ConEd To Include New Costs In Electric, Natural Gas Default Service Rates Under Rate Case Settlement

Joint Proposal Includes Retail Access Provisions

Updated Billing, Payment Charge For ESCOs

October 21, 2019

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

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Consolidated Edison (the "Company") would include new costs in its default service supply rates for electricity and natural gas in a joint proposal (JP) filed by various parties in ConEd's current rate cases before the PSC

Under the JP, ConEd would modify General Rule 25.2.2(b), Adjustment Factor - MSC II (Leaf 333) of the Electric Tariff to include all costs associated with the procurement of energy and capacity hedges and supplies for Customers, including auction platform licensing fees, maintenance fees, customization fees and related costs.

Further, the JP includes changes to the Gas Cost Factor (GCF). Under the GCF in General Information Section VII, fixed gas costs would be modified to include costs for capacity, including fees, purchased through third party Asset Management Agreements; and any fixed charges associated with Renewable Natural Gas ('RNG'). Furthermore, under the GCF in General Information Section VII, variable gas costs would be modified to include all costs associated with using online auction platforms including licensing, maintenance, customization fees and related costs; and supply costs associated with RNG.

Electricity - Merchant Function Charge, Billing And Payment Processing Charge

The JP provides that competitive delivery rates for Con Edison customers, i.e., the MFC including the credit and collection ('C&C') related component of the Purchase of Receivables Discount Rate, were set in each Rate Year to reflect the revenue requirement for each Rate Year. The MFC for Con Edison customers consists of two components: a supply-related component, including a purchased power working capital component, and a C&C related component. There were separate MFCs calculated for (1) SC 1 customers, (2) SC 2 customers, and (3) all other customers.

i. For each Rate Year, revised revenue levels for the MFC supply-related and C&C related components were based on percentages of delivery revenue as determined in the 2017 ECOS study. The resulting revenue requirement was then divided by the Rate Year full service customer sales in each group to determine the $/kWh supply-related portion of the MFC for each service class.

ii. The Rate Year revenue requirement for the C&C related component of the MFC was developed by multiplying the total Con Edison T&D Rate Year delivery revenue requirement by the percentage represented by C&C related costs for each group, inclusive of C&C costs attributable to the Purchase of Receivable ('POR') Discount Rate. The total Rate Year C&C related revenue requirement was split between full service and POR customers based on the respective split of full service and POR forecasted Rate Year kWh sales. The C&C related rate component to be recovered through the MFC from full service customers was then determined by dividing their share of the C&C related Rate Year revenue requirement for each group by the corresponding forecasted Rate Year kWh sales.

iii. The C&C related rate component to be recovered through the POR discount rate was set in each Rate Year to reflect the calculated portion of total C&C costs attributable to POR customers, the estimated Rate Year POR kWh sales, and the forecasted level of POR supply costs in the Rate Year.

iv. The proposed rate associated with the purchased power working capital component of the MFC was computed by dividing the purchased power working capital requirement for each Rate Year by forecasted Rate Year full-service customers’ sales to derive a per kWh charge that was added to the applicable competitive supply related MFC component for each service group.

v. Competitive metering charges, which consist of meter data service provider, meter service provider, and meter ownership component charges, have been eliminated and recovery of metering costs was transferred to base delivery rates at the current (2019) rate level. For Rate I of SCs 5, 8, 9, and 12, meter costs have been transferred to the minimum delivery demand charges at the current level of non–mandatory hourly pricing ('MHP') meter charges and the remaining meter costs (i.e. incremental meter costs associated with MHP customers) for these classes are recovered in the demand charges. The metering costs for the mandatory TOD rates of SC 5, 8, and 9, 12, and 13 were transferred to a newly created customer charge, initially set at the level of the current metering charges. The metering costs for customers served under voluntary TOD rates of SC 8, 9, and 12 were transferred into a new customer charge initially set at the weighted average of the current rate level for MHP and non-MHP customers. Standby rates also reflect the metering costs in the customer charges. With the elimination of competitive metering charges, the competitive metering credits applicable to NYPA were eliminated.

vi. The billing and payment processing charge applicable to Con Edison customers was increased from $1.20 to $1.28 per bill. For customers with a combined electric and gas account, the portion of the charge applicable to electric service is $1.28 less the amount applicable to gas service (e.g., $0.64). Likewise, ESCOs pay $1.28 per bill per account, unless a customer has two separate ESCOs. In that case, the charge to the electric ESCO is $1.28 less the charge applicable to the gas ESCO (e.g., $0.64).

The JP would update the electric residential and commercial Uncollectible Bill ("UB") factors related to the UB expense associated with MSC and Adjustment Factors-MSC charges based on a UB factor of 0.0046 or ($0.46 per $100). The JP would update in General Rule 25.3(d) of the Electric Tariff (Leaf 336) to reflect UB factors of 0.0072 for residential customers and 0.0028 for all other customers.

