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NY Approves Self-generation Deferral Incentives

Fortnightly Magazine - June 15 1995

The New York Public Service Commission (PSC) has approved a proposal by New York State Electric & Gas Corp., an electric utility, to offer a new rate mechanism to retain and regain low-load-factor (5 to 35 percent) customers with viable self-generation options. The Self-generation Deferral Incentive Program offers qualified customers a three-year ceiling on the monthly average price of electricity, and a minimum bill based on estimated marginal customer costs and weighted average marginal energy costs plus one cent per kilowatt-hour.

The utility said it had already lost $310,000 in annual revenues from customers targeted by the new rate program. It also claimed that options such as real-time pricing were not cost-effective for the

low-load-factor customers because such rate mechanisms require energy-intensive customers that have flexibility in scheduling their operations. To mitigate the effect of the rate discounting on nonprogram customers, the PSC placed a $300,000 cap on annual revenue losses under the plan, and required a 70/30 percent sharing between ratepayers and shareholders on discounts and any net revenue gains. Re New York State Electric & Gas Corp., Case 94-E-0828, Feb. 21, 1995 (N.Y.P.S.C.). t

Philip S. Cross is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.

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