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ESCO Alleges New York Utility Threatened To Return Customers To Default Service In Billing Dispute

December 11, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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East Coast Power & Gas, LLC ('East Coast') filed with the New York PSC a complaint and formal dispute resolution request for expedited resolution against, "KeySpan Gas East Corporation d/b/a National Grid, ('KEDNY')" [sic], concerning its annual reconciliation charges of over four hundred thousand dollars ($400,000) invoiced to East Coast for the months of January, February, March and April 2018 (such charges, the 'Annual Reconciliation').

The complaint was filed by Feller Law Group, PLLC, counsel for East Coast Power & Gas, LLC

In the complaint, East Coast alleged that on November 27, 2018, KEDNY wrote to East Coast that it would withhold East Coast’s purchase of receivables ('POR') payments unless East Coast paid fifty percent (50%) of KEDNY’s disputed Annual Reconciliation invoices ('Disputed Invoices')

"This follows additional threats by KEDNY to return East Coast’s customers to default utility service if East Coast did not pay the entire [amount] of the Disputed Invoices," East Coast alleged in the complaint

"The Annual Reconciliation assessed by KEDNY demands payment of significant and unexpected sums of money by East Coast and along with the KEDNY threat to terminate East Coast’s ability to operate in KEDNY’s service territory, constitutes the kind 'significant financial risk' to East Coast as described in Section 8(B)(2) of the UBP. If KEDNY proceeds with the disconnection of East Coast’s customers, not only would East Coast suffer immediate and significant financial harm and face irreparable reputational damage, many of East Coast’s retail customers and business partners would also suffer financial harm. Such action by KEDNY would interrupt East Coast’s longstanding relationships with its customers, broker channels, and business partners as well as interfere with valid and existing energy supply contracts currently in place between East Coast and its customers ('EC Contracts'). The harm caused by such an action would significantly impact the operating cashflows of East Coast and limit its ability to actively manage and meet its obligations," East Coast alleged in the complaint

"KEDNY’s interference with ongoing EC Contracts (particularly agreements for fixed-rate products) will cause financial harm to East Coast’s customers, in part due to budget uncertainty caused by the threatened return of such customers to default utility service will not honor East Coast’s fixed-rate electric supply contracts. Furthermore, any such mandatory payment at this time of the Disputed Invoices to KEDNY would unnecessarily harm East Coast’s customers, since the Disputed Invoices relate to a prior time period pertaining to a different set of East Coast customers, some of whom no longer remain with East Coast. While it is not unusual for utility reconciliations to cover prior periods and different groups of customers, the magnitude of the amount relating to these Disputed Invoices are clearly an anomaly, especially when compared to previous reconciliations by KEDNY pertaining to East Coast. Accordingly, immediate resolution of this dispute on an expedited basis pursuant to Section 8(B)(2) of the UBP by the New York State Public Service Commission ('Commission') is entirely appropriate," East Coast alleged in the complaint

"KEDNY seeks to recover Annual Reconciliation without providing East Coast with sufficient time to review the considerable auditable data KEDNY claims supports the basis for the underlying charges," East Coast alleged in the complaint

East Coast alleged in the complaint that KEDNY’s January 2018 invoice to East Coast (the 'January 2018 Invoice') reflected KEDNY’s ESCO Month-End Imbalance/Annual Reconciliation for the period from January 2017 through March 2017 (the 'January 2018 Reconciliation'). East Coast alleged in the complaint that, on March 20, 2018, East Coast emailed KEDNY and requested details about the January 2018 Reconciliation.

"After several conversations with KEDNY in which East Coast requested auditable data supporting the Annual Reconciliation, East Coast notified KEDNY on March 26, 2018 via email that East Coast was disputing the January 2018 Reconciliation. On April 6, 2018, East Coast paid KEDNY the non-disputed portion of KEDNY’s January 2018 Invoice, which included everything (i.e., natural gas, POR charges, required cash-outs, and virtual storage) except the January 2018 Reconciliation amount," East Coast alleged in the complaint

East Coast alleged in the complaint that, "it was not until September, approximately six (6) months later that KEDNY provided a written response explaining the cause of its billing error. On September 10, 2018, KEDNY emailed East Coast and indicated that the disputed amount of the January 2018 Invoice and National Grid’s ESCO Monthly-End Imbalance/Annual Reconciliations for February 2018, March 2018, and April 2018 (collectively, the 'February-April 2018 Invoices') were outstanding. On the same day, East Coast responded that it 'short paid the referenced invoices due to either lack of auditable invoice data pertaining to the [Annual Reconciliation [sic] for the February-April 2018 Invoices and the waiver of the cashout penalty for January 2018. East Coast requested the backup to the [Annual Reconciliation] at the time of the invoice posting and were advised that [such data] was not available at that time. Once National Grid [sic] provides the backup to the Annual Reconciliation [East Coast] will pay those amounts.'"

