New York retail gas marketers last Friday were given a new tool to manage their daily citygate gas delivery imbalances, but they also could face tougher action by Consolidated Edison if they fail to deliver required supplies.

The New York Public Service Commission (PSC) approved a new daily imbalance trading system for deliveries into ConEd’s system to go along with the monthly imbalance trading system that has been in place since April 1, 2001. Under the new service, transportation customers and marketers serving interruptible and off-peak customers will be permitted to trade imbalances incurred during the same gas day to minimize the amount of imbalance charges they must pay to the utility or to obtain cashout credits. The service will be available through Sept. 30, 2004.

The commission also gave ConEdison new authority to deal with marketers who fail to deliver gas. One provision allows the utility to recall pipeline capacity from marketers who fail to deliver or when the recall is required to preserve the integrity of the distribution system. Another reduces the grace period for termination of service to a marketer from 30 to 11 days if the marketer fails to meet its obligation to deliver required gas.

The Small Customer Marketer Coalition (SCMC) took issue with ConEd’s capacity recall request, charging that it was “overly broad and inflexible.” The group contended that recalls should be activated only under unusual and extreme conditions that truly constitute a threat to the integrity of the utility’s system. It favors the establishment of capacity recall parameters and standards that would only allow recall if the threat to system integrity was significant. If capacity was recalled, SCMC also asked that marketers be relieved of their delivery requirements and any associated charges. In addition, it also requested that ConEd provide prior notification of a recall and that a dispute resolution process be established.

In its response to the SCMC’s suggestions, ConEd told the commission that specific recall parameters would limit its flexibility to address system integrity issues. ConEd said it believed it was “neither possible nor reasonable to set forth all of the situations that may affect system integrity or the manner in which the company may need to respond to such situations.” ConEd noted that KeySpan has nearly identical provisions in its tariff.

ConEd did agree to provide notification of recalls, however, and said its current dispute resolution procedures would be adequate to handle recall disputes. It also said a marketer would not be responsible for deliveries or charges if capacity was recalled under a force majeure event.

The commission concluded that ConEd’s changes to its recall provisions were “reasonable” and SCMC’s suggestions could limit the utility’s flexibility in dealing with system integrity problems, affecting all customers on the system. The PSC said that retail marketers would not be liable for failure-to-deliver charges if capacity was recalled for reasons other than nonperformance. They would be responsible, however, for paying ConEd for the gas used to serve their customers.

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