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AEP Ohio: POR Program Should Be Put "On Hold" Or Subject To Further Discussion Due To Supplier Consolidated Billing Pilot

OCC Seeks To Sunset POR Program After One Year, Require Separate Approval For Continuation

December 12, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott (at) energychoicematters.com

The purchase of receivables program that has been mandated at AEP Ohio should be put "on hold" or be subject to further workgroup discussions due to the introduction of a supplier consolidated billing (SCB) pilot, and the impact that the SCB pilot may have on POR program participation (and therefore, cost recovery), AEP Ohio said in comments to the Public Utilities Commission of Ohio

As first reported by EnergyChoiceMatters.com, PUCO has ordered the introduction of POR at AEP Ohio, and PUCO Staff has proposed a POR program design (click here for proposed program design)

Separately, PUCO has approved a pilot for supplier consolidated billing at AEP Ohio. The SCB pilot is only open to certain retail suppliers signing a settlement with AEP Ohio in an electric security plan proceeding (such suppliers were Direct Energy, FirstEnergy Solutions, and IGS Energy).

Participation in the supplier consolidated billing pilot, and decreased participation in POR, has prompted AEP Ohio concerns regarding POR cost recovery.

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"AEP Ohio does have a new concern that did not exist at the time the comments were written. Per Case No. 14-1693-EL-RDR, AEP Ohio is implementing a pilot program which will allow up to three pilot Suppliers to bill customers directly using a consolidated bill. These bills will be sent from the Supplier and will display AEP Ohio’s charges on the bill. This program will allow the Suppliers direct contact with the customer and will allow for the Suppliers to place non-commodity charges on their bill. Once AEP Ohio evaluates the pilot program, this program might be expanded to additional suppliers. Because this option is more attractive to some suppliers than a POR program, AEP Ohio has concerns many suppliers might not want to participate in the POR program and that they may rightfully request to exclude themselves from having to pay for a POR program they no longer want nor use," AEP Ohio said

"Since large CRES suppliers would be more capable of adapting to supplier consolidated billing than smaller suppliers, this could potentially put a larger burden of cost for a POR program on smaller suppliers who at that point may not be able to afford a POR program," AEP Ohio said

"If Supplier Consolidated Billing is more attractive to suppliers than a POR program, smaller suppliers might be more easily able to participate by using the money that would have gone toward a POR program to, instead, contract with a billing agent. This option allows them to directly bill their customers and gain greater customer program flexibility and perhaps gain a competitive edge with larger suppliers. Further, if the costs of a POR program are spread over a smaller group of suppliers, then suppliers or customers are paying for a program that is not used to the extent it was intended, and bearing a needless cost," AEP Ohio said

"Because of these most recent developments since Staff’s filing of POR implementation plan in Case No. 15-1507-EL-EDI, AEP Ohio recommends that either the MDWG [Market Development Working Group] have follow-up discussions to see if a POR program is currently desired due to the path of Supplier Consolidated Billing, or that the POR program be placed on hold to see the effects of Supplier Consolidated Billing," AEP Ohio said

"AEP Ohio believes that the first step before continuing to pursue a POR program should be to evaluate the program to ensure it is still what most suppliers want and is beneficial to customers," AEP Ohio said

Addressing POR program design should PUCO move forward with POR, AEP Ohio reiterated its position that suppliers should not be permitted to use utility consolidated billing without POR, citing logistical issues. PUCO, in its POR order, explicitly said that suppliers shall retain the ability to use utility consolidate billing without participating in POR (though, if a supplier selects POR, it would be subject to an all-in requirement)

AEP said that allowing UCB without POR more than doubles the cost estimate of the POR program as well as delays implementation by over a year. "These cost increases are due to increased complexity of budget billing program, deposit requirements logic, receivables transfer from account to account. "These are all core customer service system processes that double in complexity and double in terms of how customer account maintenance might be performed, increasing confusion and frustration for them, which no doubt they will attribute to Choice," AEP Ohio said

The Retail Energy Supply Association, in contrast, stressed that suppliers should have the maximum amount of flexibility when it comes to billing options. "POR should be an additional and optional feature relative to AEP Ohio’s billing options – it should not be a mandated feature," RESA said.

"A POR Program rule on this point is important for two reasons. First, the Commission has endorsed or mandated flexibility to participate in a utility’s consolidated billing, stating, 'CRES providers should maintain the flexibility to participate in consolidated billing, without being required to participate in the POR Program.' Second, a lack of flexible and electable billing options will turn suppliers away. Not all suppliers are alike, and not all suppliers using utility-consolidated billing will want to utilize POR," RESA said.

RESA said that there are various business reasons why a supplier interested in AEP Ohio’s market and interested in utility-consolidated billing may, nonetheless, not utilize POR, including:

• Receivables purchased may be limited to plain competitive supply products

• Cost of POR implementation costs

• Dissatisfied with the discount rate

RESA also expressed concern with the implementation of PUCO's proviso that POR include only "commodity-related charges."

"While the Staff Report identifies that the receivables must only be the commodity-related charges directly tied to the actual cost of generation, greater specificity as to what qualifies as a receivable under the POR Program is needed for the suppliers and AEP Ohio alike," RESA said

"For example, would the receivable of a product offered at a single, all-inclusive price that combines generation with one or more items that are directly related to the consumption of electricity qualify entirely? RESA believes these receivables should be included. Similarly, marketing costs and overhead incorporated into a supplier’s generation-only product should be included," RESA said

"As a solution, RESA recommends that the Program include products that combine generation with one or more items that are directly related to the consumption of electricity when the price is all inclusive," RESA said.

Staff's proposed POR design would establish POR as a one-year program, but with an evergreen provision.

However, the Office of Consumer Counsel said that renewal of the POR program should not be automatic. "If AEP Ohio seeks to renew the POR program, it should file an application so that interested parties may examine the program and provide input on it," OCC said.

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