New York Utilities Propose Eliminating Swing Charges for ESCOs; Granting Storage Access to ESCOs

Keyspan New York and Keyspan Long Island have proposed a series of changes to the companies' retail access programs, relating to ESCO delivery requirements, ESCO access to swing assets, and the companies' balancing/nominations procedures.

Among other things, a collaborative process between the utilities and ESCOs reached a general consensus on (i) the elimination of swing charges in the firm transportation monthly balanced program and (ii) KEDNY and KEDLI providing ESCOs with access to storage assets, thus enabling them to manage their own delivery requirements.

"The Company proposed, and there was general consensus among the Collaborative Parties, that the Company restructure its firm transportation monthly balanced program to shift responsibility for managing daily and seasonal load swings from National Grid to the ESCOs. Under the Company's proposal, ESCOs providing service to firm customers will no longer be required to deliver the same amount of gas every day of the month regardless of their customers' actual usage. Instead, ESCOs will manage their customers' daily and seasonal load swings by adjusting their gas deliveries each day based on their customers' forecasted daily requirements for the next day. The Company will continue to balance actual daily requirements with actual daily deliveries for all customers, providing any additional supplies needed or absorbing any excess supplies delivered," National Grid said.

"Currently, the Company provides ESCOs sufficient supply and capacity to enable them to meet their customers' normal weather requirements. The Company handles the ESCOs' swing requirements by relying on swing assets that it retains for this purpose and charges the ESCOs a swing charge for this service. Under the proposed program discussed with the Collaborative Parties, the Company will expand the portfolio assets available to ESCOs to manage their customers' requirements in the firm transportation monthly balanced program. The Company will increase the amount of supply and capacity it provides to the ESCOs to enable them to meet their customers' design weather requirements as well as to manage their customers' daily swing needs. Specifically, the Company will increase the amount of pipeline capacity release and bundled storage supply (formally known as 'Virtual Storage' and now known as 'Retail Access Storage Service') it provides to the ESCOs. The Company will discontinue providing ESCOs a bundled winter supply and will, for the first time, release storage capacity directly to the ESCOs. In addition, if an ESCO's maximum capacity release and Retail Access Storage Service allocations cannot meet estimated requirements, the Company will automatically provide access to a peaking service to the ESCO for the remaining amount to meet the ESCO's firm requirements," National Grid said.

National Grid also agreed to align (on a proportional basis) the mix of transportation and storage assets made available to ESCOs with the mix of assets used by the company to serve its firm sales customers.

Under the proposed program changes, each ESCO providing transportation service to firm customers will be able to nominate any combination of pipeline capacity release, storage capacity and/or Retail Access Storage to meet the ESCO's calculated aggregate pool requirements based on temperature. National Grid further proposed, with general discussion and agreement in the collaborative, that ESCOs may transfer Retail Access Storage Service to other customers (i.e., firm, interruptible, or temperature controlled) or to other ESCOs. ESCOs will be able to nominate to non-firm customers only after meeting firm customer requirements.

National Grid said that, as a result of these program modifications, ESCOs will have greater ability to mitigate the fixed costs of the gas portfolio assets by marketing capacity not needed by their firm transportation customers to other customers.

During the collaborative meetings, ESCOs proposed that they be allowed to over-deliver on subsequent days to avoid a peaking supply charge. No consensus was reached and discussions are ongoing. Until concerns about preserving reliability are addressed, National Grid recommends no change.

A consensus was also not reached on a monthly cashout price. "Despite the lack of consensus, KEDNY and KEDLI strongly recommend a change to the monthly cashout price, currently priced at the Transco Zone 6 NY first of the month index price. A first-of-month cash out price is no longer appropriate given the recommended changes to the program. The Company believes the price for the monthly cash out should reflect the daily cash out prices of the given month. Therefore, the Company proposes the Monthly Cash Out Price be set at the simple average of the Daily Cash Out Prices that are in effect during the month," National Grid said.

National Grid reported that changes to its Gas Transportation Information System are required to implement the changes discussed above, and that it projects that the new GTIS system will be operational by November 2014.

Cases 06-G-1185 et. al.