Upstream Transmission Capacity Allocation

Upstream Transmission Capacity Allocation

Frequently Asked Questions (FAQs)

The following are commonly asked questions concerning the National Fuel Gas Distribution Corporation (NFGDC) Upstream Capacity Requirements for Aggregated Small Volume and Non-Dual Fuel Critical Care Customers.

Will the mix of Mandatory Upstream Transmission Capacity (MUTC) change over time?

The mix of MUTC to be released is subject to change. Such changes, if any, will likely be effective on an April 1st date, however they may occur at other times due to varying upstream pipeline contract terms or changes in federal regulation. NFGDC will endeavor to provide reasonable notice of any capacity adjustments.

If an ESCO’s upstream capacity requirement increases, will it be allowed to use local production that is delivered directly into NFGDC in New York State to serve this requirement instead of taking a mandatory release of upstream and intermediate capacity from NFGDC?

Yes, local production may be used in lieu of taking a mandatory release of NFGDC’s upstream pipeline capacity and associated intermediate capacity on National Fuel Gas Supply Corporation (NFGSC).

What restrictions will accompany capacity released on a mandatory basis?

NFGDC’s upstream pipeline capacity will be released recallable, re-releasable with recall. No contract amendments will be permitted and ESCOs will be subject to use such capacity as directed by NFGDC to help maintain the delivery capability of its pipeline system. NFGDC’s storage capacity will also be released recallable and no contract amendments will be permitted. ESCOs will be required to purchase or sell inventory from or to NFGDC associated with customers migrating to or from NFGDC sales service when the capacity is taken or returned, at the posted price and quantity. End-of-month inventory requirements must be adhered to.

Suppose an ESCO has Grandfathered Upstream Transmission Capacity (GUTC) in excess of its current market requirements. If the ESCO’s market grows, is the ESCO guaranteed incremental primary receipt capacity at the same NFGSC point(s) it was allocated for its current market requirements?

No. While NFGDC will endeavor through a variety of means to satisfy the ESCO’s request for a specific point, there are limitations at certain receipt points and/or downstream NFGSC facilities that determine whether or not specific receipt capacity is available. In some cases, these limitations are seasonal, i.e., receipts that may reliably flow during the heating season when market demand exists may not be able to access the system during other periods.

Can an ESCO with GUTC in excess of its current market requirements use the April 1st request for specific NFGSC receipt capacity and/or July 1st demonstration of upstream capacity to reserve space at a specific point for market growth?

Not necessarily. While the demonstrations are useful for planning purposes, incremental capacity is allocated month-to-month on a first-come, first-served basis. An ESCO with an existing market demand will receive priority for a specific receipt point over an ESCO with projected market demand. To the extent that the overall demand for a specific receipt point does not exceed the overall capacity of that point, it is likely that the receipt capacity will be available for the ESCO when its market demand grows.

Suppose an ESCO with GUTC is allocated requested NFGSC receipt capacity for November through March based upon the July 1st demonstration of upstream capacity contracts. If the ESCO loses customers and market demand before November (or during the November to March period) such that it now holds GUTC in excess of its market demand, will the allocated NFGSC receipt capacity be reserved for the ESCO’s future market growth?

Not necessarily. If no other ESCO requests the specific NFGSC point, there is a likelihood the same point will still be available when the ESCO replaces the customers and market demand it lost. On the other hand, under first-come, first-served there is a possibility that another ESCO has been allocated the original ESCO’s receipt capacity.

If an ESCO with GUTC requests an NFGSC EFT receipt point with limited capacity, will the request be approved if the capacity is not already being allocated to another ESCO or used to serve retail sales customers?

Not necessarily. NFGDC will attempt to shift the ESCO’s existing GUTC receipt point to the requested point, but if NFGDC’s request is denied and the existing capacity is being allocated to other ESCOs, or is being used to serve NFGDC’s sales customers, the ESCO’s request will be denied.

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