New York Staff Proposes to Make Charges for Winter Bundled Sales Service Consistent With Charges to Firm Sales Customers

Staff of the New York Public Service Commission have proposed to make consistent, at Central Hudson Gas & Electric, charges to retail suppliers for Winter Bundled Sales Service, and charges paid by firm sales customers for storage.

Staff's recommendations came in a proceeding reviewing the acquisition of Central Hudson (the Company) by Fortis Inc. (Case 12-M-0192).

Winter Bundled Sales Service (WBS) is a virtual storage service that is provided to Retail Access Suppliers. The suppliers are provided with storage space demand determinants for each customer in their pool. The aggregated total volume of the storage space for all customers in a Retail Supplier's pool will be the supplier's requirement under this service. The Retail Supplier is required to purchase this volume requirement from the Company during the winter period November through March. The purpose of this service is to provide storage service to firm transportation customers where it may not otherwise be available and to provide these transportation customers with services similar to those provided firm sales customers.

Staff noted that firm sales customers are charged for storage gas during the winter period as its usage is planned and executed. The storage costs are stated in the monthly Gas Supply Charge (GSC) Statements as part of the monthly commodity cost of gas. This cost is determined by the actual commodity cost of storage gas at the end of the previous winter season (end-of-month March) and the subsequent cost of the gas injected into storage from April through October of each year.

In contrast, WBS service costs are determined by averaging the publicly stated index prices for natural gas at two distinctly different purchasing locations. Although the WBS method tends to approximate the actual commodity cost of storage gas, it does not account for the beginning cost balance of gas in April each year and does not account for gas actually purchased by the Company for storage injections, Staff said.

Since WBS became mandatory for all Retail Access Suppliers on April 1, 2012, these charges should be as fair and equitable with each other as feasible, Staff said.

"Our recommendation is to use a weighted average cost of commodity for gas injected into storage during the non-winter season, instead of only two separate price index points as currently utilized. This can be accomplished by using the commodity cost of gas each month from April thru October ... or by using the same commodity price of storage charged to firm customers during the winter period," Staff said.