|
Search |
N.Y. PSC Requires Increase in ConEd Monthly Rate Adjustment to Address ESCO Under-Deliveries
September 19, 2011
Email This Story
The New York PSC has ordered Consolidated Edison to increase the load following component in the monthly rate adjustment (MRA) for 2012 to 2014 to recover the gas costs for under-deliveries of gas for transportation customers resulting from the continuation of the current lost and unaccounted for gas (LAUF) incentive, which will be maintained despite being incorrect and allowing the continued under-deliveries by ESCOs (10-G-0643).
The PSC's directive is part of a series of orders meant to correct an error associated with the calculation of the lost and unaccounted for gas (LAUF) component at ConEd for the period September 2004 to August 2010. Due to the error, ConEd's factor of adjustment (FOA) from September 2005 to August 2010 was too low.
This error resulted in an over-collection of $20.51 million in gas costs, including interest, from firm full service customers for the 2005 to 2010 annual reconciliations of purchased gas expenses and recoveries. ConEd's error also resulted in approximately $9.71 million of gas costs assumed by firm full service customers for under-deliveries of gas for transportation customers.
The six-year understatement of the LAUF was the result of a ConEd internal reporting error where ConEd's sale of gas to ESCOs for balancing city gate, metered in, deliveries for Retail Choice customers' metered out sales was inadvertently, and incorrectly, counted as metered out sales. Thus, the count for gas that ConEd considered as actually delivered to end users, metered out, was artificially increased thereby reducing ConEd's LAUF.
ConEd reported that, using corrected figures, the current FOA should be 1.0297 (which is equivalent to line losses of 2.884 percent), rather than the current 1.0133.
However, the PSC maintained the current tariff FOA of 1.0133 because, "ESCO pricing and contracts may have been predicated on the now known to be erroneous 1.0133 value."
"While the ESCOs' gross and net margins are not known, an additional 1.64% deliveries potentially represent a significant percentage of the ESCOs' gross margins and an even larger percentage of their net margins. Thus, we believe the most prudent course of action is to keep the tariff FOA in the current three year rate plan as discussed above. ESCOs should be aware, however, that the tariff FOA is likely to be changed in the next rate plan based on the revised LAUF calculations," the PSC said.
By maintaining the current FOA of 1.0133, ESCOs will continue to under-deliver gas.
"[W]e believe that the best way for the Company to address the 1.64% commodity volume discrepancy is for the Company [ConEd] to collect gas commodity costs for full service customers through the gas adjustment annual reconciliation 'over/under' recovery, and the corresponding 1.64% difference from all transportation-only customers through a uniform surcharge to all customers in the monthly rate adjustment (MRA) as part of its load following component. Because all firm customers pay the MRA, both full service and transportation customers will pay the surcharge, but this mechanism allows the Company to credit full service customers in its gas adjustment reconciliation such that it matches the 1.0133 factor of adjustment required of ESCOs thereby negating the surcharge on the full service customers. Including the surcharge in the load following component is proper as it is known that the Company's gas system will require this additional gas above the previously expected load requirements," the PSC ordered
As to the prior over-collection of gas costs from full service customers, this amount shall be addressed through the current LAUF mechanism. The PSC directed ConEd to review Staff's calculation which placed the amount to be refunded as $9.71 million, plus $0.52 million interest. Within 30 days, ConEd shall file its own analysis of the overpayment, including interest, paid by full service customers, along with a proposal for any remedy, including potential refunds.
Email This Story
Be Seen By Energy Professionals in Retail and Wholesale Marketing
Run Ads with Energy Choice Matters
Call Paul Ring
954-
|
Search |
