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Retail Suppliers Petition PSC To Introduce POR At New State, Utility

January 25, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The Retail Energy Supply Association filed a petition with the Delaware PSC requesting that the PSC order Delmarva Power to implement a purchase of receivables program, "to enhance opportunities for customer choice in Delaware and encourage more competitive suppliers to offer energy supply products and value-added services to Delaware customers."

RESA asked that POR be implemented by June 1, 2016

"Implementation of POR is the next logical step in the development of a competitive market for retail electricity supply in Delaware," RESA said

The state's Electricity Affordability Committee recently asked the PSC to review POR as part of a series of retail market enhancements recommended for review (click here for story), but RESA said that POR can be implemented expeditiously and should be evaluated separately from the review of the choice enhancements

As previously reported, Delmarva has reported that there are no technical issues preventing POR implementation, with the only non-consensus issue between Delmarva and suppliers being the treatment of revenues from late payment revenues, which both parties agree is a policy matter that can be adjudicated by the PSC

RESA recommended that the Commission require Delmarva to implement a POR identical to the non-resource programs of its affiliate EDCs in Maryland and the District of Columbia, "both of which are structured so as to encourage competition, not place an economic burden on ratepayers, and provide full cost recovery for the EDC."

RESA proposed that the POR discount, to be distinct for each SOS class, should be set at a level ensuring the POR program is revenue neutral for Delmarva and minimizes the cost to suppliers. The rate should be derived by adding (i) uncollectible costs associated with shopping customers' accounts; (ii) a program development cost component [if shown to be necessary]; and (iii) a late payment revenue component. These three components should be calculated, and included in the discount rate.

The uncollectible expense component should be a percentage calculated by dividing the estimated electric supplier uncollectible expenses associated with each rate schedule by the electricity revenues billed for all suppliers for that rate schedule, RESA said

Regarding POR development costs, "It is RESA's understanding that, following the implementation of Delmarva's new billing system, there will be no implementation costs," RESA said. If Delmarva proves that it will incur implementation costs, the PSC will need to determine the appropriate amortization duration for purposes of Delmarva's recovery of those costs, RESA said

Furthermore, RESA said that late payment revenues (LPRs) should be included in the discount rate as an offset, just as they are in the Maryland and D.C. POR programs. As in the Maryland and D.C. programs, the LPR percentage used in the discount rate for each rate schedule should be calculated by dividing the estimated electric supplier LPRs billed for all electricity suppliers for that rate schedule, RESA said. "It is RESA's understanding that Delmarva, with its new billing system, can now track LPRs received from shopping customers for inclusion in the discount rate. Thus, the Company's ability to track LPRs, and to include them in the discount rate, should not be an issue in Delaware," RESA said

RESA recommended that the PSC direct Delmarva to implement its POR program on or before June 1, 2016 at the latest, and to present the proposed POR discount rates for the Commission's consideration at the May 3, 2016 Commission Meeting. "This timeline should provide Delmarva with sufficient time to perform necessary programming and to develop and file the appropriate compliance documents with the Commission regarding the program's rules. June 1, 2016 is the next change in Delmarva's SOS rates, so a June 1 implementation date should provide operational and regulatory efficiencies for Delmarva, the Commission, and retail suppliers to comply with the new program," RESA said

RESA proposed the following transition plan to POR. Delmarva would purchase the current billed accounts receivable balance on each consolidated billed account at the appropriate discount rate. Suppliers would then receive payment for the entire balance approximately 30 days after the implementation date. All non-current balances as of the approved effective date would be billed by Delmarva for 90 days. Any payment(s) collected as a result of these billings would then be remitted by Delmarva to the supplier at the end of the 90-day period. Delmarva would also implement an auto-cancel process as part of the implementation process. After conversion, if Delmarva cancels a customer's usage (and subsequent Delmarva charges) for a given billing period, Delmarva would also cancel the corresponding supplier charges. If payment to the supplier was previously made, Delmarva would recover the amount originally remitted.

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