Con Edison 2016 Electric and Gas Rate Cases Overview:
After a year of arduous discovery, settlement negotiations, and a contested evidentiary hearing, the Joint Proposal for Con Edison’s three-year Electric and Gas Rate Plan was approved by the New York State Public Service Commission (“PSC”) without modification. Below is a synopsis of some projected rate impacts. Con Edison’s electric and gas customers have not experienced a base rate increase in three years following previously negotiated and approved Joint Proposals in Con Edison Electric and Gas Rate Plans.
Con Edison’s proposed three (3) year rate increase in combined electric and gas rates would have totaled approximately $2.71 Billion over the three year period starting on January 1, 2017 and ending on December 31, 2019. Conversely, the total rate increase in combined electric and gas rates in the approved Joint Proposal is approximately $1.57 Billion during these three years, or roughly 42% less than the original Company filing
The delivery rate increases for electric rate increases in general and specifically for the SC9 service classes are summarized below. Rate year one (“RY1”) commences on January 1, 2017 and ends on December 31, 2017. Rate years two (2018) (“RY2”) and three (2019) (“RY3”) also commence on the first of each calendar year and end on the last day of the same calendar year. Rates will vary to some extent due to the treatment of certain monthly adjustments as well as the service class to which the customer belongs. The electric rate increases have been levelized to reflect a revenue requirement increase of $199.03M each year over the three years of the rate plan in the JP in order to offer protection from rate shocks in the first year and during the three-year rate plan. Con Edison’s initial RY1 increase request was for $482M.
The delivery rate increase for gas rates in general and specifically for the SC2 Service Classes are summarized below. As with electric rates, rates will vary due to monthly adjustments and the specific service class to which a customer belongs. The gas increases/decreases are not levelized in the JP because the revenue requirement increase in gas for RY1 ($35.49M) is significantly less than it is in RY2 ($92.34M) and RY3 ($89.45M).
The PSC in its written decision agreed with NYECC that interruptible gas rates should be as negotiated in the Joint Proposal and rejected the Utility Intervention Unit’s argument for higher interruptible gas rates. The Joint Proposal provides that the Company will conduct a collaborative to examine its interruptible rates and services and that the results of the collaborative will be filed with the PSC by December 31, 2018 and include any recommended changes to interruptible rates or services.
In its original filing, Con Edison had proposed to increase SC 12 Rate 2 and SC9 Rate (C) from 8.0 cents per therm to 11.5 cents per therm, a 44% increase in delivery. Under the approved Joint Proposal, the following are the proposed increases:
RYI - 0% increase – Remains at 8.0 cents per therm for one, two and three year contracts;
RY2 – 3% increase – Rates set at 8.25 cents per therm for one, two and three year contracts;
RY3 – additional 6% increase - Rates set at 8.75 cents per therm for one, two and three year contracts.
The 1 cent per therm reduction for usage in excess of 500,000 therms per month is retained in the JP and customers with existing contracts are grandfathered at their existing rates until their existing contracts expire.
• Customer charges will be set at the customer costs under the Embedded Cost of Service study;
• The Minimum Monthly Charge (“MMC”) applicable to SCs 5, 8, 9, 12 and 13 for standby customers exempt from standby rates will permit a one-time reduction in the MMC – Contract Demand amount. If a customer installs distributed generation that qualifies as a designated technology exempt from standby service rates and the customer requests and receives the exemption, the customer will receive a one-time reduction, equal to the generator nameplate rating, in the MMC Contract Demand amount applicable to non-standby rates, after the generator commences operation;
• Exemptions from Standby Rates include Battery Storage up to 1MW of inverter capability which will be defined as a Designated Technology under the Con Edison tariff,
• and the NOx emission standard applicable to exemptions established under the Standby Exemption Order will be reduced from 4.4 lbs/MWh to 1.6 lbs/MWh, except that currently-exempt customers and customers that have an accepted interconnection application and/or air permit application as of January 1, 2017, the 4.4 lbs/MWh NOx will continue to be the applicable standard. NOx emission standards for participation in the standby rates pilot are more stringent;
• The JP implements a Standby Rates Reliability Credit directed by the Track Two Order in REV replacing the existing performance credit starting in the summer of 2017;
• The PSC in a non-rate case Order recently rejected the joint utilities opposition to the Reliability Credit and request for modification.
• Must request reliability credit by Oct. 10 and credit is applied to next 12 monthly bills starting in Nov.;
• Service under the Single Party or Multi-Party Offset has credit applied to each standby service account supplied by the generating facility output.
• Outage events will be up to three (3) time blocks for each summer period that, in aggregate, are comprised of no more than five 24-hour periods, excluding weekends and holidays. If a time block contains a period of less than 24 hours, the time period will be rounded up to the next 24 hours (i.e. 24-hour periods cannot be applied on a partial basis). If a time block encompasses a holiday or weekend, the start time of the 24-hour period on the day prior to the holiday or weekend until the same time the next business day will be considered to be a single 24-hour time period;
• Measurement period will be the previous two (2) consecutive full Summer periods, except that the first year the Standby Reliability Credit is sought will be the Measurement Hours during the previous full Summer Period only.
