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New York Utilities Agree To Not Implement Proposed Green Gas Supply Option Through March 2023

Updated Consolidated Billing Fee For ESCOs

May 17, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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The Brooklyn Union Gas Company d/b/a National Grid NY ('KEDNY'), KeySpan Gas East Corporation d/b/a National Grid ('KEDLI') (KEDNY and KEDLI, or the "Companies") and New York State Department of Public Service Staff has entered into a rate case joint proposal which includes an agreement for the KeySpan LDCs not to implement a proposed green natural gas supply tariff for utility supply customers through March 31, 2023.

The KeySpan LDCs' proposal for a green gas supply offering had been first reported by in 2019

The JP, which remains subject to PSC approval, would cover three rate years, with the final rate year ending on March 31, 2023.

The JP provides that, "The Companies shall not implement their proposed Green Gas Tariffs during the term of the rate plans." The terms of the rate plans for KEDNY and KEDLI are the three years beginning April 1, 2020, and continuing through March 31, 2023

While the KeySpan LDCs had earlier withdrawn the proposed green gas tariff from the current rate case, in doing so they indicated a future rate case filing was (under their intent at the time) likely in the near future, and thus the issue could have been raised again. The agreement not to adopt the green gas proposal through the term of the rate plans addressed under the JP thus represents an additional commitment.

The JP also addresses other issues related to ESCOs

Under the JP, KEDNY’s consolidated billing fee will be updated from the current rate of $1.42 to $1.31 per bill, except for Rate Year Two. For Rate Year Two, KEDNY’s consolidated billing fee will be $1.26 per bill, which reflects (i) the reduction in the billing fee and (ii) a compressed period over which the total Rate Year Two consolidated billing fee revenue will be collected (the eight-month period from August 2021 through March 2022).

KEDLI’s consolidated billing fee will remain at $1.32 per bill. In addition, KEDLI’s SC 9 shall be eligible for the consolidated billing charge.

Under the JP, The Companies’ Merchant Function Charges ('MFC') shall be changed to eliminate provisions that allow for mid-year adjustments to annual imbalance charges. In addition, the Companies will continue with the following modifications:

a. The MFC will be updated to reflect the Gas Supply Procurement target of $2.401 million for KEDNY and $0.349 million for KEDLI, and the Commodity-Related Credit and Collection target of $4.786 million for KEDNY and $1.269 million for KEDLI as shown in Appendix 3, Schedule 6.1 for KEDNY and Appendix 4, Schedule 6.1 for KEDLI. In addition, the conversion of the annual expense targets for gas supply procurement and commodity-related credit and collections charges from a fiscal year basis to a Monthly Cost of Gas ('MCG') year basis is shown in Appendix 3, Schedule 6.2 for KEDNY and Appendix 4, Schedule 6.2 for KEDLI.

b. The methodology for calculating commodity-related working capital expense will continue to be aligned with the methodology adopted by the Commission for NMPC in Case 08-G-0609, such that the working capital component of the MFC will be calculated each month by multiplying the updated lead/lag rate and the Companies’ pre-tax weighted average cost of capital, as shown in Appendix 3, Schedule 6.3, page 8 for KEDNY and Appendix 4, Schedule 6.3, page 8 for KEDLI.

c. The Companies will initially reset their (i) Gas Supply Procurement target, (ii) Commodity-related Credit and Collection Expenses targets and (iii) Return Requirement on Gas Storage Inventory effective August 1, 2021. Then, going forward, the Companies will reset these targets annually based on the latest sales forecast every September 1, and reconcile the revenue to target, effective the following January of each year. The initial one-month target for August 2021 will be added to the over/under recoveries for the period September 1, 2021, through August 31, 2022. An illustrative example of the stub period reconciliation is shown in Appendix 3, Schedule 6.4 for KEDNY and Appendix 4, Schedule 6.4 for KEDLI.

d. Appendix 3, Schedule 6.1 and Appendix 4, Schedule 6.1, for KEDNY and KEDLI, respectively, summarizes all the MFC components for Rate Year Two, as well as for the MCG year. These appendices align with the Companies’ Cost of Gas reconciliation.

e. Illustrative examples of the per dekatherm rates for all the MFC components are shown on Appendix 3, Schedule 6.3 to reflect the most recent targets for KEDNY and Appendix 4, Schedule 6.3 for KEDLI.

f. For the four months of the non-reconciled component of the MFC prior to the effective dates, the Uncollectible Expenses Associated with Gas Costs and Return Requirement on Gas Purchase-Related Working Capital will be added to the Make Whole provision as shown in the Appendix 3, Schedule 14.2 for KEDNY and Appendix 4, Schedule 14.2 for KEDLI.

As noted, the KeySpan LDCs will eliminate the mid-year adjustment to the MFC annual imbalance factor

The Companies will also eliminate the mid-year adjustment to the annual cost of gas imbalance factor

Case 19-G-0309 et al.

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