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Michigan PSC Approves Settlement Providing Greater Flexibility to Choice Supplies at Consumers
May 31, 2011
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The Michigan PSC approved without modification a settlement under which Consumers Energy will provide additional flexibility to natural gas choice suppliers to adjust their required daily deliveries of natural gas (U-16418, 5/17).
Under the current choice tariff, Consumers provides each supplier with a monthly schedule of quantities for delivery of gas into the Consumers system on behalf of the supplier's customers. The initial schedule indicates volumes that the supplier is required to deliver each day, and this schedule is updated by Consumers on a monthly basis. The current tariff provides that, for most choice customers, scheduled daily volumes will not normally vary by more than plus/minus 10% from 1/365th of the estimated annual customer load to be served by the supplier.
Under new language to be added to the tariff, Consumers will consider variances in deliveries up to +/-50% from 1/365th of the estimated annual customer load to be served by the supplier for the delivery months of January through March, provided that the supplier identifies the pools to be reviewed by the first business day of the month prior to the scheduled delivery. Consumers will review no more than five pools per supplier per month, and any variance in delivery beyond +/-10% will be at Consumers' sole discretion.
As done currently, scheduled daily volumes for choice accounts serving electric peakers, greenhouses, grain dryers, asphalt plants and large new loads without historical load information may be determined by Consumers on a different basis than set forth above.
The supplier shall be responsible for obtaining sufficient pipeline capacity to meet its delivery obligations.
The approved settlement also compromises on Consumers' original proposal to require four business days' notice prior to the start of the billing month for suppliers to change a choice customer's rate under utility consolidated billing. Currently, only 48 hours notice for a supplier rate change is required.
Under the settlement, supplier rate changes will require three business days notice to Consumers prior to the start of the billing month.
The stipulation adopted without modification Consumers' proposal to apply current cash-out or alternative procedures, currently triggered only in situations where the supplier's price is higher than that of Consumers, to all situations where the MMBtu delivered by the supplier converted to Mcf exceeds the billed customer consumption for the year being reconciled, regardless of the relative prices of the supplier and Consumers (see 8/17). Under this change, volumes returned to the supplier may only be held in Consumers' storage pool for a maximum of two months, after which time Consumers may impose a holding fee or start cash-out procedures.
Per the stipulation, Consumers will conduct a study and implement economic measures that will reduce the level of lost and unaccounted for gas, including storage losses. Consumers will file a copy of that study in its next rate case. The settling parties also agreed that the gas-in-kind percentage for end-user transportation customers will remain at 1.83%. Consumers' had originally proposed raising the factor to 2.12%.
Additionally, parties agreed that, in its next general gas rate case filing, Consumers shall file a cost of service study for use in developing cost allocation factors that utilize a historical peak day approach.
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