NGI The Weekly Gas Market Report
With questions continuing to arise about electric reliability in New York City this summer, the New York Public Service Commission (NYPSC) is actively seeking remedies to ensure the lights stay on. The commission approved several electric “demand response” programs to be implemented by Consolidated Edison Co. of New York that are designed to reduce demand for electricity during peak periods.
The approved programs also are expected to improve the overall reliability and efficiency of the electric system in New York City. In conjunction with the approved programs, the commission directed all of the state’s investor-owned utilities to submit plans to implement a special customer incentive program to reduce peak demand, expand the available supply of electricity and moderate pricing of wholesale electricity in the state.
“The Con Edison programs approved today will improve the reliability of our energy supplies in New York City by reducing peak demand for electricity this summer,” said Maureen Helmer, NYPSC chairman. “In doing so, these programs will also help moderate wholesale electric prices and reduce customer costs until significant amounts of new generation can be permanently sited. These programs demonstrate our commitment to respond quickly to changing market conditions during the transition to competition.”
The programs include: real time pricing rates for large electricity customers that voluntarily shift their usage to off-peak hours; incentives for large customers to quickly reduce usage during emergency periods; discounts to customers that install interval meters, which are necessary to participate in the real-time and emergency programs; and special steam air-conditioning rates to increase the use of steam in place of electricity.
The NYPSC also reminded Con Edison customers that their bills will be reduced by $208 million starting April 1. Residential and small and mid-size commercial customers will benefit from an annual reduction in delivery rates of approximately 9.8%, and larger commercial customers’ bills will be reduced by about 6.2%, the commission said.
The April 1 decreases follow $170 million (6.8%) in reductions to Con Edison’s distribution rates that took effect for all customers on Jan. 1. The NYPSC said the January and April reductions would remain in effect through March 31, 2005, and are part of a commission-approved rate plan that will save Con Edison customers $1.4 billion. Cumulative rate reductions and cost savings for Con Edison customers are expected to total about $2.9 billion over the eight years through 2005.
The commission also approved details of Phase 4 of Con Edison’s Retail Electricity Choice program that is scheduled to take effect on May 1. All customers have been eligible to shop for electricity since November 2000. During Phase 4 Con Edison’s competitors will be able to incorporate into their market strategy a certain amount of money, identified as a fraction of a cent per kilowatt hour per customer, that represents costs Con Edison avoids when a customer purchases electricity from a competitor. The NYPSC said this amount will be “backed out” of the utility’s total bill for customers choosing competitive suppliers and can be combined with any other savings a competitor realizes in offering its services to customers. The commission believes that the “avoided costs” identified for use in Phase 4 will serve as a further incentive to attract competitors into the retail electricity market in Con Edison’s territory. The commission said it will consider at a later date the process for determining a more complete avoided cost figure for future use by competitors.
Con Edison also will continue to provide a one-time incentive payment of $65 to an alternative supplier of electricity for each new residential and small commercial/ industrial customer who signs up for retail access for the first time and remains with that supplier for three consecutive billing cycles. The commission said the payment is designed to approximate the costs that ultimately will be avoided by the utility and to help further the development of the residential and small commercial customer retail electricity market.
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