Understanding LDC rate classes¶

In the natural gas industry, Local Distribution Company (LDC) organize their pricing structure using rate classes, also called rate tariffs or rate riders.
A rate class defines the pricing rules and conditions under which different types of customers are billed for gas service.

Rate classes ensure that customers pay appropriately based on their usage patterns, delivery needs, and regulatory agreements.

Each rate class typically covers:

Who the customer is (residential, commercial, industrial)
How much gas they use
How and when they use the gas (seasonal, peak demand, off-peak)
Specific services provided (like storage, delivery, balancing).

These classes are crucial for fairness, regulatory compliance, and revenue management.

Why LDC rate classes are important¶

Fair pricing: Ensures that customers with different needs and usage patterns pay appropriate rates.
Regulatory compliance: Utilities must file rate structures with regulatory bodies and follow them strictly.
Revenue management: Helps LDCs plan their infrastructure investments and recover operational costs efficiently.
Service customization: Allows for offering additional services or discounts under specific conditions.

Key components of an LDC rate class¶

Component	Description
Customer type	Specifies whether the class is for residential, small business, large industrial, etc.
Usage volume	Defines usage thresholds like low, medium, or high-volume users.
Service type	Describes services covered, such as basic delivery, firm transportation, interruptible transportation, storage.
Pricing structure	Defines if pricing is flat rate, tiered, or based on time of use (e.g., winter vs. summer rates).
Regulatory notes	Includes any government-imposed rules that affect how rates are charged (such as taxes, green energy fees).
Special conditions (riders)	Additional charges or discounts applied under special circumstances (for example, energy efficiency programs).

Simple scenario example¶

Suppose you live in Dallas, Texas. You are a residential customer, so your gas provider (an LDC) puts you under the Residential Firm Service (RFS) rate class.

You pay a fixed charge of $25/month for access to gas service.
Plus, you pay $0.50 per therm for the amount of gas you actually use.
In winter, there may be a winter rider that adjusts your rate slightly higher due to higher demand.

At the same time, a large bakery down the street would be classified under the Small Commercial Firm Service (SCFS) class with different rates and terms.

Important notes¶

One customer can sometimes fall into multiple rate classes based on different services (e.g., firm transportation for normal usage and interruptible service for peak periods).
Rate classes can change based on seasonal usage patterns or contractual changes.

Configure rate class¶

Rate riders are additional charges or credits applied to customer bills based on specific cost adjustments such as fuel surcharges, infrastructure costs, or regulatory compliance fees. In nGenue, users can configure and manage rate riders to ensure accurate billing and compliance with LDC-specific regulations.

This guide outlines the steps to configure rate riders in nGenue, including how to create, modify, and apply them to customers.

Prerequisites¶

You must have the requisite add or modify permissions in the LDC configuration screen.
The LDC is configured prior to creating a new rate rider for LDC.

Step 1: Navigate to the LDC configuration screen¶

Log in to the nGenue application.
Click the Search icon and enter LDC configuration in the search bar.
Double-click LDC configuration to open the respective screen.
In the LDC configuration screen, locate and select the desired LDC from the list.
Click on the Open tariff and rate riders definitions icon located in the header of the screen which will redirect you to the Rate/Rider configuration screen, where detailed information about the applicable tariffs and rate riders is available.

You can view or edit existing riders or create a new one. The table below describes the available icons and their functions:

Icons	Description
	Add a new LDC tariff definition record
	Edit the LDC tariff definition record detail.
	Save the LDC tariff definition record.
	Cancel the updates being made to the LDC tariff definition record.
	Delete a LDC tariff definition record.

Step 2: Enter the LDC rate cofiguration details¶

Create a new rate/rider by clicking on the Add button.
On the next screen, perform the below steps:
1. Name: Enter the name of the rate rider. For example, "T-94".
2. Abbreviation: Enter the abbreviation for the rate rider. For example: "T-94".

The LDC rate Configuration screen is divided into multiple tabs, each designed to capture specific details required to manage a rate and rider in the system. These tabs collectively help define operational, financial, compliance, and contact-related information for an LDC, ensuring smooth gas distribution, billing, and reporting processes.

Below is a detailed explanation of each tab:

1. Definition tab¶

The Definition tab allow you to define key parameters that govern the application of rate riders within nGenue. This section includes fundamental attributes such as measurement units, billing periods, delivery settings, and classification details. These fields help ensure that rate riders are configured accurately, aligning with regulatory requirements and business needs.

