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Direct Energy Petitions New York PSC For Approval Of Green Gas Programs

Seeks Finding That Plans Meet Energy-Related Value Added Standard, Do Not Need To Meet Pricing Conditions Of Retail Market Reset Order

March 2, 2020

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Reporting by Paul Ring •

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Direct Energy Services, LLC, on behalf of itself and its affiliate Gateway Energy Services Corporation (collectively, 'Direct Energy') petitioned the New York PSC to issue an "expedited" declaratory ruling, finding and declaring that each of Direct Energy’s Green Gas Programs for mass market customers described in the petition constitutes an Energy-Related Value Added ('ERVA') service that may be offered to mass-market customers without an additional requirement of being paired with a compliant guaranteed savings or fixed-rate product as required by the Commission’s Order Adopting Changes to the Retail Access Energy Market and Establishing Further Process issued on December 12, 2019 (the 'Order').

"Alternatively, Direct Energy respectfully requests that the Commission grant Direct Energy an expedited waiver from the requirements of the Order to provide each of these Green Gas programs to mass-market customers without the requirement of being paired with a complaint guaranteed savings or fixed-rate product. As a further alternative, Direct Energy encourages the Commission, in its pending Order on Rehearing and Clarification, to adopt one or both of the Green Gas products described herein as ERVAs or otherwise compliant products of general availability such that any ESCO could offer them for sale under the terms described in this Petition," Direct Energy said in its petition

Direct Energy proposes two Green Gas Products in the petition, as described below:

A. Direct Energy’s RGGI Gas Program

Direct Energy’s first Green Gas Product is known as RGGI Gas.

The RGGI Gas product calculates a customer-specific CO2 footprint from natural gas usage and then helps offset that usage by acquiring allowances ('RGGI or CO2 Allowances') in the auction mechanism operated by the Regional Greenhouse Gas Initiative ('RGGI').

Direct Energy said in its petition that RGGI Gas would be identical to the Commission’s Green Power product, in that the product will help offset 50% of the CO2 produced in the use of natural gas in the home.

Direct Energy proposes to 'gross up' the actual natural gas consumed by its customers to include a Production and Transmission Factor. "The Production and Transmission Factor recognizes that greenhouse gases are also produced throughout the natural gas value chain from wellhead, through processing and gathering, and with the delivery of the natural gas to the home," Direct Energy said in the petition

"Direct Energy’s analysis shows that a reasonable Transmission Factor is 2.85%. And a reasonable Production Factor is a further 35.00% of consumption and transmission," Direct Energy said in the petition

The RGGI Allowances Direct Energy would need to buy would be determined under the following formula:

Allowances = Total Usage in Dth * CO2 Conversion Factor * Production Factor * Transmission Factor * Renewable Content Factor * Pounds to Short Tons Conversion.


'Total Usage in Dth' is total gas supplied to that customer in a given period.

'CO2 Conversion Factor' is 117 pounds per mmbtu.

'Transmission Factor' is 1.0285.

'Production Factor' is 1.3500.

'Renewable Content Factor' is set at 50%.

'Pounds to Short Tons Conversion' is 1/2000.

"Applying this to the average New York natural gas user of 82.17 Dth per year, RGGI Gas would be required to procure and bank 3.34 Allowances each year: 3.34 Allowances = 82.17 Dth *117 * 1.0285 * 1.3500 *.500 / 2000," Direct Energy said in its petition

B. Direct Energy’s "Cleaner Heat" Product

Direct Energy also proposes to offer New York residential customers a second Green Gas Product called Cleaner Heat.

Direct Energy has designed Cleaner Heat to enable consumers to 'virtually' electrify one-half of the home heating portion of a typical New Yorker’s home (as if the customers were using electric heat rather than gas).

Direct Energy plans to fulfill these obligations through the purchase and retirement of Renewable Energy Certificates ('RECs') or making the Alternative Compliance Payment ('ACP') to NYSERDA under terms equivalent to the Green Power product authorized by the Order.

The RECs Direct Energy would anticipate acquiring would be determined under the following formula:

REC = Total Usage in Dth * Home Heating Factor * Electrification Factor * Renewable Content


'Total Usage in Dth' is total gas supplied to that customer in a given period.

'Home Heating Factor' is .693, which is the average percentage used in home heating per the Energy Information Administration for homes in New York.

'Electrification Factor' is .293, a commonly used energy equivalency in which one dekatherm of natural gas has energy content equal to .293 MWh of electricity. This 'Electrification Factor' is used to approximate the amount of electricity it would take to produce an amount of energy equal to the energy content of the natural gas consumed for home heating purposes.

'Renewable Content' represents how much of the customer’s usage will be deemed green, which is set at 50% for this product, in keeping with the 50% requirement in the Order’s Green Power product.

"Applying this to the average New York natural gas user of 82.17 Dth per year, Cleaner Heat would oblige Direct Energy to procure and bank 8.35 megawatt-hours of RECs deliverable into New York each year: 8.35 RECs = 82.17 Dth *.693 * .293 Mwh/Dth * .500," Direct Energy said

"Cleaner Heat is consistent with the Green Power product set forth in the Order in that this product will deliver 50% renewable for the electricity equivalent requirement. The green content percentage of Direct Energy’s Cleaner Heat product will, of course, increase as the Commission increases any obligations on the Green Power product or new obligations are placed on natural gas by other government actions," Direct Energy said

"Because Direct Energy’s Green Gas Programs will ... provide mass-market customers with a unique benefit that the Commission has recognized in the Order as a basis for allowing ESCOs to market certain renewable electricity products without being subject to the pricing restraints adopted in the Order, the Commission can and should issue a ruling finding and declaring that Direct Energy’s Green Gas Programs qualify for similar treatment," Direct Energy said

As exclusively first reported by, Family Energy, Inc. has also petitioned the PSC for a partial waiver of the Commission's retail energy reset order to allow Family Energy to offer two "green gas" product offerings, while NRG has said that it will submit a petition for PSC approval of a natural gas carbon offset product

Cases 15-M-0127, 12-M-0476, 98-M-1343

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