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Settlement Would Introduce Purchase of Receivables "Clawback" At Pennsylvania Utilities

April 6, 2016

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

A settlement in the FirstEnergy Pennsylvania utilities' default service proceedings for the period June 1, 2017 to May 31, 2021 would introduce, on a pilot basis, a clawback mechanism to the purchase of receivables program

EnergyChoiceMatters.com first reported last year that the FirstEnergy utilities had proposed a clawback to POR, citing "predatory pricing" practices by certain retail suppliers which was said to be driving up the amount of uncollectibles.

Under the settlement, the POR clawback pilot would be in effect for two years, with a two-prong test trigger to institute a clawback (versus the single trigger originally proposed)

Under the settlement POR clawback, the first prong of the clawback trigger would be if the EGS's average percentage of write-offs as a percentage of revenues over the twelve-month period ending August 31st of each year exceeds 200% of the average percentage of total EGS write-offs as a percentage of revenues per operating company. The second prong of the trigger would identify, of those EGSs identified in the first prong of the test, EGSs whose average price charged over the same twelve-month period exceeds 150% of the average price-to-compare for the prior twelve-month period.

For those EGSs identified by both prongs of the test, an annual clawback charge would be assessed beginning September 2016, equal to the difference between that EGS's actual write-offs and 200% of the average EGS percentage of write-offs per operating company.

To the extent the EDCs propose to continue the pilot beyond two years, the EDCs agree not to propose a decrease to the 200% threshold in the first prong of the test to below 150% prior to 2021. Other parties may propose changes to the trigger thresholds, however.

The settlement remains subject to PUC approval.

Signatories include the PUC's Bureau of Investigation and Enforcement, the Office of Consumer Advocate, the Office of Small Business Advocate, and the Retail Energy Supply Association, among others

Docket P-2015-2511333 et. al.

See Related Story Today: Settlement Would Expand Hourly Pricing at Pennsylvania EDCs, Retain Use of Three Month Contracts For Small C&I Default Service Portfolio

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