NiMo Settlement Term Sheet Leaves ESCO, Utility Cost Comparison to Collaborative; Backout Credits Set

Issues regarding the provision of ESCO and default service cost comparisons at Niagara Mohawk would be delegated to a collaborative under a term sheet setting forth the key terms of a settlement agreement among NiMo, Department of Public Service Staff, Multiple Intervenors, and other parties that may execute a Joint Proposal in NiMo's current electric and gas rate cases.

The term sheet does not reflect the final agreement of the parties and is subject to modification.

Specifically, the term sheet provides that NiMo will convene a collaborative as soon as practicable but no later than 60 days following a Commission order adopting the Joint Proposal to develop the materials (including a bill calculator and other materials discussed in the collaborative) to be provided to residential ESCO customers concerning the amount that the customer would have been billed if they had purchased commodity from NiMo.

The collaborative will also discuss what bill comparison tools could be provided to residential non-ESCO customers.

The term sheet provides that the incremental costs that NiMo will incur to develop and provide the cost comparison information will not exceed $298,000 and will be recovered by offsetting the costs against electric deferral credits provided for in the term sheet.

Other notable provisions of the term sheet include updated ESCO billing charges as follows:

• $1.24 to an ESCO that supplies electricity to an electric-only customer

• $1.24 to an ESCO that supplies gas to a gas-only customer

• $0.62 to an ESCO that supplies electricity to a gas and electric customer.

• $0.62 to an ESCO that supplies gas to a dual gas and electric customer.

The customer backout credit will equal the ESCO billing charge

Customers electing paperless bills will receive a $0.40 credit per service period.

The term sheet also provides that NiMo shall implement a new bypassable charge in the Merchant Function Charge to recover the return requirement on Gas Purchase Related working capital using NiMo's pre-tax WACC.

Additionally, the term sheet provides that if an ESCO requests an ICAP tag for any account, including accounts that have an incentive allocation (i.e., Recharge NY), NiMo will respond via email with the serviceable load (i.e., the load that can be served by the ESCO) and the ICAP tag for that load along with the notation "Reported ICAP Tag Adjusted for Special Programs" if applicable.

NiMo also confirms that, in accordance with the Joint Proposal dated December 19, 2005 in Case 05-M-0333 (Competitive Opportunities Development Plan), under the existing Purchase of Receivables program for customers in SC-3 and SC-3A, the ESCO has the option to use either a one-bill option or two-bill option for individual customers. However, if the ESCO seeks to move a customer from the two-bill option to a one-bill option, NiMo's purchase of the accounts receivable of such customer will be subject to the conditions set forth in the Competitive Opportunities Development Plan.