Thursday, February 21, 2019

NY Ready for ‘Average’ Winter; Burman Worried

By Shawn McFarland

The New York Department of Public Service assured the Public Service Commission on Thursday that utilities are prepared for the upcoming winter and that customers’ bills will be on par with last year’s. But Commissioner Diane Burman was worried about possible outliers.

Commissioner Diane Burman, who voiced concerns with no “stress test analysis” | New York Public Service Commission

Every number Utility Supervisor Chris Stolicky and his panel presented, including the $800 winter bill customers should expect to see, was based on an “average winter.”

Burman was interested in knowing if the DPS had stress tested any of their numbers for an event like the winter of 2013/14, when a polar vortex posted record-low temperatures and drove energy prices far above projections.

“I am concerned, for one, because the Energy Information Administration predicts, nationally, to expect average household bills to rise because of a higher forecast in energy price[s],” Burman said.

Engineering Specialist Paul Darmetko said they had not done any stress testing, but that the chance of electric prices approaching those of the polar vortex winter were “slim-to-none” because of the hedging the utilities have taken.

“If the market price increases by 100%, the utilities have locked into hedges that are 70% of the portfolio, so the customers could really only see about 30% of any market price spike that does occur,” he said.

LDC Commodity Portfolio | New York Public Service Commission

Cindy McCarran, the PSC’s deputy director for natural gas and water, said utilities’ hedging programs also act as an “insurance policy” against gas price increases.

“Prices may very well spike because of cold weather or something like that, but because our utilities buy a lot of fuel ahead of time [and] lock in the price … our firm natural gas customers are certainly not subject to those big spikes,” McCarran said.

Burman reminded the panel that stress testing became a topic after the 2013/14 winter. The DPS had acknowledged a need to dive deeper into the numbers, she said, but nothing has evolved since.

New York Winter 2018-19 Capability & Load | New York Public Service Commission

“We said [in 2014] that we need to look deeper. Check for scenarios in cold winters. Take most of the coldest winters and do stress test analysis.

“How many negative events are we prepared for? … We need to [do] further study and bring this discussion back.”

None of the other commissioners voiced similar concerns.

Stolicky did say earlier in the session that local distribution companies must prepare for “extreme days in normal winters,” and noted that last April was one of the coldest Aprils on record in New York.