• For RY1, measurement hours will be Monday-Friday, except Holidays, 10am -10pm, June 15-September 15;
• For RY2 and thereafter, measurement hours will be Monday-Friday, except Holidays, 8am -10pm, June 1-September 30;
• Standby Reliability Credit for any measurement period will be equal to the product of the Customers Contract Demand less the highest kW demand recorded on the meter(s) used for monthly billing (net of generation) during the Measurement Period and the Delivery Service Contract Demand Charge per kW in effect on October 1 of the year in which the credit is determined. Credits requested by October 10 will be applied to customers’ successive 12 monthly bills commencing November of the year the credit is requested and continuing until the following October. If service is taken under the Single Party or Multi-party offset, the credit will be applied to each Standby Service account supplied by the generating facility’s output.
• Generating facility’s output must be separately metered using an Output Meter furnished and installed, and communications service provided and maintained for the Output Meter, both at customer’s expense;
• Generating facility’s output must be connected to a voltage lower than 100kV and Output Meter must be Commission-approved, revenue grade, interval metering with telecommunications capability, and compatible with the Company’s metering infrastructure, including compatibility with the Company’s meter reading systems and meter communication systems;
• There is an Optional Bill Credit for SC11 Export-only Buyback customers.
• The Company will modify its proposal in Case 16-E-0196 regarding the multi-party offset tariff to permit customers in multiple buildings to participate if each of the customers is connected to the generating facility by a thermal loop (delivering steam, hot water, or chilled water);
Standby Rate Pilot:
• The Co. will implement a Standby Rate Pilot.
• Option 1 – Targeted up to 10-Year exemption or Pilot Rates: For up to 50 MW of new or expanded, efficient Combined Heat and Power (“CHP”) with no less than 1 MW per interconnection and up to 25 MW of new battery energy storage projects with no less than 50 kW of storage per interconnection. The exemption is intended to encourage development of efficient distributed energy resources (DERs) in Con Edison’s service territory;
• CHPs must not be in operation on the effective date of the JP and must have completed application in Company’s DG interconnection queue by December 31, 2019 and begin commercial operation of CHP or storage system by December 31, 2021;
• At least 25MW of aggregated CHP MW capacity shall have the ability to operate in grid-export mode;
• Starting from initial commercial date of operation, customer will remain in non-standby delivery rates for up to 10 years receiving shadow billing at Pilot rates during the pilot and at the then-effective standby rates thereafter;
• Participants can elect a one-time switch to billing at either 1) the Pilot rate during the Pilot, or 2) the then-effective standby rates.
• The 10-year exemption from standby requires a CHP with average annual efficiency of 63% or greater and peak efficiency of 65% or greater;
• The 7-year exemption from standby requires a CHP with average annual efficiency of 63% or greater, but less than 65%;
• The 4-year exemption from standby requires a CHP with average annual efficiency of 60% or greater, but less than 63%;
• Participation under Option 1 is not available to technologies that emit criteria air pollutants (eg. that burn fossil fuels) that are not in compliance with local air quality criteria to be established in the Standby/Export Rates Pilot Collaborative.
• Option 2 – Standby/Export Pilot Rates is available for standby customers for up to 125 MW (75MW is reserved for customers qualified under Option 1 and 50 MW for standby customers (new or existing) that don’t qualify for Option 1. Applications accepted the sooner of either full subscription or December 31,2021;
Pilot Rates Collaborative:
• About February 1, 2017, a collaborative will convene to develop proposed Pilot rates with an effective date of January 1, 2018.The collaborative has met after September 15, 2016 to determine air quality criteria for this Pilot and the SC11 Bill Credit Proposal to take effect on January 1, 2017;
• Once Pilot rates are approved by the PSC, participants will be placed on Pilot rates with shadow billing at current standby and/or export rates.
• The Pilot will test 1) differential levels of standby service by allowing customers to elect a level of Contract Demand, 2) more granular Daily As-Used Demand Charges, including locational and time-varying rates, and 3) payment for locational benefits for SC11 customers that operate their generation assets to support the distribution system;
• Pilot Rate developed will include allowing customers to assume all or portion of the reliability risk of their onsite generation by contracting for a lower level of service with substantial penalties for non-compliance.
• Pilot participants will provide data regarding their hourly generation, fuel consumption and efficiency.
The NYECC is participating in the collaborative to determine Standby Pilot Rates.
The Joint Proposal contains Earnings Adjustment Mechanisms (“EAMs”) as directed by the PSC in its Reforming the Energy Vision (“REV”) Track Two Order. An EAM is an opportunity for a utility to obtain enhanced earnings based on performance and outcomes. EAMs are established in the JP for meeting energy efficiency and system peak reduction goals, outcome-based EAMs for reducing energy intensity and increasing DER utilization, an EAM for Con Edison’s DG-Interconnection Program, and an EAM based on customer awareness of Advanced Metering Infrastructure (“AMI”).
Earnings Adjustment Mechanisms: