Retail Suppliers To Pay $1.4 Million To Settle WGL Penalties

Several District of Columbia retail suppliers have reached a settlement with Washington Gas Light under which the suppliers would collectively pay to resolve disputes concerning penalties assessed on the suppliers by WGL.

WGL had originally assessed penalties on the suppliers for failure to adhere to a Delivery Matrix. Suppliers said that WGL could not impose the penalties for non-compliance with the matrix as the matrix is not contained in WGL's tariff.

Under a stipulation filed with the D.C. PSC, as a settlement of the penalties assessed to the competitive service providers (CSPs) by Washington Gas for failure to comply with the Delivery Matrix and Balancing Curtailment orders over the January through March 2014 period, the settling CSPs agree to pay their proportional amount of a dollar value equal to $1.4 million, without interest.

Each settling CSP that was assessed a non-compliance penalty by Washington Gas will pay its pro-rata share of the $1.4 million settlement amount. The specific amount to be paid by each supplier was confidential

Signatories to the stipulation which will pay a pro-rata share of the settlement amount include Integrys Energy Services - Natural Gas, LLC, Compass Energy Gas Services, LLC, Direct Energy Services, LLC (on behalf of several of its companies), NOVEC Energy Solutions, Inc., Bollinger Energy, LLC, Stand Energy Corporation. Washington Gas Light Company also signed the settlement

The settlement is subject to regulatory approval

The settlement also addresses various operational issues and provides that all CSPs participating in Washington Gas' Customer Choice Program in the District of Columbia must comply with WGL's six-tiered Pipeline Delivery Matrix

The settlement provides that, on any day when WGL's forecasted system send-out for the day is equal to, or more than, 600,000 dths, each CSP will have a "safe harbor" amount of 100 dekatherms per day to which WGL's six-tiered Pipeline Delivery Matrix does not apply. On any day when a CSP fails to comply with the pipeline allocation delivery requirements of the Delivery Matrix (after taking into account the "safe harbor" amount, if applicable), a charge of $25 per dth penalty shall be assessed for non-compliance with the Delivery Matrix, which addresses a CSP's failure to deliver the correct allocation of gas on the assigned pipelines in accordance with the Delivery Matrix.

The settlement also clarifies the penalty assessed on a CSP that fails to deliver the Daily Required Volume ("DRV") of gas commodity to serve its customers. If a CSP under-delivers the daily volume of commodity required to serve its customers, the penalty shall be the higher of: (1) $25 per dth; or (2) the highest index price listed in Platt's Gas Daily for the following pricing points - Columbia Appalachia, Dominion South Point or Transco Z6NNY, multiplied by a factor of 1.5, which shall be applied to the difference between the volume of gas delivered by the CSP and the daily volume of gas that the CSP was required to provide for its customers. If a CSP over-delivers the daily volume of commodity required to serve its customers, the penalty shall be $25 per dth, which shall be assessed on the over-delivered volume of gas. Any volumes subject to the foregoing penalties for Failure to Deliver the DRV (e.g., for under-deliveries or over-deliveries) shall not also be subject to the $25 per dth penalty for non-compliance with the pipeline allocation delivery requirements in the Delivery Matrix.

Regarding the interruptible delivery service tolerance band, Washington Gas will apply the +/- 15% tolerance band to compute penalties for failure to deliver the DRV on any day when the Company has not issued a balancing curtailment or an Operational Flow Order ("OFO"). The +/- 15% tolerance band will not be applicable on any day when Washington Gas has issued a balancing curtailment or an OFO. On such days, penalties will be assessed on all volumes not in compliance with the OFO or balancing curtailment.

Washington Gas agrees to communicate to CSPs on a monthly basis the volume of capacity that will be assigned to the CSP by Washington Gas on the designated interstate pipeline during an applicable month, if a CSP does not choose a specific pipeline. WGL will bill each CSP for its capacity assignment that is not accepted on the pipeline during the applicable month at the pipeline's monthly reservation charges, plus $1.00 per dth.

Under the settlement, Washington Gas agrees to meet quarterly with the Joint CSPs and other interested CSPs to discuss implementation of a daily imbalance trading program and will schedule a conference call with CSPs and Baltimore Gas and Electric (BGE) before August 30, 2015, to discuss BGE's approach to daily imbalance trading. Washington Gas will proceed in good faith to implement such a program and to meet quarterly with CSPs to keep them apprised of progress and discuss any issues that may arise, the settlement states.

D.C. Formal Case No. 1128