New York Utility Seeks To Price Electric Supply Service To Non-shopping Customers On A "Subscription" Basis, Under Pilot
Pilot Would Include Bill Guarantee For Customers
October 22, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
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Niagara Mohawk (National Grid or "the Company") has filed at the New York PSC for changes to its Clifton Park Demand Reduction REV Demonstration Project, including a proposal to use a subscription model for part of the electric supply charges applicable to a subset of non-shopping customers who receive electric supply from the utility
Niagara Mohawk proposes to implement and evaluate three different rate design groupings
for Clifton Park customers served by Company energy supply. As of July 2017, the Company had completed installation of approximately
13,300 electric AMI meters at Clifton Park
Under the proposed modified Clifton Park Demonstration, customers served by Company supply would be placed into one of
(1) Group 1 customers served under a Subscription Delivery and Subscription Supply
(2) Group 2 customers served under a Subscription Delivery and the Company’s SC-7
Hourly Supply rate; and
(3) Group 3 customers served under the Company’s SC-7 rate for both Delivery and
The Subscription Delivery rate for customers in Groups 1 and 2 would be the same;
however, their Supply rates would differ. The Hourly Supply rate for customers in Groups
2 and 3 would be the same; but, their Delivery rates would differ. The specific supply rates are described further below.
Customers who purchase their supply from an energy service company (ESCO) would continue to receive supply
from their ESCO; however, they would be divided into two groups for delivery service: one served under the
Subscription Delivery rate; and the other served under the SC-7 Delivery rate.
Subscription Supply Rate - Group 1
Under the proposal, the Subscription Supply rates applicable to Group 1 customers are comprised of a monthly
On-peak Energy Charge, Off-peak Energy Charge, and a Subscription Capacity Charge as
(1) On-peak Energy Charge – The On-peak Energy Charge will be determined as the
product of: (i) the customer’s total energy usage during the on-peak period of the billing
period, and (ii) the On-peak Energy Rate ($/kWh) in effect during the billing period.
The On-peak period is defined as the hours of 10am - 9pm weekdays, excluding
holidays, year around.
The On-peak Energy Rate ($/kWh) will be determined on a monthly basis as the
forecasted on-peak locational based marginal price (LBMP) applicable to the on-peak
period, derived from available monthly forward trading market prices prior to the
forecast month, plus the forecasted cost of NYISO charges under all applicable OATT
schedules, plus the forecasted NTAC. This rate will be multiplied by applicable loss
factors and any applicable taxes.
(2) Off-peak Energy Charge - The Off-peak Energy Charge will be determined as the
product of: (i) the customer’s total energy usage during the off-peak period of the
billing period, and (ii) the Off-peak Energy Rate ($/kWh) in effect during the billing
period. The Off-peak period are all hours not defined as on-peak. The Off-peak Energy
Rate ($/kWh) will be determined using the same methodology as the On-peak Energy
Rate described above but using off-peak LBMP and the off-peak period.
(3) Subscription Capacity Charge – The Subscription Capacity Charge will be determined
as the product of the customer’s Subscription Demand, as described in the Subscription
Delivery section above, and the Subscription Capacity Rate ($/kW) in effect during the
The Subscription Capacity Rate ($/kW) will be determined as the product of: (i)
the twelve month forecasted capacity price ($/kW-mo) based on available market
prices, (ii) the sum of one plus the forecasted annual Unforced Capacity Requirement
of the NYISO, (iii) the sum of one plus the forecasted annual Demand Curve
Requirement of the NYISO, and (iv) the sum of one plus the Average Unaccounted For
Energy Factor as specified in Rule 39, plus any applicable taxes.
Peak Time Credits - Group 1
Group 1 customers who take supply service from the Company will pay the Subscription
Supply rates for their energy supply and capacity and have the opportunity to recoup a portion of
their capacity payments through Peak Time Credits based on their demand response during
Company called events ('Peak Time Events') and during the hour of the New York Control Area
('NYCA') system peak ('NYISO Peak Hour').
The Company will offer two types of credits that will provide Group 1 customers the
opportunity to offset their Subscription Capacity Charges. The offerings are Peak Time Event
Credits and NYISO Peak Hour Credits.
