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Central Hudson Files Clarifications to Gas Balancing, Settlement

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October 6, 2010

Central Hudson has filed with the New York PSC several gas tariff amendments to clarify the daily balancing requirement and revise the monthly balancing and semi-annual settlement provisions contained in the company's retail access program.  The company is proposing that these amendments become effective April 1, 2011 to allow time for required programming changes.

The tariff currently requires retail suppliers to deliver to Central Hudson on a daily basis a predetermined volume of gas called the Aggregated Daily Contract Quantity Forecast (ADCQforecast).  In the event of a period of peak weather conditions, or other system emergencies, Central Hudson may increase the volume of natural gas to be delivered by the Incremental Daily Contract Quantity (IDCQ).

The balancing/settlement of delivered volumes is done on a daily, monthly and semi-annual basis.  On a daily basis, retail suppliers are required to deliver gas volumes that are within 2% of the ADCQforecast. In the event that daily deliveries are either less than 98% or exceed 102% of the ADCQforecast, retail suppliers are required to purchase deficiencies from or sell excesses to Central Hudson.

The proposed tariff amendments clarify this process to explicitly state that the daily balancing process includes any applicable IDCQ.

Currently, the tariff provides for a monthly cash out by estimating customer consumption using actual degree-days and the same heat and non-heat factors utilized in the ADCQforecast.  This estimate is the Aggregated Daily Contract Quantity Actual (ADCQactual).  The monthly cash out for each retail supplier is equal to the difference between the monthly aggregated ADCQforecast minus the monthly aggregated ADCQactual.  A final settlement is performed on a semi-annual basis for each retail supplier to reconcile the gas supplies delivered and the natural gas consumed.  This reconciliation compares the total usage for a retail supplier's pool of customers to the total pool deliveries, inclusive of confirmed nominations including incremental gas, any daily and monthly imbalances, if applicable, and any Winter Bundled Sales volumes.

Under the filed amendments, Central Hudson is proposing to revise the monthly and semi-annual processes to move the recognition of incremental gas from the semi-annual reconciliation to the monthly cash out, in order to better align volume imbalances and pricing.

   
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