|
Search |
Blue Rock Energy Seeks PSC Order Preventing KeySpan-NY from Terminating Blue Rock's Ability to Serve Customers
October 7, 2011
Email This Story
Brooklyn Union Gas (National Grid/KeySpan New York) is seeking to involuntarily terminate Blue Rock Energy's right to serve customers at Brooklyn Union, due to a failure to deliver, and Blue Rock Energy has filed a complaint at the New York PSC to stop the termination (Case 11-01982).
Brooklyn Union, which was originally seeking to terminate Blue Rock's ability to serve customers as of September 13, has agreed to withhold further discontinuance proceedings and activities pending final resolution of the complaint by the PSC.
Brooklyn Union's sought termination relates to an under-delivery by Blue Rock Energy during Labor Day weekend, which Blue Rock says was due to a force majeure and thus does not compel termination, per the Uniform Business Practices.
The amount which Blue Rock failed to deliver was only 31 Mcf, with an economic value of $150, and Brooklyn Union has conceded that the shortfall did not threaten system integrity.
To meet its anticipated load requirements in Brooklyn Union on September 3-5, Blue Rock scheduled the delivery of 31 Mcf per day for Saturday, Sunday and Monday (9/3-9/5) to be delivered to Brooklyn Union via Transco. The gas supply was purchased from ConocoPhillips and properly scheduled for the three days. At the time that the gas was scheduled, no party that Blue Rock dealt with indicated any concerns or identified any problems regarding gas supplies on the Transco pipeline, Blue Rock said.
However, ConocoPhillips declared a force majeure due to tropical storm Lee, and curtailed deliveries from the Gulf beginning September 2.
After first learning of the force majeure after calling ConocoPhillips on the morning of September 3, Blue Rock, at about 10:15 a.m., contacted the Gas Control unit of Brooklyn Union, and informed the LDC that it would be under-delivering on Transco. Blue Rock inquired if it could make a retroactive nomination on September 6 to make up for the under delivery, but Brooklyn Union indicated that this option was not available.
To replace the gas curtailed by ConocoPhillips, Blue Rock examined and attempted to secure gas from another source but reported that it was unsuccessful as it was a holiday weekend.
Subsequently, on September 9, Brooklyn Union informed Blue Rock that it would terminate Blue Rock's right to serve customers at Brooklyn Union, for failure to provide for delivery of at least 95% of the amount of natural gas directed by a distribution utility for delivery or at least 80% of the daily metered usage of the ESCO's customers or a Direct Customer's specified load or lower percentages included in a balancing program established in a distribution utility's tariff and/or any operating agreement.
In its complaint to the PSC, Blue Rock said that UBP Section 2.F.7.d delineates the conditions governing discontinuance of an ESCO's participation in a gas utility's retail access program.
Blue Rock said that this UBP section provides that upon, "a distribution utility determination that an ESCO or Direct Customer responsible for the nomination and delivery of natural gas failed, except in force majeure conditions, to nominate and/or deliver sufficient natural gas to the distribution utility's service territory to satisfy at least 95% of the amount of natural gas directed by a distribution utility on any three days during any month, the distribution utility may initiate a discontinuance process..." [emphasis by Blue Rock]
Blue Rock further noted that the Brooklyn Union tariff provides, "ESCOs/Direct Customers will be obligated to continue to deliver, or cause to be delivered, a volume of gas up to their maximum delivery obligations, unless upstream force majeure interruptions or curtailments prevent ESCOs/Direct Customers from securing or delivering such supplies."
Though Brooklyn Union's response to the complaint is not available online, Blue Rock indicates that the LDC has made a distinction between a supply-related force majeure and a pipeline Force Majeure. Blue Rock noted that the UBP makes no such distinction. "The UBP references 'force majeure conditions' generally, and the tariff identifies force majeure that prevents the ESCO from 'delivering or securing' needed supplies," Blue Rock said.
"[T]he Force Majeure was unilaterally imposed by Conoco due to the hurricane conditions in the Gulf of Mexico which restricted deliveries on Transco. Blue Rock had no prior notice or control over this Force Majeure and learned of it only after its invocation by Conoco. This is a classic force majeure condition in the gas industry and represents circumstances clearly out of the reasonable control of Blue Rock," Blue Rock said.
Brooklyn Union has taken the position that Blue Rock failed to apply diligent efforts to address the force majeure. Aside from arguing that the UBP places no such requirement for "diligent" replacement efforts to make the force majeure excusable, Blue Rock said that its actions to replace the gas lost due to the force majeure were reasonable. These included:
- Blue Rock attempted to move gas from Dominion Southpoint to a Tennessee interconnect to a Transco interconnect to the KEDNY City Gate. The restrictions at various pipeline points/meters on the Tennessee pipeline limited the ability to meet the KEDNY delivery requirements from this effort.
- Obtain a Loan of gas from Tennessee at Rivervale Delivery Meter/Transco interconnect to deliver to KEDNY. Restrictions at Rivervale limited this effort.
- General discussion with Tennessee weekend on-call person resulted in no suggestions that would result in deliveries to KEDNY via Tennessee to Transco interconnects.
- Attempted to utilize loaned gas from Transco. Blue Rock was advised that a Park and Loan agreement could not be set up until Sept. 6.
Furthermore, Blue Rock argued that Brooklyn Union failed to provide a five day cure period to correct the reason for the notice of discontinuance. Blue Rock said that UBP Section 2.F.7.d provides that the utility, "may initiate a discontinuance process no sooner than five business days (cure period) after receipt by the ESCO ... of discontinuance notice."
While Brooklyn Union has justified the lack of a cure period due to earlier delivery problems, under which no adverse action was taken against Blue Rock, Blue Rock said that these prior incidents cannot be used to avoid the cure period (by essentially starting the period earlier), because otherwise ESCOs would be subject to an open-ended discontinuance process where even an ESCO with delivery failures years in the past could be subject to termination without a cure period.
Additionally, Blue Rock said that the UBP provides that if the ESCO, "provides adequate assurances and a description of any necessary process changes that ensure adequate nominations and deliveries on or before the expiration of the cure period, the distribution utility shall stop the discontinuance process."
"Such an assurance was available, as the Force Majeure -- the sole cause of the failure to deliver -- was lifted on September 7, 2011. Thus by September 7 at least two days prior to the issuance of the September 9 Notice of Discontinuance, sufficient assurances has already been provided to assure adequate deliveries. Accordingly, the discontinuance should have been stopped as required under the UBP," Blue Rock said.
Email This Story
Be Seen By Energy Professionals in Retail and Wholesale Marketing
Run Ads with Energy Choice Matters
Call Paul Ring
954-
|
Search |