Natural Gas - Merchant Function Charge, Billing And Payment Processing Charge

The JP sets forth the total revenue requirement targets, in dollars, for the Supply-Related Component and C&C Component of the Merchant Function Charge, and C&C Component of the Purchase of Receivables (POR) discount rate. The JP does not translate these into per kWh or therm, or % amounts, at this time.

For natural gas, separate MFC charges will continue to be established for SC 1, SC 2 Rate I, SC 2 Rate II, SC 3, and SC 13. For the Supply-Related component and for the C&C component, different unit costs will be set for residential and for non-residential classes. At the end of each Rate Year, the supply-related and C&C components of the MFC will be trued up to the Rate Year design targets and any reconciliation amount will be included in the subsequent year’s calculation of the MFC.

The charge for Uncollectible Accounts Expense (UBs) associated with supply will continue to be based upon actual supply costs for each month included in the Company’s monthly Gas Cost Factor (GCF). The UBs associated with supply costs will be included in the MFC. Separate UB factors will be calculated for each of the three GCF groupings and will be update to reflect the overall uncollectible rate of 0.46%, with uncollectible rates of 0.72% for residential customers and 0.28% for non-residential customers.

The billing and payment processing charge (BPP Charge) for gas will increase to $1.28 for single service gas customers who purchase both their commodity and delivery from the Company and for retail access customers receiving separate bills from the Company and the ESCO. Dual service customers will pay no more than $0.64 for gas BPP.

The parties agree that no party supporting the Joint Proposal has waived its right to file a petition with the Commission to address, on a generic basis, issues related to the methodology used to compute the MFC and Credit and Collection Costs and Billing Back Out Credit.

Retail Access Issues

The JP includes the following provisions concerning retail access

The Company will create a centralized process for regular updates to energy service companies ('ESCOs') via the Retail Access newsletter that is emailed to all ESCOs and posted on the Company’s website. Day-to-day communications with ESCOs will continue outside of the newsletter process. The Company will endeavor to respond to simple inquiries -- i.e., inquiries that do not require investigation or detailed review -- that are made to ConEd's retail access email address within three business days. If the Company requires additional time to respond to inquiries, the Company will notify the ESCO that additional time is necessary. Further discussion on the types of inquiries and response expectations to be addressed at first annual meeting referenced in below.

Regular Gas Marketer Collaborative Meetings: Regular Meetings will be held at least twice each rate year (though Collaborative Members may collectively decide to hold additional meetings). Meeting notices and proposed agenda items shall be circulated via email to the email distribution and made available on the Company’s ESCO website for the Gas Marketer Collaborative at least one week prior to scheduled meetings. Any Collaborative Member may propose to add items to the proposed meeting agendas.

Special Collaborative Meetings: The Company agrees to convene a Special Collaborative that will be limited in duration to six months, beginning within 90 days of the Commission’s Order adopting this Proposal. During that time, Special Collaborative Meetings will be held at least once during each of the first two months and then every other month thereafter. By consensus, the Collaborative members may agree to schedule additional meetings and/or teleconferences. The Special Collaborative will discuss the following issues:

• Intraday Nomination Flexibility for Virtual Storage;      -- How Virtual Storage Inventory Costs are Computed;      -- Intraday City Gate Allocations;

• Baseload peaking basis costs;

• Timely Cash Out Invoices;

• Alternative method to satisfy credit and security requirements related to imbalances;

• POR Disbursements Adjustments;

• An informational presentation on the components of the MRA;

• Details of how Con Ed will notify ESCOs of changes proposed by upstream pipelines that will affect rates;

• A presentation on how gas operations handles nominations for excess city gate capacity; and

• No harm-no foul rule for non-firm daily balancing.

Within 60 days of the last Special Collaborative Meeting, the Company will submit a report to the Secretary describing the Special Collaborative discussions. Any issues considered in either the Regular Collaborative or the Special Collaborative will be resolved in a manner that is revenue and earnings neutral to the Company.

Annual Electric Marketer Meeting

Starting in 2020, the Company will hold an annual meeting each year with ESCOs and other third parties to answer questions on the electric retail choice program. Four weeks before the meeting, the Company will solicit comments, suggestions on topics to be covered and questions from ESCOs using the Company’s distribution lists for gas and electric ESCOs. The Company will provide a summary of the agenda items discussed at the annual meeting in its Newsletter.

Updated Reference Materials for CSRs

The Company agrees to provide annual updated reference materials for call center representatives to update them on retail access developments including changes in rates charged ESCO customers and changes in UBP rules. The Company agrees to provide communications to remind CSRs [Customer Service Representatives] of the procedure to follow when ESCO customers call with questions about their bill. ESCOs can at any time reach out to the Company via established channels to provide suggestions for materials or information that should be available to utility call center representatives.

