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PUC Opens Inquiry Into Allocation of Utility Deposits To Retail Supply Service

September 12, 2016

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

The Maine PUC has initiated an inquiry to receive comment and collect information regarding the collection and allocation of customer deposits for electricity supply service by electric transmission and distribution utilities

The PUC noted that while Chapter 815 of its rules addresses the circumstances under which deposits can be demanded and the amount of such deposits, Chapter 815 does not specify the allocation of deposits between electric supply and delivery service.

Chapter 322 of the Commission’s rules sets forth the methodology for allocating payments when a customer pays less than the full amount due. Section 6(C) of Chapter 322 states when a customer’s payment is less than the total amount of the customer’s bill, the partial payment shall be allocated in the following order:

a. Past due transmission and distribution and standard offer charges with the oldest charge paid first. When transmission and distribution charges and standard offer charges are of the same age, the transmission and distribution charge shall be paid first.

b. Past due competitive electricity provider charges with the oldest charge paid first.

c. Current transmission and distribution charges.

d. Current standard offer charges.

e. Current competitive electricity provider charges.

In October of 2010, the Commission initiated an investigation into CMP’s credit and collection practices and how such practices and related accounting methods may have influenced CMP’s standard offer-related uncollectible balances and write-offs. In that investigation, the Commission considered, among other things, whether CMP was properly collecting and allocating customer deposits related to standard offer service. The investigation found that rather than applying deposits collected for standard offer service as an offset towards unpaid standard offer amounts, CMP had used the partial payment allocation process described above to allocate deposits when a customer’s service was terminated. This resulted in a disproportionate share of deposit amounts being allocated to transmission and distribution charges because CMP was using its limited vintage bucket methodology (in which arrearages of varying ages are combined into a discrete number of buckets, e.g. 30 days old, 60 days old, etc.), the PUC said

In an order issued on January 25, 2013, the PUC found that Central Maine Power may collect a deposit based upon the provision of both delivery and standard offer supply service because reading Chapters 301 and 815 together, when CMP collects a deposit from customers based on two months of usage, it is actually collecting two deposits: one on behalf of itself for delivery service and one on behalf of standard offer providers for standard offer service. The Commission further found that to the extent CMP collects a deposit for standard offer service, that such deposit should be held as a security for the future payment of standard offer service. In situations where payment was not made for standard offer service, the standard offer service deposit which was being held as security for future payment of standard offer service should be applied as an offset against unpaid standard offer amounts.

CMP objected to such direction, noting that the PUC's order amounted to a new policy created through an adjudicatory proceeding. CMP said that the PUC's direction lacked detail, and that the issue was better addressed on a statewide basis. The PUC's instant inquiry is the beginning of reviewing such issues across all utilities.

Among other things, the PUC initiated the inquiry by asking the utilities:

• For each of the following categories of applicants and customers, please explain how deposits collected by the utility are allocated between T&D service and supply service upon the disconnection of the customer or when an account is closed and receivables exist for both delivery and supply services. Please provide any written polices or procedures or other guidance documents that support your response.

   a. Applicants and customers who receive standard offer service;

   b. Applicants and customers who receive supply service from a CEP that use the utility as their billing agent; and

   c. Applicants and customers who receive supply from a CEP that does not use the utility as their billing agent.

• Please fully describe your utility’s policy and practice related to the handling of deposits for customers that initially receive standard offer service when the deposit is collected and then later switch to receiving supply service from a CEP (e.g. is the portion of the deposit related to the standard offer provider refunded to the customer? Is the amount of the deposit relating to supply modified?). Does your practice vary if the utility is providing the billing for the CEP? Please provide any written polices or procedures or other guidance documents that support your response.

The PUC also asked the following policy questions:

1. Should utilities billing a customer or applicant on behalf of a CEP be required or allowed to collect a deposit for the CEP if requested to do so by the CEP? If yes, how should the deposit amount be calculated? Should interest be paid on the deposit and by whom?

2. Should utilities include the supply portion of the bill when collecting deposits from applicants and customers served by a CEP to hold in case a customer drops to standard offer service at some point in the future? If yes, should the amount collected be based on current standard offer rates?

3. When a utility collects a deposit that includes supply charges from a customer that is served by a CEP to cover standard offer charges in the event the customer drops to standard offer service, should the CEP be allowed to collect a separate deposit from the customer?

4. At the time of deposit collection, should deposits collected for T&D, standard offer, and CEP service be separated? If not separated, how should utilities allocate deposits between supply and delivery charges when a customer is disconnected or closes an account, e.g., should the deposit be segregated and applied to the supply and delivery charges in the same proportions as when the deposit was collected or proportionally pursuant to current supply and delivery prices?

5. Once a deposit is allocated between supply and delivery charges when a customer is disconnected or closes an account, should any amount associated with delivery charges that is remaining after the deposit is applied be re-apportioned to remaining supply charges and vice-versa?

6. Should utilities be required to track the movement of customers to and from standard offer service and take specific actions with respect to supply deposits, such as collecting a supply deposit if a customer with a CEP drops to standard offer service or refunding a supply deposit when a customer elects to take service from a CEP?

Docket No. 2016-00202

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