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Utility Reports Large Under-Recovery In Default Service Costs Is Due To Utility Errors In Load Reporting (Under-recovered Costs Had Sparked Nonbypassable Reconciliation Proposals)
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About $6.5 million in under-recovered default service costs for the large customer class at Public Service Company of New Hampshire (Eversource or the "Company"), the growth of which helped jump start consideration of changes to default service reconciliations, including making such reconciliations nonbypassable, were due to load reporting errors by PSNH to ISO New England, PSNH said in testimony
A panel of witnesses for PSNH testified, "Based on our internal investigation of the underlying reasons for the substantial Large
Customer Group under-recovery balance, we have reviewed in depth 58 customer accounts
that demonstrated a material difference between retail billing and wholesale load reported.
Based on that investigation, the Company determined that there are three primary drivers
for the under-recovery, all of which are related to timing issues caused by delays in system
data transfer that ultimately resulted in load data over-reporting: (1) certain customer
accounts, with timing issues regarding the establishment or modification of the account
that persisted for some period of time within the New Hampshire Large Power Billing
System ('LPB'); (2) certain LPB customer accounts that were closed for billing purposes
in the LPB system because the customers had either moved out or discontinued operations
at the service location, but the accounts continued to be shown as open accounts within the
internal systems; and (3) certain customers which migrated from default service to competitive energy supply where the change in supplier, showed a delay in LPB updating
the change in supplier to the downstream Retail Operations Load Settlement System
('LSS')."
"Based on these three scenarios the Company has analyzed, load data for the ES [default energy service]
Large Customer group was reported to ISO-NE that was higher than would have been the
case if the customer accounts had not appeared as they did in the LPB and LSS systems," the panel testified
More specifically, the panel stated, "[I]f a customer account without associated metered interval usage for a period
of time, such as those described in the three scenarios above, appears in the LPB and LSS
to have an active Rate GV, Rate LG, and Rate B account, that customer’s load is reported to ISO-NE based on the average rate class load profile for that rate class (either Rate LG
or Rate GV), even if the actual customer had lower actual load or no load for the relevant
time period."
"In those circumstances, the result was an over-reporting of hourly load data
for those particular customers, increasing the aggregate load obligation of the Large
Customer group when those customers are on default service supply," the panel testified
"As related to large customers taking
default service, the Company paid its default service wholesale suppliers more than it
would have otherwise for the periods during which the hourly load data was over-reported.
This effect began to have a material impact on the Large Customer group under-recovery
balance in December 2022 and persisted during the 2022-2023 ES rate reconciliation
period and into the 2023-2024 ES rate reconciliation period," the panel said
PSNH estimates that the Large Customer group under-recovery balance was higher
than it should have been by approximately $3.8 million for the August 2022 – July 2023
reconciliation period, and by approximately $2.8 million for the August 2023 – July 2024
reconciliation period.
PSNH also noted the concomitant results of the load reporting error, stating that, "In general, the Small Customer group costs were lower than they would have been if the
hourly load data had not been over-reported, while the Large Customer group loads were
higher than they would have been in the absence of the load data over-reporting."
PSNH has now proposed that the $6.5 million under-collected balance should be addressed through bypassable default service rates, and that this specific amount should be separated from PSNH's proposal to make default service reconciliations nonbypassable
Specifically, "The Company proposes to implement a revised [bypassable] reconciliation intended to put both ES [default energy service] rate
customer groups, the Large Customer group and the Small Customer group, in the positions
they would have been in if the load data over-reporting had not occurred during the relevant
periods. The net effect of that approach would be for the Small Customer group to see an
increase in its reconciliation adder while the Large Customer group sees a much smaller
increase in its reconciliation adder than is reflected in the current deferral account and, but
for that deferral, otherwise would have been included in that group’s ES rates. The
Company proposes to implement that revised reconciliation approach through the ES rate
mechanism (rather than the [nonbypassable] SCRC rate), and within the rate period beginning on August 1,
2025."
PSNH still proposes, going forward, to make default service reconciliations nonbypassable, but the specific $6.5 million balance related to load reporting errors would be addressed through a bypassable reconciliation
PSNH's witness panel also said that, because of the error, customers served by retail suppliers (CEPS) and
opt-out municipal aggregations (CPAs), "actually incurred lower costs based on reduced loads reported to ISO-NE for their
respective Load Assets."
PSNH said, "The amounts attributable to lower load data reporting for the Load Assets of other LSEs, such as CEPS and CPAs,
would not be included in the ES [default energy service] rate reconciliation and will be handled outside of the ES rate entirely. Those other
LSEs were paid based on their actual sales; however, they were billed lower amounts by ISO-NE based on the load
data reporting issues associated with the Company’s Large Customer group Load Asset."
With regards to preventing similar errors in the future, the panel testified, "The Company has taken actions to address and mitigate the internal system and load data
reporting issues described in this joint testimony, starting on or about April 1, 2025. In the
near term, the Company has implemented corrective measures through a manual process,
with the review focused on identifying and addressing any apparent internal system
anomalies that might affect load data reporting to ISO-NE using the LSS. In the longer
term, the Company plans to implement system modifications that will resolve the customer
account timing (closed accounts showing as open and customer supply migration issues
between systems) that were primary drivers of the hourly load data over-reporting issues
described in this testimony. The Company has not yet developed an estimated timeline or
cost estimates for the longer-term system modification initiative."
NH PUC Docket No. DE 24-112
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April 16, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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