Changes to Transportation Customer Information System

The Company will make changes to its Transportation Customer Information System ('TCIS') that reject nominations from approved gas marketers that over-nominate at City gates for firm supply under the Company’s DDS program. The Company will complete these changes to TCIS by December 31, 2021.

Electricity - Optional Demand-Based Rate With Time Of Use Supply Rates

Under the JP, the Company will establish an optional demand-based rate, which will be available with no cap to (a) existing residential geothermal customers and (b) new residential geothermal customers that meet the Company’s requirements for its heat pump program to be launched during 2020. This rate will also be available to up to 5,000 other residential customers, including residential geothermal customers that do not meet the requirements. This rate will be based on the rate structure of Rider Z, Rate IV, and include a $27.00 customer charge, which reflects the full customer cost set forth in the 2017 ECOS study. The supply component of this rate will assess time-of-use supply for full service customers. In addition, this Optional Demand-Based Rate will be subject to review in the Company’s next electric base rate case.

Electricity - New RTO, Generation Charges

The Signatory Parties agree that whenever the Company is or will be subject to governmental or regional transmission organization ('RTO') transmission and/or generation-related charges, costs or credits (e.g., FERC, NYISO, PJM, or EPA) not already listed in or otherwise covered by the then-effective Supply and Supply-related Charges and Adjustments and the MAC tariff language, notwithstanding the Commission’s adoption of this Proposal, the Company may make a tariff filing with the Commission providing for recovery of such charges/costs, or application of these credits, through the Supply and Supply-related Charges and Adjustments and the MAC mechanism and/or comparable adjustment mechanism, as appropriate. The proposed tariff amendment may include charges/costs/credits applicable to the period prior to the effective date of the tariff amendment.

Bill Redesign & New Customer Service System (CSS)

The JP provides that, concerning ConEd's ongoing Bill Redesign Program., ConEd shall file evaluation reports annually by March 1 with the Secretary.

The reports will include the number of customers adopting ebills, reduced costs for printing and postage, and customer use of the digital platform.

The Company will also submit to the Secretary the results of its Phase Two analysis and prototype bill redesign recommendations for review with Staff prior to implementation.

The JP would authorize the Company’s implementation of a new CSS, subject to a $421 million cap on capital expenditures

The JP provides that the Company will schedule two stakeholder meetings during 2020 to discuss stakeholder requests regarding CSS technical features and requirements.

Energy Storage

During the term of the Electric Rate Plan, the JP provides that the Company will implement two energy storage projects as described below.

Fox Hills Project

The Company will implement one in front of the meter energy storage project at its Fox Hills substation. The current plan is for the project to include a battery that will discharge over a peak period of four hours at an output of 7.5 MW/30 MWh to provide relief during system contingencies during high load days.

Nevins Street Projects – Battery Storage and Electric Vehicle Charging

The Company will implement two projects at its Nevins Street location in Brooklyn -- Battery Storage and DCFC Charging. Pursuant to the Battery Storage project, the Company will make the site ready for a battery installation and lease the property to a third party(ies) to own and operate a battery facility(ies) on the site. The Company will file a Public Service Law Section 70 petition for approval of this lease.

In addition, the Company will propose as a REV demonstration project that it will contract with a third party to own and operate a DCFC facility, which will be supported by the battery energy storage project to mitigate the effects of DCFC load during peak periods.

Innovation Hub

The Company’s Innovation Hub is a corporate-wide initiative, "to implement transformative innovation projects."

This group will meet with DPS Staff twice each rate year, in February and August, to review the group’s existing portfolio, provide updates to existing projects and discuss the Company’s then-current strategy for the group. The Company will also meet annually with interested parties to discuss the Innovation Hub’s activities.

Green Tariff

The JP does not include any provision for adoption of ConEd's proposed voluntary renewable energy supply option for electricity customers (see details here)

The JP was filed by Consolidated Edison Company of New York, Inc. ('Con Edison' or 'Company'), New York State Department of Public Service Staff ('Staff'), the City of New York ('NYC'), Association for Energy Affordability ('AEA'), Blueprint Power, CALSTART, ChargePoint, Inc., Consumer Power Advocates ('CPA'), Direct Energy Services ('DES'), Environmental Defense Fund ('EDF')(Case 19-E-0065 only), Metropolitan Transportation Authority ('MTA'), Natural Resources Defense Council ('NRDC') (Case 19-E-0065 only), New York Energy Consumers Council ('NYECC'), New York Geothermal Energy Organization ('NYGEO'), New York State Office of General Services ('OGS'), New York Power Authority ('NYPA'), New York Retail Choice Coalition ('NYRCC'), the Sabin Center for Climate Change Law at Columbia Law School, Bob Wyman, and other parties whose signature pages are or will be attached to this Proposal (collectively referred to as the 'Signatory Parties').

The JP remains subject to PSC approval

Case 19-E-0065

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