SCMC Raises Concern on Demand Component in National Fuel Gas Distribution Cash-Out Price

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December 20, 2010

The Small Customer Marketer Coalition has raised new concerns regarding revised imbalance procedures at National Fuel Gas Distribution in New York, specifically regarding the components used in the index price for cash-outs (10-G-0474).

SCMC said that it agrees with several modifications made by National Fuel Gas Distribution (Only in Matters, 12/8) which added several safe harbor provisions exempting ESCOs from paying (or receiving for surpluses) a premium (discount) over the market price for imbalances.

The index price to be used for cash-outs will be the Dominion South Point plus transportation costs.  During a November meeting with ESCOs, SCMC said that Distribution indicated that transportation costs would include all pipeline related charges.  These pipeline charges include Demand (capacity), Variable (commodity), and Fuel (losses).

"The inclusion of Demand Charges appears to be inappropriate.  The ESCO is already paying for Demand Charges for a Design Peak Day through mandatory capacity release," SCMC said.

"If the Company applies demand charges to a deficiency balance, the ESCO will be paying twice for the same pipeline asset.  The ESCO would be paying for Design Peak Day pipeline capacity plus an additional demand charge in the Index price," SCMC said

"SCMC therefore recommends that the Commission and NFG consider modifying the components incorporated in the Index Price to eliminate this double assessment for demand charges."

 

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