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Retail Supplier Seeks Pa. PUC Emergency Order To Prevent Utilities From Withholding POR Payments As Offset To Disputed POR Clawback; Alleges Clawback Amounts To Retroactive Ratemaking

October 27, 2016

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

Respond Power LLC has petitioned the Pennsylvania PUC to issue an ex parte Emergency Order to prohibit Penelec and West Penn Power from, "unilaterally withholding from Respond Power Purchase of Receivables ('POR') payments as an offset for a nearly one-half million dollar POR Clawback Charge assessed by the Companies on Respond Power on September 30, 2016, which Respond Power disputes on the basis of fundamental principles of due process and impermissible retroactive ratemaking."

Respond Power said that the POR Clawback results from the PUC's approval of the FirstEnergy EDC's default service plan for the period beginning June 1, 2017. As previously reported, such order, issued on May 19, 2016, authorized, on a two-year pilot basis, a POR Clawback mechanism which Respond Power described as being, "retroactively based on revenues, write-offs and prices for the period from August 31, 2015 through August 31, 2016."

Click here for more details on the new POR Clawback mechanism

"During that timeframe, Respond Power was not notified that its retail customers were not paying their electric supply charges or that a POR Clawback Charge would be retroactively imposed. Therefore, Respond Power had no opportunity to address these concerns and minimize the write-offs, such as through a return of nonpaying customers to the Companies for default service. Moreover, the proceeding in which the Commission approved the POR Clawback Charge was captioned by the Companies as establishing a default service program for the period beginning July 1, 2017 and did not place Respond Power on notice that retroactive charges were being proposed," Respond Power said

Respond Power said that the FirstEnergy EDCs are threatening to withhold POR payments on (or immediately after) October 27, 2016, which Respond Power noted is less than one month after being invoiced for the POR Clawback Charge, which Respond Power is disputing.

"[I]n approving the POR Clawback Charge, the Commission did not authorize the Companies to impose arbitrary due dates for payment of such charges or empower the Companies to exercise 'self-help' remedies to address payment disputes with EGSs regarding these charges. Indeed, the Settlement, Recommended Decision, Commission Order and the Companies' tariffs are silent on these matters. If the Companies are pe1mitted to unilaterally withhold POR payments from Respond Power, without any basis in the tariffs and without any dispute process, the Commission would be sanctioning the unrestricted imposition of charges and remedies by EDCs on EGSs - a scenario that does not promote its goals for the development of a fully functioning robust, competitive retail electric market," Respond Power said

Respond Power petitioned the PUC for issuance of an emergency order directing the EDCs to: "(a) cease and desist from carrying out their threat to unilaterally withhold nearly one-half million dollars in POR payments on or after October 27, 2016; (b) extend the due date for payment of the disputed POR Clawback Charge by three months until January 27, 2017; and (c) engage in a dispute resolution process with Respond Power."

"Having the POR payments withheld less than one month after being invoiced for the POR Clawback Charge would significantly impact Respond Power's cash flow and jeopardize the continued provision of electric generation services to retail customers in Pennsylvania," Respond Power said

"It would also set a bad precedent regarding the POR program that would discourage other electric generation suppliers ('EGSs') from offering competitive retail service to mass market customers based on the fear that they too will have their POR payments offset whenever the electric distribution company ('EDC') deems appropriate and without regard for the service that the EGS has provided to the customer," Respond Power said

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