ESCOs Seek Changes To ConEd Purchase of Receivables Discount Rate Calculation Methodology

A group of ESCOs has sought changes to the calculation methodology used to determine the natural gas purchase of receivables (POR) discount rate at Consolidated Edison

The petitioners requested that the New York State Public Service Commission revise the methodology used by ConEd to reconcile its gas purchase of receivables (POR) discount rate charge. Petitioners included BBPC, LLC d/b/a Great Eastern Energy (GEE), in alliance with ESCO Petitioners Direct Energy Services, LLC; East Coast Power & Gas, LLC; Robison Energy, LLC and Robison Energy (Commercial), LLC

The ESCOs said that, under ConEd’s current methodology energy service companies participating in the purchase of receivables program are responsible for paying this charge and any positive or negative reconciliation flows back to customers through the Market Rate Adjustment

The ESCOs explained that, on January 26, 2017, GEE received notice that ConEd’s gas purchase of receivables rate, effective February 1st, 2017 would increase from 2.77% to 4.24%.

The ESCOs said that, following conversations with ConEd about the "steep" rate increase, GEE learned that certain elements of the POR rate are estimated and subject to future reconciliation.

Petitioners had previously specifically asked ConEd to explain why ConEd’s credit and collection rate almost tripled from 1.10% in 2016 to 3.17% in 2017. The ESCOs said that ConEd subsequently provided work papers which showed the derivation for the new rate and an explanation as to why the rate increased so dramatically. "GEE’s analysis showed that the credit and collection cost is driven by an estimate of gas commodity cost revenues. It also does not reflect subsequent changes to gas cost commodity revenues which now include storage demand charges. These storage charges were originally collected through the MRA," the ESCO said

The ESCOs said that the POR reconciliations are flowed back directly to customers through ConEd's Market Rate Adjustment (MRA) clause and not back to the ESCOs that originally incurred the costs.

"Petitioners therefore request that all reconciliations of POR percentages (both positive and negative) be rolled-forward to the subsequent year’s POR percentage year rather than through the MRA. This would better align the true-up adjustments with the parties that are initially paying the charges. This change will would [sic] be revenue neutral to ConEd, will not adversely impact ratepayers, and will promote fair and transparent markets," the ESCOs said