New York Utility Files to Lower Hourly Pricing Default Service Cutoff to 100 kW

Orange and Rockland Utilities, Inc. has filed with the New York PSC an implementation plan to expand the company's Mandatory Day-Ahead Hourly Pricing (MDAHP) default service program to customers with demands above 100 kW.

Currently hourly pricing applies to customers served under Service Classification (SC) Nos. 2, 3, 9, 20, 21, 22, and 25 who maintain a demand in excess of 500 kW in any two months of the previous 12-month period ending September 30. Per a prior Commission order, effective May 1, 2013, hourly pricing will apply to customers served under these SCs who maintain a demand in excess of 300 kW in any two months of the previous 12-month period ending September 30.

Under O&R's proposed expansion plan, MDAHP will be applicable to customers with demands of 100 kW or greater in any two months of the previous 12-month period ending September 30. Conversely, customers who do not maintain billing demands of 60 kW or greater for the 12-month period ending September 30 will be transferred out of MDAHP.

O&R proposes that customers 100-300 kW be provided with interval meters by May 1, 2014, with billing under MDAHP to commence May 1, 2015.

There are currently 230 customers with demands between 100 kW and 300 kW.

The New York PSC has been increasingly concerned with the net benefits of any further expansion of hourly pricing (see prior story).

O&R cited three types of costs required for expansion of the hourly cutoff from 300 kW to 100 kW: one-time costs, ongoing costs, and metering costs.

The one-time costs equal $43,500 and include items such as customer seminars, training, and licensing costs. The ongoing costs equal $145,500 and include items such as annual maintenance increases and the cost for hiring an additional administrator to handle the expansion of the program. Finally, there are metering costs that total $372,600.

Concerning the metering costs estimated in the plan, O&R has assumed wireless communications for the metering installations. However, as the threshold for MDAHP is lowered, there is the possibility that some meters will require a traditional phone line for communication; resulting in an additional expense of approximately $300 per meter per year. O&R currently does not have an estimate of how many customers would require a traditional phone line.

"A benefit to lowering the MDAHP threshold is that it gives customers more control over their energy costs since customers can adjust their usage during peak periods when supply prices are high. This in turn may reduce or mitigate increases in the electric system's peak period demand," O&R said.

O&R's implementation plan includes various customer outreach efforts, including hourly pricing education seminars. Among other things, these seminars will educate customers that in addition to the MDAHP program, customers may secure their electric supply from ESCOs. ESCOs would be invited to explain and promote their programs.

Orange and Rockland will also provide to customers moving to hourly pricing a list of ESCOs serving the market to help customers explore competitive market alternatives.

O&R noted that there is currently one customer with non-conventional meter equipment configurations included in the MDAHP expansion to 100 kW. This customer is part of the Palisades Mall located in West Nyack, New York.

The Commission-approved revenue meters for many of the accounts in the mall are Intellimeters, which are used in many sub-metered applications. By design the Intellimeters only provide kilowatt-hour usage and kilowatt demand. They cannot provide interval data or the communication functionality to transmit usage information to O&R on a daily basis. Due to this configuration, the customer would need to perform a costly retrofit of the internal electric distribution and metering system to be interval metered as required under MDAHP. In addition, any future MDAHP-eligible customers in the mall would need to have interval metering equipment installed that has been approved by O&R, as well as obtaining necessary approvals from local authorities having jurisdiction. The costs for installing the metering equipment and obtaining approvals are normally borne by the customer.

O&R requested that, due to the enormous cost that would be borne by the customer and lack of offsetting benefits to said customer, the Commission waive the requirement to be billed under MDAHP for any customer with an Intellimeter installation.

Case No. 11-E-0408