NYSEG Seeks Rehearing of FERC Order Declining Rebilling for Metering Errors

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November 30, 2010

New York State Electric & Gas Corporation petitioned FERC for rehearing of the Commission's October 28 order denying NYSEG's request to rebill certain charges dating back 10 years to correct metering errors from both NYSEG and Niagara Mohawk (EL09-26).

"The Commission agrees with those parties who argue that section 7.4 of the Services Tariff reflects Commission policy that, once invoices are finalized, they should generally remain unchanged, even if later found to contain errors, so that the market participants can rely on the charges contained in the invoices," FERC said in its decision (10/29).  

In particular, FERC cited the impact on ESCOs, faced with a rebilling for 10 years' worth of settled charges, as causing a "significant injustice," while concluding that not correcting the errors, which FERC said were minor, would not cause NYSEG significant injustice.

NYSEG, in its rehearing request, faulted FERC's logic in concluding that the $21 million in higher costs imposed on NYSEG due to the metering errors is insignificant, while finding that lesser losses to ESCOs would be significant in comparison.

"The Commission claims that total losses tallying over $21 million are 'minor' and not 'significant.'  The Commission claims that these losses were 'so slight and caused so little harm to NYSEG as to go unnoticed for all those years.'  Here, the Commission fails to engage in reasoned decision-making, because it also finds that correcting the invoices would inflict 'large additional bills' and 'inequity and injustice' on the ESCOs.  However, none of the ESCOs will suffer more than slightly over 3% of the losses experienced by NYSEG; the majority of affected ESCOs would be reinvoiced for less than 0.50% of the amounts.  It is arbitrary and capricious to deem the more than $21 million of NYSEG's loss to be insignificant and losses of no more than 3% (and in most cases less than 0.50%) of the same amount to be significant," NYSEG said.

NYSEG also argued that FERC, "arbitrarily and capriciously elevated Commission policy above both tariff provisions and FERC precedent in refusing to grant NYSEG relief from the harm it suffered due to metering errors," as the Commission ignored, in favoring settlement finality, a NYISO tariff provision expressly permitting FERC to order rebilling in certain circumstances.

Finally, NYSEG said that the metering errors qualify as "extraordinary circumstances" which compel rebilling, since the errors occurred when the NYISO simultaneously launched the day-ahead and real-time energy market operations, as well as the ancillary services and capacity markets -- an ambitious launch which no other RTO has undertaken (instead using a phased approach).  

"This ambitious approach, supported by Commission policies resulted in numerous early challenges with markets, data processing systems, and the billing system. In short, the NYISO's start-up constituted 'extraordinary circumstances' that are very unlikely to reoccur," NYSEG said.

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