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Retail Supplier: Consumer Counsel Seeking To "Retroactively" Assign Bypassable Costs To Retail Suppliers

November 11, 2019

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

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In a brief in a Public Utilities Commission of Ohio review of Duke Energy Ohio's purchased gas adjustment, Interstate Gas Supply said that the Office of the Ohio Consumers’ Counsel is seeking to require choice customers to retroactively pay for costs that were expressly bypassable

Duke, PUCO Staff, and IGS have entered into a stipulation in the proceeding

OCC is contesting the stipulation, seeking different treatment of propane costs.

OCC argues that the stipulation does not properly allocate propane commodity costs to choice customers during the period covered by the audit proceeding, nor does it provide a refund to GCR customers.

OCC argues that the stipulation should be amended to include the incremental costs incurred during the audit period in Duke’s Contract Commitment Cost Recovery Rider (CCCR), and to require a refund of those costs to GCR customers

IGS said that OCC’s argument, "disregards the plain language of the Gas Supply Aggregation Agreement contained in Duke’s Full Requirements Aggregation Service ('FRAS') tariff and should be dismissed."

"Under the FRAS tariff, a supplier serving firm transportation has the option to use an allocated share of Duke’s propane facilities to meet customer requirements during periods of peak or design day demand. When a supplier elects not to deliver the incremental volume of gas in excess of its adjusted peak day requirements, Duke’s tariff provides that it is required to fulfill that supplier’s gas needs with propane or other peaking supplies. In that situation, the fully allocated costs of the propane or alternate peaking supply that Duke provided are billed directly to the supplier. Otherwise, the propane commodity charge applied under the tariff is expressly bypassable. Nevertheless, the OCC seeks to modify the Stipulation to include the incremental propane costs incurred during the audit period in Duke’s nonbypassable CCCR," IGS said

"The audit confirms that suppliers operated within market rules during the audit period. Further, the audit provides that suppliers declined to utilize their allocated share of Duke’s propane facilities during the audit period and, instead, obtained additional supply through other sources. Given that propane is likely to be utilized on the coldest days, when wholesale prices for natural gas are the highest, suppliers’ alternative sources may have been just as costly as the incremental propane costs OCC seeks to reallocate. Yet OCC now seeks to penalize suppliers and their customers for compliance with Duke’s tariff," IGS said

"The OCC should not be permitted to rewrite the market rules to require choice customers to retroactively pay a propane charge that is expressly bypassable. Here, the Stipulation resolves the auditor’s propane cost concerns by agreeing to include the incremental cost of propane utilized for system integrity in its Rider CCCR on a forward-looking basis. The negotiated outcome benefits ratepayers, it serves the public interest, and does not punish suppliers or their customers for compliance with Duke’s FRAS tariff during the audit period," IGS said

Under the stipulation, Duke will file an application to change its gas tariff to require choice suppliers to deliver 100% of their Target Supply Quantity. Duke will also include the incremental cost of propane utilization for system integrity in its Contract Commitment Cost Recovery Rider (CCCR) to cause choice customers to pay their "fair share" of marginal propane costs on a going forward basis, Duke noted in a brief supporting the stipulation

Duke agreed that, "To refund the incremental cost of propane during the audit period to the GCR by imposing a charge on Choice Customers through the CCCR [as proposed by OCC] is tantamount to retroactively revising the Company’s tariffs."

However, OCC said that since propane was used to maintain integrity of the distribution system, costs should be assigned to all customers

"Duke utilized the propane facilities to maintain distribution operating pressure on a number of days. Maintaining proper operating pressure is necessary to keep the system running, thereby providing benefits to all customers. Had it not been for the need to maintain distribution system operating pressures, it would not have been necessary for Duke to use its propane facilities during the audit period," OCC said

"[D]uring the audit period the costs associated with the propane facilities were allocated only to Duke’s GCR customers, even though all firm transportation customers (marketer customers) also benefited from the use of the propane facilities. Marketer customers were not assessed costs associated with the use of the propane facilities even though they benefitted from the use of the facilities," OCC said

GCR and marketer customers should be responsible for their proportional share of incremental propane costs during the audit period, OCC said

The stipulation also provides that Duke will file an application to change its gas tariff to prevent avoidance of capacity release due to timing of customers leaving the GCR. Duke has also agreed to hold a collaborative to discuss rates and charges paid by competitive retail natural gas suppliers for Firm Balancing Service (FBS) and Enhanced Firm Balancing Service (EFBS) and to discuss whether the formula for pricing FBS should be modified.

OCC also opposes the Stipulation because it did not incorporate OCC’s requests to replace Duke’s GCR with a standard service offer auction or to include aggregated shadow-billing data on customers’ bills, requests that OCC has made in prior proceedings, as previously reported. The parties to the stipulation do not support OCC's requests for relief on these issues in the instant proceeding

Case No. 18-0218-GA-GCR

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