ConEd Reports Measures Undertaken Which Result In Nearly 9¢/kWh Decrease In Default Service Supply Cost

February 28, 2022

Email This Story
Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com

Consolidated Edison (Con Edison or ConEd) has submitted its response to New York PSC Chair Rory Christian detailing measures it has undertaken to mitigate the immediate default service supply price spike, and to reduce the risk of severe price volatility in the future

Christian had directed Con Edison to file its response by February 28 and had, among other recommendations, said that Con Edison should mitigate the recent high customer bills by providing the full value of its hedged commodity procurements to customers in the next billing cycle

See more background on the issue here

In a letter dated February 24 to Christian, Consolidated Edison, Inc.'s Chairman & CEO Timothy P. Cawley reported that, for bills issued beginning on February 11, 2022 and continuing until the next adjustments take effect in March, Con Edison has reduced the supply charge for its full-service customers (other than those on hourly pricing) by about 8.8 cents per kilowatt-hour in part to account for the additional value of its January hedges that was not reflected in supply prices in the previous billing cycle.

"This adjustment will provide full-service customers with significant price reductions that they did not realize in their earlier bills," Cawley wrote in the response

Immediate Customer Relief by Providing Full Hedge Value

Cawley wrote, "We understand the hardship that higher energy bills can cause for our customers. We take seriously the need to mitigate this cost volatility and to help customers who need assistance paying their bills."

"The Company hedges a portion of the supply that it procures on behalf of its customers to mitigate the impact of market price volatility on customer bills. Once each month, Con Edison forecasts the value of its hedge -- whether positive or negative -- and adjusts customer supply costs to account for those forecasted gains or losses. If actual prices differ from the forecast, in either direction, then Con Edison reconciles this difference by adjusting these costs in the following month," Cawley wrote

"In early January, based on available market data, Con Edison forecasted that monthly hedge value. As has been our process for many years, we applied that forecasted hedge value to bills over the next billing cycle along with the actual, market supply prices. When temperatures fell and energy use rose, those market supply prices increased significantly and that, coupled with the fixed hedge value for the month, resulted in the significantly higher costs on customer bills. As has also been our process, the full balance of that hedge value is passed back to customers during the next month, in this case, beginning on February 11, 2022," Cawley wrote, resulting in the nearly 9¢/kWh supply price reduction discussed above

Billing Process Enhancements to Reduce Likelihood of Extreme Volatility

"As requested in your letter, we have completed an initial review of our supply billing processes to identify opportunities to further reduce volatility. As a result of this initial review, we are adjusting our billing process to more closely align, on monthly bills, the impacts of supply price fluctuations with the results of our hedging positions. The adjustment will serve to reduce the likelihood of supply cost volatility causing significantly higher customer bills," Cawley wrote

"We have had discussions and will continue to collaborate with Staff to consider future process changes," Cawley wrote

Improved Customer Communications Regarding Forecasted Commodity Price Changes

"Con Edison is also committed to improving its communications to electric and gas customers to provide better information about potential significant increases in customer bills resulting from higher forecasted supply prices," Cawley wrote

"Before this winter, Con Edison informed its customers that it expected natural gas prices to rise. Going forward, we will specifically address both gas price volatility and its follow on impact on electric price volatility in our pre-winter communications. These communications will also continue to provide cost-saving tips and information on payment assistance programs. We will also provide notice to customers in cases where supply price increases could result in significantly higher bills," Cawley wrote

Cawley's response also detailed Con Edison's range of programs that offer, "meaningful discounts or more flexible payment terms," including deferred payment agreements, payment extensions, level payment plans, energy affordability program discounts for low-income customers, and working with customers and local and state government agencies to facilitate the receipt of public assistance by customers

Writing to Christian, Cawley wrote, "As you state in your letter, we must continue to work together to advance the State's ambitious clean energy goals. Con Edison supports those goals and is implementing its own Clean Energy Commitment to play a leadership role in achieving them."

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Energy Pricing Analyst -- Retail Supplier
• NEW! -- Digital Marketing Manager -- Energy Marketer

HOME

Copyright 2010-21 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.