N.Y. Collaborative Recommends Modest Acceleration in Switching Timeline

A New York collaborative has recommended to the PSC that the existing on-cycle natural gas switching timeline of 15 calendar days be modified to 10 business days.

The collaborative recommended that the accelerated switching timeline be effective as of March 1, 2016

The collaborative concluded that, "Further reductions in the timeline are not practical at this time, primarily as a result of existing gas capacity assignment requirements."

"As a practical matter, gas capacity assignment requirements preclude substantial reductions in the time required to process changes of a customer’s gas supply provider ... Regardless of whether the utility processes customer switches on a cycle basis or on the first day of the calendar month, all utilities release capacity to ESCOs prior to the first day of the calendar month," the collaborative noted

"The major price formation event in the natural gas industry, known as 'Bid Week,' is conducted during the last business days of the preceding calendar month. On the third day of Bid Week, another pricing event known as the 'NYMEX Close' occurs. These two events essentially determine the wholesale market price of natural gas for the upcoming month and indirectly, the retail rates charged by utilities for sales service. Many ESCOs prefer to have capacity releases completed prior to Bid Week so that they can trade based upon those assets, re-release the capacity to asset managers and/or otherwise optimize their gas supply portfolios. Some ESCOs believe that without having these assets in-hand, they cannot compete with utilities on a level playing field. Thus while there is no direct requirement in the Capacity Planning and Reliability Orders, the convention followed by New York utilities is to endeavor to have capacity releases completed in advance of Bid Week," the collaborative noted

The collaborative did not recommend the use of off-cycle switching to accelerate switches.

The collaborative recommended that interested parties approach the North American Energy Standards Board (NAESB) to automate the existing manual process for entering capacity releases into pipeline databases, thereby potentially further reducing the required gas switching timeline

"[I]t may be possible to reduce the gas switching timeline if the process of entering capacity releases into pipeline EBBs can be automated. Specifically, two to three additional days could be cut from the existing process if a flat-file upload transaction could be made to enter capacity releases into pipeline EBBs. Automating this process in a cost-effective manner will require voluntary support from the pipelines; the current manual EBB-based process is compliant with FERC regulations and any effort to change such regulations would take time, could be costly and would not necessarily be successful," the collaborative said

Case 98-M-1343