1. Peak Time Event Credits – The Company may call up to ten Peak Time Events per year
during the period of June 24 through September 15. Each event may be up to several
hours in duration as determined by the Company. The Company will notify Group 1
customers of the day and duration of each Peak Time Event on a day ahead basis. The
Company will determine when events will be called which will likely be during
forecasted periods of high demand and/or high market prices for supply.
Peak Time Event Credits will be determined for each customer for each event if the
customer’s maximum demand during the Peak Time Event is less than the customer’s
Subscription Demand in that billing period. The Peak Time Event Credit will be
determined as the product of: (i) the difference between the customer’s maximum
demand (kW) during the Peak Time Event and the customer’s Subscription Demand
during the billing period, and (ii) the Peak Time Event Credit Rate ($/kW).
The Peak Time Event Credit Rate ($/kW) will be determined as 50% of the annual
Subscription Capacity Rate ($/kW-yr) divided by 10 events per year. The 50%
represents that half of the customer’s capacity costs that may be potentially returned to
the customer through Peak Time Event Credits. The sum of the Peak Time Event
Credits for all events during a billing period will be provided to the customer as a credit
on a subsequent bill.
2. NYISO Peak Hour Credit – The NYISO Peak Hour Credit will be available each year
following the end of the NYISO summer capability period. Customers will be eligible
for the NYISO Peak Hour Credit when their maximum demand during the hour the
NYCA peak demand occurs is less than their Subscription Demand. The NYISO Peak
Hour Credit will be determined as the product of: (i) the difference between the
customer’s maximum demand (kW) during the hour of the NYCA peak and the
customer’s Subscription Demand during the billing period, and (ii) the NYISO Peak
Hour Credit Rate ($/kW-mo).
The NYISO Peak Hour Credit Rate ($/kW-mo) will be determined as the annual
Subscription Capacity Rate ($/kW-yr) in effect during the NYISO Peak Hour,
multiplied by 50%, and divided by 3 months over which the customer will receive the
credit. The 50% in the formula represents that half of the customer’s capacity costs
may be potentially returned to the customer through the NYISO Peak Hour Credit.
Groups 2 and 3 Pricing
Customers in Groups 2 and 3 will have the same structure for energy supply and capacity,
which will be the rate design the Commission approves for mass market customers who opt into
the SC-7 Standby tariff. The Hourly Supply Rate will include an hourly energy supply charge and
a capacity charge based on the customer’s individual capacity tag. For the hourly energy supply
charge, the customer’s hourly energy usage (kWh) will be multiplied by the NYISO hourly day
ahead LBMP ($/kWh) plus applicable NYISO ancillary costs, losses and taxes. The customer
will be charged the sum of these hourly supply charges during the billing period.
For Groups 2 and 3, the capacity charge applicable will be calculated as the product of: (i) the customer’s
unique capacity tag, as determine by the Company, and assigned for the duration of each NYISO
capability year, and (ii) the forecasted NYISO capacity spot market price established in each
monthly billing period. The method for establishing capacity tags will be consistent with the
method the Company uses to establish capacity tags for its current demand class customers and is
based on the customer’s peak demand during the hour of the previous year’s NYCA peak hour.
For the purposes of the Clifton Park
Demonstration, the supply rates for Groups 2 and 3 will follow the designs the Commission
approves for the Company’s SC-7 Standby rates.
Group 1 and Group 2 customers will be excluded from the New Hedge Adjustment, the
Mass Market Adjustment ('MMA'), the Supply Service Adjustment ('SSA') for non-hourly
supply customers, and the Supply Reconciliation Balance. The Company proposes that Group 1
and Group 2 customers be included in the SSA for hourly supply customers and the Balance of the
ESRM (ESRM) for hourly price customers. This will result in the Group 1 and Group 2 customers receiving
the same ESRM ($/kWh) rate as hourly supply customers. Group 2 customers will also receive
the capacity reconciliation that is currently applicable to hourly supply customers.