East Coast alleged in the complaint that, "In response to East Coast’s request for additional information about the Annual Reconciliation, KEDNY discovered that charges for 'Expected Deliveries' were processed improperly in its Gas Tracking Information System ('GTIS') due to system-wide errors, thus causing Expected Deliveries to be accounted for three (3) times, instead of zero (0) times, and which is an issue entirely out of East Coast’s control."

East Coast in the complaint recited the history of billing errors and related billing standards issues at the National Grid LDCs in New York

East Coast alleged in the complaint that, "East Coast has limited faith and confidence in the accuracy or reliability of KEDNY’s billing system and any resulting charges. East Coast’s position is well-supported by KEDNY’s documented history of billing errors and failure to provide timely and reliable data on a consistent basis. It is unreasonable for KEDNY to demand advanced payment of amounts in dispute when it has a well-established history of acknowledging its fault and liability regarding its billing mistakes, failing to provide accurate data in a timely manner to support its charges to ESCOs, and failing to perform its billing obligations in an acceptable manner. Furthermore, KEDNY’s failure to investigate East Coast’s concerns in a timely manner, is a breach of its obligation required under UBP Section 7.C.3. The Commission should therefore mandate that East Coast receive adequate time to further analyze KEDNY’s billing data."

East Coast alleged in the complaint that, "KEDNY is using UBP Section 7.C.1 to strong-arm East Coast into submitting an up-front payment of a disputed amount when KEDNY’s internal systemic errors, which KEDNY has admitted do indeed exist, are a material underlying cause of the Disputed Invoices."

East Coast alleged in the complaint that, "KEDNY has specifically admitted to East Coast that the 'Expected Deliveries' were processed improperly in KEDNY’s 'GTIS' and thus mistakenly accounted for three (3) times instead what should have been zero (0). East’s preliminary belief that that the Disputed Invoices may be erroneous and/or the result of flaws in KEDNY’s systems..."

East Coast alleged in the complaint that, "East Coast has had daily calls with KEDNY starting on November 29, 2018 through the date hereof to review and ask KEDNY questions about the data that KEDNY has provided in support of the Disputed Invoices. East Coast has now reconciled approximately one-third (1/3) of such data against East Coast’s own billing data, which has revealed numerous duplicate transactions that appear to be the result of faulty KEDNY systems regarding meter reads and natural gas supply. These errors in KEDNY’s systems seem to echo errors within other National Grid systems that appear to be at the root of the fines, required customer refunds, and complaints against National Grid that we highlighted in the bullets above."

East Coast alleged in the complaint that, "KEDNY seeks to impose significant retroactive charges upon East Coast, which would, in effect, be a penalty with unusually harsh economic consequenses [sic] for an entity that has done nothing wrong. In addition, given the nearly six (6) months it took National Grid to provide the Disputed Invoices (particularly the January 2018 Invoice), any of the penalizing actions that KEDNY has threatened against East Coast for the Disputed Invoices as described above in Section A would unfairly affect East Coast’s customers who did not have accounts with East Coast during the periods covered by the Annual Reconciliation. East Coast does not have the luxury of 'guaranteed rate recovery' that a regulated utility like KEDNY has, whereby the utility is allowed to charge and recover from all of its ratepayers all commodity charges, even if such charges relate to a prior period. East Coast would instead face only a limited ability to recover retroactive charges pertaining to a period that occurred over one (1) year ago."

East Coast alleged in the complaint that, "Based on National Grid’s extensive troubled history of billing, other performance errors, and the circumstances specific to this case, East Coast’s position is entirely reasonable. It is unfair and unreasonable for East Coast and its customers to bear the consequences of KEDNY’s errors by requiring East Coast to pay the Disputed Invoices in advance. Regardless of whether East Coast ultimately owes some or all of the Disputed Invoices to KEDNY, it would be materially harmful and unfair to East Coast to force its payment of the Disputed Invoices up-front without East Coast first having the opportunity to reconcile the data that KEDNY took six (6) months to provide against East Coast’s own billing data. East Coast should instead receive adequate time to complete its analysis of KEDNY’s billing data."

East Coast requested that the Commission direct the Department of Public Service Staff ('DPS Staff') to (i) mandate a meeting within the next three (3) business days (from the date of the petition dated December 5) among East Coast, KEDNY, and DPS Staff; and (ii) assist in the parties’ attempt to resolve this dispute.

"Additionally, DPS Staff should ensure that KEDNY does not in any way, shape or form take any retaliatory action against East Coast, including but not limited to, prohibiting KEDNY from initiating any disconnection actions from its system against East Coast or any of East Coast’s customers, or requiring immediate payment by East Coast to KEDNY of any of the Disputed Invoices amount during the pendency of this dispute resolution process," East Coast requested

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