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ICC Issues Amendatory Order on ComEd POR, Throws Discount Rate into Chaos

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February 11, 2011  

The Illinois Commerce Commission has issued an amendatory order on Commonwealth Edison's Purchase of Receivables program, which establishes a new discount rate, but also appears to result in the double collection of administrative costs, and creates additional confusion on the uncollectibles factor (10-0138).

The amendatory order comes after the ICC rejected a request for rehearing from Dominion Retail regarding the discount rate.

As only noted by Matters (12/17), the ICC's December order on POR did not contain an explicit discount rate, but did endorse the 50¢ fee per utility consolidated bill for administrative and implementation costs, and held that the supply-related portion of ComEd Rider UF - Uncollectible Factors should be used to set the POR discount for uncollectibles.  Though no amount for Rider UF was cited in the December order, Matters reported in our 12/17 story that the applicable Rider UF resulted in an uncollectibles discount of 2.239% for residential customers, and 0.774% for non-residential customers.

The amendatory order, issued February 10, adds the following language regarding uncollectibles:

"[T]o aid in the sustained profitability of retail electric suppliers in ComEd's territory, which could help to ensure that competition endures and thrives in Illinois, we decrease the discount rate in the manner that was proffered by Commission Staff as an alternative to Staff's original proposal.  We conclude that Staff's alternative recovery charge of 0.44%, as opposed to 0.68%, should be imposed here.  Also, it is in the best interests of Illinoisans in ComEd's service territory if there were one single charge for uncollectibles, as opposed to one uncollectible charge for residential customers and a different uncollectible charge for commercial customers.  ComEd shall amend its tariffs to reflect this charge, which is 1.843%.   When this figure is added to 0.44%, it yields a discount rate of 2.293%.  (0.44% + 1.843%)."

The cited 0.44% refers to an administrative cost component, but we'll get to that in a minute.  Aside from this component, the amendatory order would apply a single discount rate to all classes.  The amendatory order states that this blended rate of 1.843% reflects the weighted average of ComEd's residential uncollectibles and small commercial uncollectibles as filed in a November 8, 2010 post-hearing data response.  However, as reported by Matters, and verified in a review of the original filing, ComEd's November 8 filing reported a weighted average uncollectibles factor for these customer classes of 1.8453%.  Based on an ICC footnote, it appears the use of 1.843% is a typo and not the result of an adjustment to the filing (the footnote simply states the discount rate results from ComEd's November 8 filing).

However, even more confusing than these two issues it that despite the above quoted language in the amendatory order supporting a discount rate of 2.293% for all classes, the following language from the original December order also remains in the amendatory order, under a section on "uncontested issues."

"No party contested ComEd's proposal that, to determine the percentage reduction for the recovery of uncollectible costs that are associated with the purchase of receivables, ComEd will apply the same supply-related uncollectible cost factors set forth in its Rider UF - Uncollectible Factors ('Rider UF') that it applies to its own supply charges under Rate BES, ComEd's fixed-price bundled electric service tariff.   This proposal links the historic bad debt rates used in setting ComEd's supply charges with those used in the PORCB discount.  It also identifies when the uncollectible cost factors will be established."

While this language, which is identical to the language in the December order, does not explicitly accept Rider UF as setting the POR uncollectibles component, it was originally interpreted to mean that Rider UF would establish the POR uncollectibles rate.  Although there is new language elsewhere in the amendatory order regarding the blended 2.293% rate, the Rider UF language was not stricken or amended.

Additionally, the amendatory order establishes the POR discount rate using the 0.44% administrative cost factor as proposed by Staff.  However, the amendatory order also maintains the original language from the December order pertaining to acceptance of the 50¢ charge per utility consolidated bill to recover administrative costs.

Specifically, the amendatory order states:

"Therefore, we conclude that ComEd's proffered $0.50 cent, per-bill, fixed charge is in accord with the General Assembly's articulated purpose, which is contained in 220 ILCS 5/16-118(a), and is cited  above.  We are of the opinion that a fixed charge will serve to promote the development of an effectively competitive and fair electricity market because, according to record evidence, it provides the best opportunity to maximize participation for both residential and commercial customers.  The Commission further notes that, while the percentage charge approach was adopted for the AIU purchase of receivables program, adoption of the fixed charge approach for ComEd's program will allow the Commission to evaluate the strengths and weaknesses of each approach."

Again, while the language might not explicitly approve the 50¢ per bill charge, it is identical to the language which, in the context of the original December order, was clearly granting such approval.

Accordingly, the amendatory order, as written, would apparently charge suppliers both 50¢ per utility consolidated bill and a discount of 0.44% of receivables to recover administrative costs.

It is also worth noting that it is not clear how the amendatory order would be implemented.  Although it directs ComEd to file tariffs compliant within the order within five business days of the order's effective date, it is not clear what the tariff effective date would be, and to what vintage of receivables the new discounts would apply.

In any event, it is likely retail suppliers will seek further clarification from the Commission on the discount rate as a result of the amendatory order.


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