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Purchase of Receivables Program Proposed at New Utilities

January 22, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

North Shore Gas and Peoples Gas in Illinois have filed for approval of a purchase of receivables program for retail natural gas suppliers.

The program would be open to customers in the utilities' small volume transportation programs, under which customers take service under Rider CFY, Choices For You Transportation Service, and suppliers take service under Rider AGG, Aggregation Service

However, due to the expense of the POR programs, the utilities propose that they not be required to commence implementation until at least one retail supplier has agreed to take POR service and, more importantly, pay for program costs.

The utilities specifically asked that the ICC not require the LDCs to begin incurring costs to build the POR system, and that service under the POR rider not commence, until the later of: (a) 18 months after the Commission approves the utilities' POR riders, and (b) 18 months after at least one supplier signs a service contract and provides the LDCs with credit assurances in an amount equal to the estimated investment costs of POR implementation. Such credit assurance would be in the form of an irrevocable standby letter of credit

Suppliers would be allocated start-up costs of the POR program outside of the discount rate.

Specifically, the LDCs would institute a POR Application Charge to recover the LDCs' actual investment in information technology systems and other costs incurred to implement POR, which include: 1) changes to technical system interfaces between the LDCs and suppliers; 2) changes to internal data management and reporting; 3) changes to the LDCs' customer information systems; 4) modifications to internal administrative processes; 5) training and communication; and 6) carrying costs on the investment as determined using the prevailing pre-tax weighted cost of capital identified in the LDCs' most recent rate case order.

The LDCs would initially determine the POR Application Charge using estimated investment costs. The LDCs would adjust the POR Application Charge using actual investment costs no later than six months after the effective date of POR, with refunds or additional charges issued to suppliers for their pro rata share of any difference. For a current POR supplier, the LDCs may reflect the refund or charge on their bills to the supplier.

Investment costs would be recovered over 5 years, with suppliers allocated a pro rata share based on the number of suppliers participating in the program.

To the extent new suppliers join the POR program after start-up but during the period of investment cost recovery, they would still be responsible for a pro rata share of the total investment costs, with refunds issued to other suppliers based on their new pro rata share resulting from newly joining suppliers

Supplier receivables would be paid subject to a discount. The LDCs would determine a POR discount factor for each of the utilities' Companion Classifications. The POR discount factors would initially be equal to the Uncollectible Factors defined in Rider UEA-GC.

However, after 36 months, the LDC would determine the class-specific discount factors using data underlying the POR suppliers' CFY customers' net write-off amounts (in the aggregate, not supplier specific), with the discount updated annually.

Under the proposed program, a supplier would be required to elect POR for an entire pool of customers. Suppliers would retain the ability to elect utility consolidated billing without POR for separate pools

If no supplier signs up for POR and agrees to fund implementation within 12 months of ICC approval of the program, the LDCs would be permitted to withdraw the tariff offering POR service.

The LDCs may also terminate the POR program if, "the number of CFY Customers in LDC POR Billing Option Pools falls below a level deemed necessary by the [utility], in its reasonable discretion, to sustain the program, provided that payment of the POR Application Charge shall survive the discontinuance of service under this rider until the end of the recovery period."

The LDCs also reserve the right to terminate the POR program in a rate case proceeding.

Dockets 16-0033, 16-0034

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