New York DPS Staff Support Utility's Offering Of Green Gas Supply, With Changes

Staff Provides Recommendation On Merchant Function Charge

September 3 , 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Staff of the New York Department of Public Service have filed testimony in support of the proposal from KeySpan New York and KeySpan Long Island (collectively, National Grid) for a "Green Gas" tariff offering that will allow customers to voluntarily purchase renewable natural gas [RNG] to meet all or a portion of their energy needs.

The KeySpan LDCs' proposed green gas supply tariff had been exclusively first reported by EnergyChoiceMatters.com in May, and is part of the LDCs' current rate case

See our updated story with the KeySpan LDCs' latest proposed pricing and format for the green supply tariff

The DPS Staff Gas Supply Panel submitted testimony stating, "We support the proposed program and believe that the tiered structure provides a simple subscription methodology for customers to participate along with pricing certainty that is easy for a customer to include in their decision making for budgeting purposes. However, we do have two recommendations."

Most notable among the changes proposed by DPS Staff is that KEDNY and KEDLI should reconcile renewable natural gas (RNG) gas costs and any associated gas credits as part of the existing gas adjustment clause mechanism.

"With the program just starting, and a lack of participation and RNG cost data, we are concerned that a separate RNG reconciliation could lead to bill impacts that may be detrimental to the initial participants and ultimately undermine their continued participation in the program," Staff said

A separate RNG- specific reconciling mechanism should be considered when the companies have some track record of forecasting the costs, so that the bill impacts of the reconciliation can be understood, Staff said.

"Also, the Commission should consider the number of participating customers, across which the reconciliation would be spread," Staff said

"With the proposed program being in its infancy, and that the supply and environmental benefits provided by the RNG supplies ultimately benefiting all customers, we recommend that any excess unsubscribed RNG supplies be included as part of the overall gas supply portfolio of all firm gas customers, including those that do not participate in the program. At this stage, any gas cost impacts to non-participating gas customers will be minimal and not have any material effect due to the small expected RNG volumes in the near future and the size of the current gas supply portfolio," Staff said

Staff also recommended that the proposed FTEs [full-time equivalent employees] from KeySpan for the RNG program be reduced from two to one FTE for the Rate Year.

Merchant Function Charge

The Staff Rates Panel also filed testimony regarding the merchant function charge

Staff noted that, "The Companies’ current MFCs are designed to recover certain expenses associated with providing gas procurement functions. For firm sales customers, the MFC recovers the costs associated with gas supply procurement, commodity-related credit and collection expenses, commodity-related uncollectible expenses, the return requirement on gas storage inventory, and commodity related working capital expenses. For transportation customers, the MFC recovers the return requirement on gas storage inventory that the Companies manage on their behalf. For IT sales customers, the MFC recovers the costs associated with gas supply procurement, commodity related credit and collection expenses, commodity-related uncollectible expenses and return requirement on gas purchase-related uncollectible expenses and return requirement on gas purchase-related working capital. For ESCOs participating in the Companies’ Purchase of Receivables programs, the MFC recovers commodity-related uncollectible costs and credit and collection expenses."

Staff noted that, "For KEDNY, the MFC applies to: customers who take firm sales service under SC Nos. 1, 2, 3, 4A, 4A-CNG, 4B, 7, 21; customers who take transportation Service; IT sales customers; and ESCOs that participate in the Companies’ Purchase of Receivables program. For KEDLI, the MFC applies to customers who take firm sales service under SC Nos. 1, 2, 3, 15, 16, and 17; customers who take transportation service under SC 5; IT sales customers; and ESCOs that participate in the Company’s Purchase of Receivables program."

Staff noted that the KeySpan LDCs proposed the following MFC changes: "The Companies’ Rates Panels explained that they propose to modify the MFCs by: (1) changing the reconciliation period to match the GAC year to align with the Companies’ Annual Cost of Gas reconciliation; and (2) updating the MFCs to reflect the proposed targets from the Cost of Service studies."

Staff testified that, "We agree to changing the reconciliation period to match the GAC year to align with the Companies’ Annual Cost of Gas reconciliation. Because the Companies use pro-forma ECOS [cost of service] studies, the MFC should be updated based on the overall revenue requirements granted by the Commission. Furthermore, we recommend that the Companies update their MFC targets for the uncollectible rates and pre-tax weighted average cost of capital (WACC) set by Commission order in these proceedings. Finally, we recommend updating the cost of gas to reflect Staff’s assumption that the NESE [Northeast Supply Enhancement Project] Project will not be available in the Rate Year."

Cases 19-G-0309 & 19-G-0310

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