NiMo To Require ESCOs To Take Capacity Under New Mandatory Capacity Release For New Core Service; Will Cease Adding Capacity Exempt Customers

National Grid Calculates New Backout Credits, Billing Charges To ESCOs

Updates Merchant Function Charge, POR Discounts

August 3, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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As part of a rate case newly filed with the New York PSC, Niagara Mohawk (National Grid, NiMo, or "the Company") is proposing to close its non-core daily balancing transportation service to new customers, and is proposing to offer a new core daily balancing transportation service, which will require that ESCOs take released capacity associated with such core daily balancing customers

"This proposal will allow the Company to plan for all new firm customers going forward, whether they elect sales service or transportation service. Accordingly, interstate pipeline and storage capacity will be released to the ESCO serving new core daily balanced transportation customers," NiMo said in testimony

NiMo explained that, currently, third-party marketers that supply the Company’s transportation customers that opt for daily balancing are capacity exempt. "The Company does not plan for these capacity exempt customers in its gas supply portfolio, even though the distribution system is designed to support these customers on the design day (except for a small subset of customers electing D-1 sales service). Instead, the Company relies on the third-party marketers to deliver gas to the Company’s distribution system on behalf of these capacity exempt customers. Two of the major pipelines (Dominion and Tennessee) that serve the Company’s distribution system are constrained. Without additional capacity to the Company’s distribution system, and unless third-party marketers sign up for such incremental capacity, the Company has no assurance that gas will be delivered on cold days, because on these days the pipelines may implement flow restrictions that impact the ability for non-primary volumes to flow. As pipelines become more constrained, this issue will only exacerbate. Therefore, the Company proposes to cease adding capacity exempt customers so that the Company can ensure that primary firm capacity is available for all firm customers," NiMo said in testimony

Existing daily balanced customers will be allowed to maintain their status as non-core.

"The Company does not have sufficient capacity to serve all existing non-core daily balanced customers and therefore will need to grandfather the existing load," NiMo said in testimony

Backout Credits, ESCO Charges

NiMo's electric billing charges to ESCOs to issue a consolidated bill on behalf of the ESCO are currently: $0.98 to an ESCO that supplies electric to an electric-only customer and $0.49 to an ESCO that supplies electric to a dual gas and electric customer.

NiMo is proposing to update these electric billing charges to: $0.80 to an ESCO that supplies electric to an electric-only customer and $0.40 to an ESCO that supplies gas to a dual gas and electric customer.

Additionally, NiMo provides a billing backout credit to a customer that is supplied by an ESCO and receives a consolidated bill from either the Company or an ESCO. The current $0.98 billing backout credit to electric-only customers is proposed to be updated to $0.80.

The current $0.49 billing backout credit to a dual gas and electric customer that is supplied electric by an ESCO is proposed to be updated to $0.40.

See the table below:

Similarly, for natural gas, NiMo's one-bill billing charges to an ESCO to issue a consolidated bill on its behalf are currently: $0.98 to an ESCO that supplies gas to a gas-only customer and $0.49 to an ESCO that supplies gas to a dual gas and electric customer.

NiMo is proposing to update these gas billing charges to: $0.80 to an ESCO that supplies gas to a gas-only customer and $0.40 to an ESCO that supplies gas to a dual gas and electric customer.

Additionally, for natural gas, NiMo provides a billing backout credit to a customer that is supplied by an ESCO and receives a consolidated bill from either the Company or ESCO. The current $0.98 billing backout credit to gas-only customers is proposed to be updated to $0.80. The current $0.49 billing backout credit to a dual gas and electric customer that is supplied gas by an ESCO is proposed to be updated to $0.40.

See the table below:

Merchant Function Charge, POR Discount

NiMo proposes updates to the Merchant Function Charges in the rate case

For electricity, the MFC is calculated as follows for Non-Demand customers:

MFC - Electric - Non-Demand Customers ($/kWh) 

Uncollectible factor              $0.00074
Credit & Collections              $0.00011
Supply Procurement & Admin        $0.00010
Purchased Power Working Capital   $0.00027

Total $/kWh                       $0.00123 
                                     [sic]

MFC for other classes are provided in NiMo's Electric Rate Design Panel testimony in Exhibit E-RDP-7

For ESCOs using POR, the electric credit and collections discount rate per kWh would be $0.00011 per kWh for non-demand customers, $0.00000 per kWh for demand customers, and $0.00001 per kWh for outdoor lighting customers.

The MFC electricity uncollectible factor used to calculate the per-kWh MFC uncollectible component listed above is as follows. For non-demand electricity customers, the MFC uncollectible factor is 1.97%. For demand customers, the MFC uncollectible factor is 0.20%

For natural gas, NiMo calculated the illustrative MFC as follows, for SC1 Residential and SC2 Residential, Commercial customers:

MFC - Gas (Illustrative), $ Per Therm

                            SC1       SC2 R&C
Uncollectible             $0.00561   $0.00053
Gas Procurement           $0.00112   $0.00112
Credit & Collection       $0.00100   $0.00005
Return, Storage           $0.00259   $0.00259
Return, Working Capital   $0.00423   $0.00419

Total                     $0.01455   $0.00848

MFCs for additional classes are provided in NiMo's Gas Rate Design Panel testimony in Exhibit G-RDP-6

For ESCOs using POR, the Commodity Related Credit and Collection Charge would be $0.00100 per therm for SC1 MB Residential, and $0.00005 per therm for SC Nos. 2MB, 12 DB, 12MB, 13MB, 5 DB, 5 MB, 7 DB, 7 MB, and 8 DB

Additionally, for the gas POR, the uncollectible discount will equal the MFC uncollectible factor used to calculate the per-therm MFC uncollectible component listed above. For SC1 Residential gas customers, the MFC uncollectible factor is 2.1%. For SC2 Residential and Commercial customers, the MFC uncollectible factor is 0.2%. (all discounts illustrative)

NiMo said in testimony it is proposing a change to the MFC to expand the MFC to include firm sales service customers that will migrate to SC-5, SC-7, and SC-8 (under another aspect of the rate case) for the following MFC components: Gas Supply Procurement Expenses, Commodity- Related Credit and Collection Expenses, Commodity-Related Uncollectible Expenses, and Return Requirement on Working Capital for Purchased Gas.

"Consistent with the service classification modifications [proposed in the rate case], the Company is proposing to modify SC-5, SC-7, and SC-8 to allow sales service. Because the Monthly Cost of Gas ('MCG') rate will be applied to applicable sales customers served under SC-5, SC-7 and SC-8, the MFC would apply as well," NiMo said

Case 20-G-0381, 20-E-0380

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