Field name	Description
Usage unit of measure	Defines the unit of measurement for gas usage applicable to the rate rider, such as Therms, MMBtu, or Mcf. This unit determines how gas volumes are calculated and billed.
Calendar period	Specifies the billing or operational period used for rate calculations. This could be a monthly, quarterly, or annual cycle, ensuring rates align with the appropriate time frames.
Delivery rounding	Determines how gas delivery quantities are rounded in calculations. Rounding rules can impact billing accuracy and should be configured to align with regulatory or contractual requirements.
Delivery priority	Sets the priority level for gas deliveries under the rate rider. This can influence gas allocation, scheduling, and supply chain decisions, especially during peak demand periods.
Residential/Commercial	Identifies whether the rate rider applies to residential customers, or commercial customers. This classification helps define pricing structures and eligibility criteria.
Enable storage targets	Allows users to define storage-related targets, ensuring gas availability for peak demand periods. This is particularly useful for managing seasonal fluctuations in gas consumption.
Peak months	Defines specific months where peak demand pricing, adjustments, or additional charges apply. Helps utilities manage high-demand periods efficiently.
Default meter type	Sets the default classification of meters used for consumption tracking and billing. Examples include analog meters, digital meters, and smart meters, each affecting data collection and accuracy.
Tariff sub-group	Categorizes customers into specific sub-groups within a tariff structure. Different sub-groups may have unique pricing models, contract terms, or regulatory considerations.
GL revenue mapping	Links revenue-related transactions associated with the rate rider to the appropriate General Ledger (GL) account. Ensures accurate financial reporting and tracking of revenue streams.
GL expense mapping	Maps expenses related to the rate rider, such as operational costs, maintenance, or administrative fees, to the appropriate GL account. Helps maintain accurate cost tracking and financial analysis.

2. Misc. requirements¶

The Misc. requirements tab provides additional settings that help manage contract reminders, consumption estimate alerts, and collection letter preferences. These configurations ensure accurate communication with end users, prevent potential billing issues, and streamline supply deal assignments.

Field name	Description
Show tariff message on billings	Enables a tariff-based message to appear on invoices, providing end users with relevant regulatory or contractual information about their rate rider.
Message effective date	Specifies the date when the tariff message becomes effective on invoices, ensuring that updates or changes to tariff details align with billing cycles.
Require contract reminder (Days prior)	Allows users to set up an automated contract renewal reminder a specified number of days before the contract's expiration. This helps in proactive contract management and reduces the risk of service interruptions.
Alert when consumption estimates deviate more than (%) from actual	Triggers an alert when the estimated gas consumption deviates by a specified percentage from the actual usage. Helps detect anomalies, prevent billing disputes, and improve forecast accuracy.
By default, prevent end users from receiving collection letters	When enabled, prevents end users from being sent collection letters automatically. This can be useful for customers with special agreements or those on payment plans.
Preferred supply deal assignment method	Defines whether supply deals should be assigned manually or automatically.
Manual	Requires users to assign supply deals to end users manually, allowing greater control over contract allocations.
Automatic	Automatically assigns the most suitable supply deal based on predefined system logic, reducing manual intervention and improving operational efficiency.

3. End users¶

The End users tab allows users to associate specific customers with the configured rate or rider. This ensures that the correct pricing, surcharges, and tariff conditions apply to designated end users. The tab provides options to add, remove, or modify end-user assignments, ensuring flexibility in rate application.

4. Notes¶

The Notes tab provides a space to capture important details, comments, or justifications related to the rate or rider configuration. Users can document explanations for rate adjustments, internal approvals, or any specific considerations that may affect future rate modifications. Keeping detailed notes ensures transparency and consistency in rate administration.

5. Special clauses¶

The Special clauses tab is used to define any additional terms, conditions, or exceptions that apply to the rate or rider. This can include contractual obligations, regulatory compliance clauses, or customer-specific agreements. Special clauses help in maintaining legal and operational clarity regarding the application of the rate/rider.

6. Annual load allocation¶

The Annual load allocation tab is used to define how the total annual gas consumption is distributed across different months. This tab helps in forecasting, scheduling deliveries, and managing seasonal demand fluctuations. By configuring monthly allocation percentages, users can ensure that gas supply and billing align with actual usage patterns. This is particularly useful for adjusting supply during peak winter months when heating demand is high or reducing allocations in summer months with lower consumption. Proper configuration of this tab enhances operational efficiency and prevents supply imbalances.

Review all details to ensure accuracy and click on Save button to finalize the LDC creation.