ICC Chairman Flores Stresses Need for Robust Residential Choice During POR Oral Arguments

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December 3, 2010

Illinois Commerce Commission Acting Chairman Manuel Flores pressed intervenors yesterday during oral arguments regarding Commonwealth Edison's Purchase of Receivables tariff regarding what form of cost recovery would lead to more robust residential choice.

A proposed order, in a position generally backed by Staff and Dominion Retail, would institute a percentage-based discount rate on purchased receivables.  

ComEd, the Illinois Competitive Energy Association, and Retail Energy Supply Association favor a flat fee of 50¢ per utility consolidated bill to recover implementation costs, plus a percentage-based discount for uncollectibles only.

Flores noted that Illinois already has robust competition in the non-residential space, and noted that a flat, per-bill discount would essentially incent suppliers to focus their marketing on larger volume customers, since suppliers could retain a higher percent of margins from serving larger customers under a per-bill fee versus a percentage of receivables.

Flores pressed ICEA and RESA why the Commission should be more concerned with making POR advantageous for serving larger customers, rather than residential customers.

Calling the current level of residential offerings in Illinois "unacceptable," Flores said that maintaining the status quo is not good enough.

Flores further said that he is "not going to be happy" if the level of residential offers has not materially increased during the first year of POR implementation.

Counsel for ICEA agreed with Flores' desire for greater residential choice, and said that the per-bill discount rate will lead to more residential options than a percentage-based discount.  

Pressed by Flores on exactly how the per-bill fee encourages suppliers to offer residential products versus the percentage-based discount, counsel for ICEA could not provide specifics, but said that some 20 suppliers are represented by the two trade organizations which support the per-bill fee, and said that these suppliers have been active in working to open the residential market.

Commissioners also asked why Ameren has not seen increased residential offers given that its POR program, in place for a year, utilizes the percentage-based discount preferred by Staff and Dominion Retail.

The percentage-based discount approach is "clearly" not working at Ameren, counsel for RESA said.

Staff said that the comparison to Ameren is not an apples-to-apples comparison since Ameren is in the Midwest ISO, whose market structure is less conducive to retail choice.

Aside from the cost recovery issues, ComEd reported that under the proposed order, it would be ready to go-live with POR without a delay.  ComEd had earlier raised the possibility of a delay until April 1, 2011 in POR implementation; however, certain tariff changes which would have prompted the delay have not been recommended for approval.  Given ComEd's statement, retail suppliers asked for an implementation date no later than December 31, 2010.

Typically, when the ICC grants oral arguments, the ICC does bring back a revised proposed order for a vote at a subsequent open meeting, rather than issuing a ruling from the bench.  However, the statutory deadline for action on the ComEd tariffs is quickly approaching (the tariff suspension runs through Dec. 18, 2010), which leaves the Commission only one scheduled meeting before that time.

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