National Fuel Gas Distribution Adds "Safe Harbor" Provisions in Revised Cash-Out Procedures

Email This Story
December 8, 2010

National Fuel Gas Distribution Corporation has filed further revisions to its imbalance and cash-out procedures with the New York PSC, adding a "safe harbor" provision to the pricing of imbalances.

The changes were in response to comments from the Small Customer Marketer Coalition, Fluent Energy, and the National Energy Marketers Association (10/20), which raised concerns about cash-outs not at market price in cases where the ESCO meets the daily delivery requirement set by National Fuel Gas Distribution, but which still results in imbalances.  ESCOs also raised concern with the ability of Distribution to replace cash-outs with rollovers as operating conditions permit or require.

In response to such concerns, National Fuel Gas Distribution said that a System Imbalance Position will be computed by dividing the system total Initial System Imbalance Volume (ISIV) by the system Total Monthly Consumption (TMC), and converting the quotient into a percentage.  If the System Imbalance Position is within the range 5% long to 5% short, then all Imbalance Holders will be assigned to the Market Pricing Tier for cash-outs, rather than sliding tiers based on their unique position, in which they would pay (or be paid, for surpluses) an increasingly higher (lower) index of the market price as their imbalance increases.

Additionally, National Fuel Gas Distribution will create another safe harbor provision under which an individual Imbalance Holder would be assigned to the Market Pricing Tier without regard to its absolute imbalance position.  If the Imbalance Holder's allocated deliveries for each of the pools for which it is responsible are within 2% of the Aggregated Daily Delivery Quantities (ADDQ) provided by the National Fuel Gas Distribution, then the safe harbor would apply.  In cases where the Imbalance Holder is responsible for pools where Distribution does not assign an ADDQ, the Total Monthly Consumption for each customer pool will be substituted for the ADDQ.

Finally, as originally proposed, if an Imbalance Holder's Final System Imbalance Volume (FSIV) is less than 1,000 Mcf, it will be assigned to the Market Pricing Tier.

National Fuel Gas Distribution also proposed additional language to qualify the circumstances under which it would suspend the default cash-out mechanism and resolve imbalances through rollover, in order to, "make clear that such an event would not be administered arbitrarily."

Additionally, a provision regarding public notice to Imbalance Holders of any suspension of cash-outs and use of rollovers was added, with such notice occurring no later than the beginning of imbalance trading.  Distribution said that it will also add similar language to its next Gas Transportation Operating Procedures Manual (GTOP) filing.

Distribution further clarified that the purpose of the language is to provide certainty in the procedures which shall apply if the cash-out were suspended.  "It does not anticipate that this provision would routinely be implemented, if ever," Distribution said.

Email This Story

HOME

Copyright 2010 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.

 

Be Seen By Energy Professionals in Retail and Wholesale Marketing

Run Ads with Energy Choice Matters

Call Paul Ring

954-205-1738

 

 

 

 

 

Energy Choice
                            

Matters