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Utility Opposes Adding Discount Rate To POR (PUC Staff Seeking Discount)
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Enbridge Gas Ohio (f/k/a Dominion East Ohio) is opposing a proposal from the Staff of the PUC of Ohio to introduce a discount to Enbridge Gas Ohio's purchase of receivables program
Staff's sought addition of a discount to Enbridge Gas Ohio's POR program, which has had zero discount for approximately two decades, had been first reported by EnergyChoiceMatters.com
Aside from recommending the use of a POR discount, Staff, in a report on Enbridge Gas Ohio's current rate case, had alternatively suggested that mechanisms be explored to address write-offs associated with retail supplier debt, which is currently recovered under Enbridge's Uncollectible Expense Rider (UEX)
Staff specifically cited as worthy of exploration a policy of limiting the purchase of receivables
to the Standard Choice Offer rate.
Staff further recommended that Enbridge Gas Ohio examine, "the continued need
for a purchase of receivable program as the Company exits the retail merchant function."
In response to Staff's POR discount proposal, Enbridge Gas Ohio said, "Generally speaking, this
recommendation appears premised on review of a very narrow data set, does not include any
analysis of the impact on the competitive market or on customers if the recommendations on
pricing were adopted, and does not address whether such pricing regulation would be permissible
under Ohio law."
Enbridge Gas Ohio warned that the introduction of a discount to the POR program, "could harm competition and create other unintended consequences," including limiting the availability of fixed price retail supplier offers that Enbridge Gas Ohio said customers use to minimize price volatility
Noting that Staff's report, in some instances, couched Staff's preference for introduction of various POR changes (noted above) as a recommendation that the utility should merely explore or study, Enbridge Gas Ohio said, "EOG nevertheless objects to these recommendations as eliminating or
limiting the purchase of receivables that would foreseeably lead to higher rates by increasing the
financial risks on suppliers."
Enbridge Gas Ohio also warned that implementing a discount for POR, "could also prevent EOG from recovering the
difference in pricing between the SCO rate and the supplier, and could require recovery either through a true up mechanism or through socialization of costs through supplier rates."
In a separate response to the Staff report, Interstate Gas Supply, LLC likewise opposed the introduction of a discount to the POR program
IGS Energy called Staff's POR proposal unsupported
"The only supporting statement in the Staff Report for this recommendation is that the Company’s purchase of a supplier’s receivables 'contributes' to the amount owed [by customers at disconnection," IGS observed
"There is no evidence that shows a material impact of the purchase of receivables on the amount owed at disconnection," IGS said
IGS Energy noted that Staff did not propose a specific discount rate, "or a tangible limit on [Enbridge Gas Ohio] purchasing a supplier’s receivables."
In other matters, IGS Energy objected to Enbridge Gas Ohio's proposal to end the current mechanism whereby the costs of PUC and OCC assessments are essentially bypassable for non-SSO customers (via a credit mechanism). Enbridge Gas Ohio has instead proposed to recover these assessment costs in base delivery rates. This proposal had been first reported by EnergyChoiceMatters.com last year, see our prior story for a full discussion of current treatment of the assessment costs
Enbridge Gas Ohio proposes to accomplish this, in part, through elimination of the Transportation Surcredit Rider, which currently provides a credit to all volumes under the following service schedules: Energy Choice Transportation Service – Residential; Energy Choice Transportation Service – Nonresidential; and Large Volume Energy Choice Transportation Service
IGS said that R.C. 4905.10(A) "expressly prohibits" the Commission from issuing an assessment, related to the costs of operating PUCO, to retail natural gas suppliers until PUCO has removed from base rates any charges for the PUCO assessment related to the supply of natural gas
IGS said that Staff's report erred in not rejecting elimination of the Transportation Surcredit Rider outright, or alternatively not recommending that retail suppliers be relieved of any obligation to pay the PUCO and OCC assessment related to their sales at Enbridge Gas Ohio, since their customers will now be paying such assessment in base rates while choice volumes will no longer receive an accompanying credit
IGS Energy said that Enbridge Gas Ohio's proposal would result in shopping customers subsidizing assessments related to default commodity sales service
In another matter, IGS Energy said that Enbridge Gas Ohio should release capacity to retail suppliers on a monthly basis. Currently, Enbridge Gas Ohio releases upstream pipeline primary firm transportation capacity on a pro rata basis once each year, with the right to recall and reallocate capacity as needed.
This once-annual capacity release does not take into account customer migration, IGS said
"[A] monthly assignment of capacity would more accurately and efficiently align resources with demand and align Enbridge with the practice of other LDCs. Moreover, requiring capacity assets to follow customers ensures that suppliers have sufficient firm capacity to reliably deliver natural gas when the system is under stress," IGS Energy said
IGS objected to tariff language stating, "... if Supplier’s aggregate Customer demand has materially increased, Supplier may be required to accept a pro rata release of such capacity," with IGS citing the "vague" phrase "materially increased"
IGS said that if a supplier will be required to accept capacity, then the conditions triggering such obligation should be clearly set forth in the tariff
IGS further said that if the tariff will require suppliers to accept a release of capacity, then the tariff should also allow retail suppliers to release capacity to Enbridge Gas Ohio if there is a material decrease in a supplier's demand.
Case 23-0897-GA-ATA
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July 26, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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