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As part of its ongoing efforts to reform the state's electric utility industry, the New York Public Service Commission has approved a multi-utility, retail-access pilot program for commercial farms and food processors.

Dairylea Cooperative Inc., an agricultural cooperative with 3,500 members and affiliates in the state, submitted the proposal, one of six received by the commission under its recent restructuring initiative. The commission found the remaining five proposals insufficiently developed and referred them to appropriate utility-specific restructuring proceedings for further consideration.

The approved pilot initiative would require four upstate utilities (em Niagara Mohawk Power Corp., Rochester Gas and Electric Corp., New York State Electric and Gas Corp., and Central Hudson Gas and Electric Corp. (em to permit commercial farm and food processing customers to use outside supply sources. Under the pilot, member farms may aggregate their load or purchase supplies individually.

The commission directed case parties to develop methods for unbundling access rates and services provided by the utilities. It said Dairylea's proposal to base access charges on existing utility tariffs less an estimated market value of energy and capacity plus 10 percent of the remaining portion of the utility's sales rate might require modification. The commission explained that access rates designed by removing only the energy aspects of retail rates might improperly limit the opportunity for savings and the success of the plan. It also noted, however, that an incentive such as the proposed 10-percent reduction in the remaining portion of the tariffed charge might produce an undue preference for program participants at the expense of other ratepayers or the utility's shareholders.

The PSC also ruled that utility affiliates could participate in the pilot programs (including in their own service territories) provided that appropriate safeguards are put in place. It also concluded that the utilities should continue to serve as the "provider of last resort" and provide reasonable metering and billing services if requested. Re Dairylea Co-op. Inc., Case No. 96-E-0948, Feb. 25, 1997 (N.Y.P.S.C.).

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