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New POR Program Approved At Two New Utilities

Regulators Express Concern About Suppliers' Pricing, Marketing To Low-Income Customers, Will Be Monitoring Rates, Complaints Under POR


November 10, 2016

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

The Illinois Commerce Commission has approved purchase of receivables programs at North Shore Gas and Peoples Gas

POR shall not commence until 18 months after at least one supplier signs a service contract and provides one or both utilities with credit assurances in an amount equal to the estimated POR investment costs.

The utilities will recover from participating suppliers, in the form of a POR Application Charge, the costs of developing system functionality, modifying existing systems, processes, and data management, and conducting necessary training to support the service.

A "participating supplier" is a choice program supplier that has executed an LDC POR Billing Option contract and has provided credit assurances equal to its pro rata share of POR investment costs any time during the five-year recovery period for POR investment costs. The intent is to eliminate a potential free rider problem, i.e., to eliminate an incentive to wait to participate until other suppliers have committed to pay the investment costs

Participating suppliers will annually pay a pro rata POR Application Charge annually equal to one-fifth of POR investment costs, with the pro rata share adjusted as suppliers join the program (with refunds to older suppliers as needed as new suppliers assume a pro rata share of POR investment costs)

Separate from the POR Application Charge, purchased receivables will be discounted to reflect uncollectibles

The utilities stated that they will set a POR discount factor for each service classification eligible for Rider CFY (Choices For You) service. The LDCs will reserve the amounts resulting from applying the discount factors to the supplier charges to offset potential write-offs from customers who purchase gas from participating suppliers.

Initially, the POR discount factors for each Service Classification will equal the Uncollectible Factors defined in Rider Uncollectible Expense Adjustment – Gas Costs (UEA-GC). Effective the first May 1 occurring 36 months after the effective date of POR, the utilities will calculate discount factors for each Service Classification using data underlying the participating suppliers’ customers’ net write-off amounts.

During the period in which the POR discount equals Rider UEA-GC, any difference between actual POR uncollectibles and recovery under Rider UEA-GC shall be reconciled and paid for (or credited) to end-use customers taking service under POR through a new factor, Incremental POR Uncollectible Adjustment. This charge holds non-POR customers harmless for any changes in uncollectible costs as a result of POR until such time suppliers' receivables are discounted based on actual POR program uncollectibles experience.

North Shore Gas and Peoples Gas will only include on their bills and purchase receivables for "CFY Supplier Charges," which are defined as including only undisputed charges directly related to the purchase of gas supply and charges related to enrolling and maintaining customers. For example, CFY Supplier Charges include charges for gas supply and interstate transportation and storage service and a supplier’s customer service costs associated with its Rider CFY customers. CFY Supplier Charges would not include, as examples, charges for other products and services a supplier may offer such as electricity or telephone.

While rejecting several proposals for program design proposed by the Citizens Utility Board and Attorney General, the ICC, "shares the concerns of CUB and the AG concerning the potential effects on low income and/or credit challenged customers arising from increased or aggressive AGS marketing as a result of Rider POR."

Accordingly, the Commission ordered certain reporting concerning rates charged by retail suppliers under POR, and how such rates compare to default service rates, and directed that Staff report on whether new marketing and consumer protection rules are required for the retail natural gas market.

The Commission directed North Shore and Peoples Gas to provide Staff with access to customer data to facilitate an annual review of the individual and aggregate AGS (alternative gas supplier) supplier rates that sales customers pay during each month for each 12 month period.

As a part of the annual review, Staff shall evaluate and report whether a rulemaking or other action is necessary to provide additional customer protections in the AGS market.

Staff shall take measures to protect confidential and competitively sensitive information. As a condition of participating in Proposed Rider POR, each participating AGS shall provide Staff with its relevant pricing data upon request. Staff shall also consult with the Retail Energy Supply Association and the Illinois Competitive Energy Association to determine how appropriate comparisons of AGS’ prices and the utilities’ PGAs can be made and to determine appropriate confidentiality measures to protect the proprietary pricing information of AGSs.

In addition, the Commission directed Staff to monitor complaints to the Commission’s Consumer Services Division for data indicating activity that could harm vulnerable consumers or constitute a threat to LIHEAP funding.

Staff was directed to report to the Commission on the individual and aggregate AGS supplier rates that sales customers pay during each month for each 12 month period annually or more often if merited by market developments. Staff was directed to include and explain in the annual report any data or complaints to the Consumer Services Division suggesting market activity that could hurt vulnerable customers or constitute a threat to LIHEAP funding

The ICC rejected CUB's petition to limit purchased receivables to amounts equal to or less than the applicable default service rate.

Commissioner Miguel del Valle dissented from approval, expressing concern about increased aggressive marketing by suppliers to low-income customers under POR, in light of the fact that the natural gas market does not have comprehensive consumer protection rules similar to rules being considered under a rulemaking in the retail electric market.

Docket 16-0033, 16-0034

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