gas—it has no impact on the ability to balance the system. Second, the system is balanced daily by the Choice and SCO Suppliers, not Vectren. Vectren has not argued or provided evidence that the practice in place prior to September placed the system at any risk. It is arbitrary and unreasonable to establish protocols that will make it harder to trade imbalances and therefore lead to additional penalties on Suppliers. Accordingly, IGS objects to the Staff Report’s failure to address Vectren’s proposed changes and current practices."

IGS also raised objections related to new penalties and other new fees

"Initially, the Application proposes to add language permitting Vectren to impose penalties for 'any instructions provided by the Company' in addition to in the event [sic] of Curtailment Procedures. This change is vague and ambiguous and does not articulate whether the penalty may be assessed for failure to follow an operational flow order ('OFO') in addition to failure to follow Curtailment Procedures. There are already penalties imposed against competitive natural gas suppliers ('Suppliers') for failure to follow an OFO; therefore, it would be duplicative and putative to penalize a Supplier twice," IGS said

Among the new penalty provisions for Unauthorized Gas Usage is a new "All Other Customers Penalty" applicable to situations not otherwise described in the tariff. "All other customers -- which would include residential customers -- shall be subject to a penalty of $3 per Billing Ccf," IGS said

"[I]t would be unjust and unreasonable to charge all other customers a penalty of $3 per Billing Ccf, given that smaller customer meters are not read on a daily basis. Thus, there is no way to verify whether a customer in fact used gas in excess of the allowed quantity during the time of any curtailment. Therefore, this provision is unjust and unreasonable," IGS said

IGS said that the application proposes to require a Choice Supplier to elect one of two billing options (1) rate ready, or (2) dual billing. Under the proposal, a Supplier cannot change their billing option more than once every thirty-six months, and if a Supplier utilizes dual billing, Vectren "shall approve Choice Supplier’s bill format prior to the issuance of any bill to Customer."

"These proposed changes are unjust and unreasonable and not supported by testimony or the Staff Report," IGS said

"Initially, a Supplier should not be limited to modifying its billing method once every three years. This is simply too long; it has not been justified. Second, a Supplier should not be required to pick between Rate Ready and Dual Billing -- there should be a third option, which provides for a mixture of the two. For example, a Supplier should be permitted to submit a rate code with a zero charge for the commodity of natural gas for a subset of its customers. This would enable a Supplier to submit a dual bill for a portion of its pool, while utilizing rate ready billing for the remainder," IGS said

IGS also raised objections related to recovery of merchant function exit costs, and the lack of further unbundling

IGS said that, "Vectren proposed tariff language that would allow it to recover costs associated with an exit of the merchant function (Sheet No. 41 of Schedule E-2.1). The Staff Report, however, failed to address this tariff language. Moreover, the Staff Report failed to recommend terms and conditions under which an exit of the merchant function for residential and non-residential customers would take place and for which costs can be recovered. The Staff Report addressed several cost-related changes within Vectren’s tariff (Page 23-24). It, however, did not address the proposed change to Vectren’s tariff that would allow it to recover costs associated with an exit of the merchant function through the Exit Transition Cost Rider."

IGS also objects to the Staff Report’s failure to recommend that Vectren allocate to the SCO or SCO providers certain costs proposed for recovery in distribution rates

In separately filed objections the Retail Energy Supply Association also raised objections to the lack of merchant function exit, the lack of further unbundling, and various fees.

Case No. 18-0049-GA-ALT

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