New York DPS Staff Seek Increase In ConEd Billing and Payment Processing (BPP) Charge

Recommend Re-introduction Of ConEd Gas Storage Program For ESCOs

Seek Tighter Balancing Rules

May 28, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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In testimony in Consolidated Edison's current electric and natural gas rate cases, Staff of the New York Department of Public Service proposed an increase to ConEd's Billing and Payment Processing (BPP) charge, and re-introduction of a natural gas storage program for ESCOs

ConEd in its rate case did not propose a change to the Billing and Payment Processing (BPP) charge. ConEd provided its calculation of the unbundled costs for the electric BPP to be $1.18 per bill. The company stated that this cost is very close to the current BPP charge of $1.20 per bill and therefore, did not propose a change

DPS Staff, however, proposed increasing the BPP to $1.28, per bill, which a witness for DPS Staff said is the calculated Rate Year (RY) level of $1.28

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A panel of witnesses for DPS Staff said, "The Company has calculated the historic 2017 unbundled average costs for receipts processing to be $0.57 per bill and has also calculated the average unit cost for printing and mailing a bill to be $0.61 per bill. The combined historic 2017 cost of these two functions is $1.18 per bill for the Rate Year. In order to bring these charges up to RY levels, the Panel inflated the $1.18 using the Gross Domestic Product Price Index."

Staff generally agreed with ConEd's approach to determine the rates for the competitive services, in accordance with the Statement of Policy on Unbundling and Order Directing Tariff 18 Filings, issued August 25, 2004, in Case 00-M-19 0504.

Staff did use a Staff sales forecast to update the supply-related and credit and collections (C&C) components of the Merchant Function Charge (MFC).

Staff's proposed Merchant Function Charge (MFC) rates are as follows:

Supply-Related
Class     Rate ($/kWh)
SC1&7     0.000821
SC2       0.000664
Others    0.000319


C&C - FS
Class     Rate ($/kWh)
SC1&7     0.002129
SC2       0.001640
Others    0.000329


C&C - POR
Class     Rate ($/kWh)
SC1&7     0.001263
SC2       0.001263
Others    0.001263


Purchase Power Working Capital (PPWC)
Class     Rate ($/kWh)
SC1&7     0.000357
SC2       0.000357
Others    0.000357

Natural Gas Market Changes

Staff recommended re-introduction of a Tier 2(B) storage program for ESCOs

ConEd's Tier 2(B) mandatory pilot storage program concluded on March 31, 2019. The company said that it plans to evaluate the results of the pilot over the next year and make a subsequent tariff filing based on the on-going marketer collaborative meetings.

While Staff generally agreed with the company’s plan to review the Tier 2(B) pilot program, a witness for Staff expressed "concerns" with the absence of a timeframe in which the company will make a tariff filing.

"Tier 2(B) of gas supply assets is a physical release of storage capacity, and associated pipeline transportation, for gas deliveries to Con Edison’s citygates on behalf of all firm customers, a portion of which is being supplied by gas marketers. The allocated storage capacity is only released to marketers serving firm customers and allows for a more level playing field among marketers and the 16 Company alike," a Staff witness said

"I recommend that the Commission require Con Edison to complete its evaluation of the pilot, in accordance with the established procedure for program updates, as described on page 26 of the Company’s Gas Sales and Transportation Operating 23 Procedures Manual. That provision requires the Company to continue the collaborative with gas marketers and file any proposed updates to its Retail Access program to the Secretary on or before July 1 of each year, to provide an adequate review process prior to November 1 of each year. Based on this schedule, the Company should complete its evaluation and propose updates by July 1, 2019. This will provide an adequate review process, including the time necessary for implementing tariff amendments, so Marketers can begin filing their assigned allocation of storage assets by April 1, 2020, in order to serve firm transportation customers for the winter heating season commencing on November 1, 2020," a witness for Staff said

DPS Staff also sought to tighten various balancing provisions

Staff agreed with ConEd's proposal to add a maximum delivery charge for over-deliveries above 110% of the Daily Transportation Quantity to the Monthly Balancing Program for interruptible marketers, but sought a further change

Staff noted ConEd offers interruptible service transportation participants in the Monthly Balancing Program a range of minimum delivery quantities of 70%, 80% or 90%. The current tariff provisions include a charge for under-deliveries, or a Daily Transportation Quantity that is less than the minimum delivery quantity, but there is no similar charge permitted for over-deliveries.

"Since both under-and over-deliveries adversely affect the Company’s gas operations, Con Edison proposes to apply the same charge to over-deliveries that is currently permitted in its tariff for under-deliveries," a witness for Staff said

Staff agreed with this change but said that, "more changes are necessary to help the Company better manage daily swings."

A witness for Staff noted that, "the Company offers marketers participating in the Monthly Balancing Program the election of either a 70%, 80%, or 90% minimum delivery quantity. Swings resulting from under- and over-deliveries should be minimized to protect the integrity of the storage assets designed as a priority on behalf of firm customers. I am not aware of a tariff of any other gas utility in New York State that allows more than 10% as an option for imbalance associated with no-notice storage assets and the lack of availability of additional or new no-notice storage assets for the Company’s gas supply portfolios."

"For these reasons, the 70% and 80% minimum delivery levels of balancing service should be eliminated," a witness for Staff said

Staff further noted that the existing Daily Balancing Services for interruptible and off-peak firm customers are allowed imbalances of up to 10% with no charge to the participants.

"Since the risk of daily imbalance swings is heightened by increased firm customer demand and weather volatility, Con Edison can no longer allow imbalances of up to 10% free of charge without a corresponding increase in no-notice storage services available to the Company. In addition, a review of the Company’s tariff and statement of balancing charges, Statement 65, shows that these customers are not paying for this balancing service. Balancing services, even for non-firm customers, are firm services for the purposes of maintaining the integrity of the gas distribution network," a witness for Staff said

"I recommend that both Service Classification (SC) 9 and SC 20 daily balancing service tiers begin at 5%, as opposed to the current 10%. In addition, Con Edison should modify its existing tariff to properly charge for this balancing service on a total throughput basis similar to the variable balancing charges for power generation customers, but at the 5% level, not the 2% level imposed on power generation. The Commission has approved similar provisions for other LDCs statewide, including the downstate National Grid companies that serve the New York City and Long Island service territories," a witness for Staff said

Case 19-E-0065 et al.

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