Central Hudson Revises Proposal to Implement WACOC Pricing for Capacity Releases

Central Hudson Gas & Electric has modified its tariff filing to implement Weighted Average Cost of Capacity (WACOC) pricing for capacity released to retail suppliers required to accept mandatory assignment of capacity.

The PSC had previously ordered the use of WACOC pricing.

In a June compliance filing, Central Hudson proposed to base the WACOC on rates that Central Hudson pays for firm pipeline capacity as published in the pipeline’s FERC tariff and/or as negotiated with the pipeline, inclusive of a provision for a rate revision should the rate differ by greater than plus or minus 5%. At that time, Central Hudson had also proposed to maintain the existing Capacity Assignment Adjustment (CAA) mechanism, but proposed to revise the calculation to surcharge or credit firm transportation customers the difference between the WACOC charged to retail suppliers during the 12-month period ending March 31 and the actual WACOC experienced by Central Hudson during the same period.

Pursuant to discussion with PSC Staff, Central Hudson has revised its original proposal, and now proposes to eliminate the Capacity Assignment Adjustment.

"The need for a reconciliation component is mitigated by the fact that volume changes are usually known ahead of time, and pipeline tariff rates change infrequently. Additionally, the five (5) percent threshold for recalculating would effectively capture any significant changes to the WACOC rate," Central Hudson said.

However, Central Hudson shall retain the CAA to reflect the reconciliation of the final period prior to the November 1, 2012 changes in capacity release pricing.