ConEd Seeks New York PSC Approval To Offer Renewable Electricity Supply Program To Full Service Customers

Would Initially Recover Costs Through Merchant Function Charge; MFC Also To Be Used As "Backstop"

ConEd: 60% Of Customers Express "Preference" To Purchase Their Green Power From ConEdison

August 3, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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Consolidated Edison Company of New York, Inc. (the "Company") petitioned the New York PSC for approval to provide residential and small commercial full-service customers with a renewable, carbon-free electricity option (the 'Green Power Program').

Under the program, Con Edison would purchase renewable energy certificates ('RECs') on behalf of participating electric customers. The Company would procure these RECs from renewable generators located in or delivering power into New York State

Notably, Con Edison plans to purchase New York State Tier Two RECs equivalent to subscribers’ total monthly electricity consumption, less the compliance RECs that the Company purchases on their behalf pursuant to the Clean Energy Standard. [emphasis added]

The Company plans to procure those Tier Two RECs from New York renewable generators that are not currently, or will soon no longer be, selling their RECs to NYSERDA. On a periodic basis, the Company will procure available RECs from the open market and other qualified REC suppliers who produce or deliver the RECs within New York. Upon bill payment from program subscribers, the Company would retire RECs equivalent to program participants’ energy consumption in NYGATS.

The Company projects that it will purchase approximately 72,000 RECs annually if 20,000 residential program participants (the first year program target) choose to participate in the program.

"Con Edison initially plans to purchase only Tier Two RECs because the Company’s RFI results indicate Tier Two RECs are readily available and can be procured for approximately half the price of Tier One RECs. The Company will continue to monitor other New York REC markets to determine if the program should offer other REC products in the future," ConEd said

ConEd proposes to offer its Green Power Program to its approximately 2.7 million full-service residential (SC 1) and small commercial (SC 2) customers.

The Company will set a participation target of 20,000 customers for the first year and believes it could grow the program to 200,000 customers or more via ongoing marketing to attract new subscribers.

ConEd said that this participation level would still leave, "a sizable supply of RECs for Community Choice Aggregation and other third-party voluntary offerings."

Participating customers will be charged a $/kWh price premium on their total monthly electricity consumption and will continue to pay all otherwise applicable supply related charges.

Customers will receive advance notice of any changes in the $/kWh price premium.

Customers will be able to enter or leave the Green Power Program at any time

Prior to the launch of the program, the Company will incur incremental capital costs of $2.0 million for billing infrastructure upgrades and incremental operation and maintenance ('O&M') costs of $0.7 million, primarily for initial marketing of the program to customers. The Company expects to pass on pre-launch and post-launch costs to the customers participating in the program.

"The Company will file a tariff change for a cost recovery mechanism that will initially recover the program costs via a component of the Merchant Function Charge ('MFC'), through a common rate that will be applied to SC 1 and SC 2 full-service customers only. Use of the MFC will convey the program costs through the Company’s supply charge, consistent with ESCO offerings of comparable products. After the program is launched, SC 1 and SC 2 full-service customers will be credited via the MFC with the subscription revenue collected from Green Power Program participants," ConEd said

The $/kWh subscription rate will be designed to collect all program costs, including pre-launch costs, from anticipated participants. The $/kWh rate may be reset periodically to account for, among other things, variations in projected number of program participants and program costs. The Company will track all incremental program costs charged to the MFC and revenues from the Green Power Program participants in order to design an appropriate subscription rate.

Currently, Con Edison estimates that the incremental monthly cost of subscribing to the Green Power Program will be less than $10.

ConEd stated, "Con Edison believes that this program will ultimately provide societal benefits that will benefit all of its customers. Typically, program costs for such programs are socialized to all customers, both full service and retail access. Under the particular circumstances of this program, where it is being offered only to SC 1 and SC 2 customers and Con Edison expects that the participants’ subscription fee will cover all program costs, Con Edison is proposing that only full service SC 1 and 2 customers will provide the backstop mechanism for cost recovery."

ConEd noted that, if the Commission approves the petition to implement the Green Power Program, the Company will need to upgrade its billing system. It will also need to develop operational procedures, train program administrators, prepare customer service representatives, modify its website, and launch a targeted marketing campaign.

ConEd said that, "Over 70% of recently surveyed Con Edison residential customers expressed interest in purchasing renewable power from the Company to help reduce the carbon footprint of their electricity supply."

"[I]n a 2019 survey of [ConEd] residential customers, 73% indicated that they would be willing to pay a price premium for 100% renewable electricity service; 46% would be willing to pay an extra $5-10 a month; and 60% expressed a preference for purchasing green power from Con Edison," ConEd said

Assuming Commission approval by December 31, 2020, the Company plans to market the program during 2021 and start fulfilling Green Power Program subscriptions by January 2022.

Matter No. 20-01624

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