The Company operates an unbundled distribution system pursuant to the Delivery Service Terms and Conditions approved by the Maine Public Utilities Commission (“ME Delivery Service Tariff”) and the New Hampshire Public Utilities Commission (“NH Delivery Service Tariff”, or jointly “Delivery Service Tariffs”). The Delivery Service Tariffs allow commercial and industrial (“C&I”) customers to purchase their gas supply from retail suppliers and establish the rules under which retail suppliers deliver supply to Northern’s system and under which Northern provides services such as administration, metering and balancing. The Delivery Service tariffs also include Capacity Assignment provisions that directly and significantly impact the amount of, and the certainty associated with, Northern’s planning load.
1. Capacity Assignment Rules
The basic Capacity Assignment provisions of the Delivery Service Tariff for Northern’s Maine Division are as follows:
1. Any Customer at a new service location who commences Transportation Service within 60 days of initiating service for high-use customers or within 120 days of initiating service for low-use customers is not assigned capacity.
2. All other Customers, including Sales Service customers, initiating Transportation Service are assigned capacity equal to 50 percent of the Customer’s estimated Peak Day Requirement. Once the Customer’s share of capacity is established, it remains unchanged so long as the Customer remains on Transportation Service.
3. No assignable capacity is directly released to Retail Suppliers. All assignable capacity is provided as Company-Managed service.
4. The resources subject to capacity assignment are limited to Northern’s Washington 10 storage and its Delivered peaking supply contracts. Retail Suppliers may nominate to purchase Company-Managed commodity through these resources for the months of November through March, subject to maximum daily contract quantities (“MDCQ”) and annual contract quantities (“ACQ”).
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5. Retail Suppliers under the Maine Delivery Service Tariff pay a demand rate equal to the average annual cost of all of Northern’s capacity, which is charged over the five-month winter period. Commodity rates similarly reflect the cost of unassigned resources.
The basic Capacity Assignment provisions of the Delivery Service Tariff for Northern’s New Hampshire Division are as follows:
1. Any Customer receiving Sales Service on or after March 1, 2000, who later initiates Transportation Service, is assigned capacity equal to 100 percent of the Customer’s estimated Peak Day Requirement. Once the Customer’s share of capacity is established, it remains unchanged so long as the Customer continues to receive Transportation Service. 2. Any Customer receiving Transportation Service on or before March 1, 2000 is not assigned
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3. Any Customer at a new service location who commences Transportation Service within 120 days of initiating service is not assigned capacity.
4. With minor exceptions, Retail Suppliers in the New Hampshire Division are assigned resources from Northern’s entire capacity portfolio. A portion of the assignable capacity is released directly to the Retail Suppliers through each pipeline’s Electronic Bulletin Board. A portion of the assignable capacity is provided as a “Company-Managed” Service. Company- Managed capacity is controlled by the Company, rather than being released to the Retail Suppliers, and the Company arranges for delivery on behalf of the Retail Suppliers when they nominate supply.
5. Retail Suppliers pay the actual cost of the resources provided under the New Hampshire Delivery Service Tariff.
2. Impact on Planning
The Delivery Service Tariffs allow all new C&I customers to avoid Capacity Assignment. Thus, even though Northern is adding significant numbers of new C&I customers as established in Section IV, potentially none of the added load associated with these new customers will become either Sales Service or Capacity Assigned Transportation Service and therefore add to Northern’s Planning Load. At the time of this filing, an estimated 34 percent of design year throughput and 28 percent of design day throughput on the Company’s system is Capacity Exempt, and thus excluded from Planning Load.116 The Company anticipates that the vast majority of new C&I customers will elect to become Capacity Exempt with the long-term result that Northern’s planning load will reflect a modest and shrinking portion of the
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These customers had the option to elect capacity assignment, subject to availability, as determined by Northern.
116
Please see 2014/15 capacity exempt and non-capacity assigned values in Tables V-8 and V-9 for design year and Tables V-11 and V-12 for design day. Please see Table V-16 for design year Throughput and Table V-17 for design day Throughput.
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Company’s throughput. Since Northern is located in a largely illiquid region, as discussed in Section III, the current capacity assignment rules introduce pricing and reliability risks.
The ME Delivery Service Tariff provides that existing C&I Sales customers who choose a retail supplier will only be assigned capacity to match 50 percent of the customer’s peak day requirement. This provision creates significant uncertainty in planning load. For example, in the Maine Division, the load of a new C&I customer can create a planning load obligation equal to zero if the customer never takes Sales Service, equal to 50 percent of the customer’s peak day requirements if the customer takes Sales Service long enough to trigger Capacity Assignment requirements and later chooses a retail supplier, or 100 percent if the customer goes to and stays on Sales Service.
The calculations that follow apply the capacity assignment provisions to the demand forecast results to in order to determine the Company’s planning load requirements.