The Company has determined that Group 1 customers should not be included in the MMA,
which currently trues up residential customers’ fixed monthly energy rate to actual spot market
energy rates, because Group 1 customers will have On-peak and Off-peak energy rates that differ
from the energy rates applicable to other residential customers and would have to be tracked
separately. Similarly, Group 1 customers should not be included in the SSA for non-hourly supply
customers because the SSA includes a reconciliation of capacity for residential customers that is
not applicable to Group 1 customers who will be receiving the Subscription Capacity Rate, NiMo said. The SSA for hourly supply customers is more appropriate for Group 1 customers because it does not
reconcile capacity, NiMo said
The Company proposes to separately calculate the reconciliations of Group 1 customers’
time of use energy rates and capacity rates for informational purposes only. "The programming
complexity and expense to separately reconcile these costs to the Group 1 customers is not
warranted due to the limited term of the proposed project and the limited number of Group 1
customers. Group 1 reconciliations of energy and capacity will automatically be recovered
through the SSA for non-hourly supply customers and is not expected to have a significant bill
impact on other residential customers," NiMo said
Group 3 customers will be subject to
the supply reconciliations of the SC-7 class.
All customers enrolled in the proposed rates will receive a one-year bill guarantee at the
end of their first twelve months on the proposed rates, under NiMo's proposal
The bill guarantee will provide a credit to the customer for the difference in the event the customer’s charges over the first twelve months
on the proposed rate are greater than what they would have been billed on standard SC-1 charges
on a total bill basis (excluding the New Hedge Adjustment component of the ESRM as specified
in Rule 46.3.1 of the Tariff).
"In addition, consistent with the Company’s proposed approach in
the AMI Report, low-income customers will receive an extended bill guarantee on a graduated
basis. During the second year of the revised Clifton Park Demonstration, the Company will
compare the low-income customer’s annual charges with the amount the customer would have
otherwise paid under the Company’s standard volumetric rate for the same twelve-month period.
If the comparison shows the low-income customer paid more than five percent above what he or
she would have otherwise paid under the Company’s current basic volumetric supply rate for the
entire twelve months, the Company will credit the customer that amount over the 105 percent of
the bill the customer would have otherwise received. In the third year of the Clifton Park
Demonstration, the Company would extend the bill guarantee for low-income customers to a limit
of 110 percent above the bill a customer would have otherwise paid under the Company’s standard
volumetric supply rate for the entire twelve-month period," NiMo said
The Company proposes to test the proposed rate structures on an opt-out basis.
In this case, customers will have the choice to opt out of the rate structure they are assigned.
Those who exercise that option will default to the Service Classification No. 1 ('SC-1') standard
rates under the Tariff. However, to avoid the potential for gaming capacity and network costs,
customers who elect to opt out will be ineligible to re-enroll in the innovative rate program for a
period of one year from the effective date of opt-out.
In addition, customers who made an active
choice to enroll in the Company’s voluntary TOU ('VTOU') program under Service Classification
No. 1 or the Service Classification No. 1-C, Residential and Farm Service – Optional Large TOU
Rate ('SC-1C') will continue to be enrolled in the rates they chose (i.e., they will not be
automatically enrolled in the Clifton Park innovative pricing demonstration). However, such
customers may choose to change their pricing program and opt-in to the demonstration. Such
customers who opt-in to the demonstration, and subsequently opt out at a later time, will be placed
on SC-1 and will need to re-enroll in either the VTOU or SC-1C if they so choose.
Based on an approval by the Commission’s February 2020 session, the Company intends
to commence serving customers under the innovative pricing structures described above in October or November
2020. The Company intends to balance the groups such that changes in load and savings between
the groups can be attributed to the effects of the different rates, rather than sample selection. To
achieve this balance, the Company will attempt to account for customer characteristics across the
groups, including low-income, net metering, EVs, and ESCO customers. The Company will, to
the extent practicable, balance the treatment group customers by load profiles, energy consumption
strata, or customer persona profiles. This approach will enhance learnings, as it will improve the
Company’s ability to isolate the effects of time-varying pricing on both supply and delivery.
NiMo's latest Clifton Park proposal replaces its earlier proposal (see details here) of 1) a time-of-use ('TOU') and critical peak pricing ('CPP') supply rate as initially proposed in the Company’s Advanced Metering Infrastructure ('AMI') Report (the 'AMI Rate'); and 2) a 'Beneficial Electrification Rate' that combines the TOU / CPP supply component from the AMI Report with a two-demand delivery charge, or such other rate as approved by the Commission in response to the Company’s Beneficial Electrification Proposal.