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PSC Approves Utility Prepay Pilot At BGE

PSC Rules On Retail Supplier Concerns

October 26, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Maryland PSC adopted an order authorizing Baltimore Gas & Electric to conduct a prepay pilot for electric and dual-fuel customers, with the PSC requiring several modifications from BGE's proposal, but generally not adopting changes sought by retail suppliers

The PSC said that the pilot, "will help inform whether a wider rollout of prepaid billing by our utilities and/or other providers might be appropriate in the future."

"We also believe that the Prepaid Pilot could provide helpful information to third-party suppliers about how a third-party prepaid billing program would function in Maryland," the PSC said

The PSC accepted BGE's commitment that it is prepared to engage with retail energy suppliers to explore opportunities for them to learn from the prepaid pilot and apply lessons learned to future prepaid billing programs offered by retail energy suppliers. The PSC directed that BGE shall discuss with a stakeholder workgroup, led by Commission Staff, how to best ensure that the pilot is producing data that could facilitate lessons learned on this topic.

"We urge and welcome retail suppliers to be active participants in this workgroup to ensure that the Pilot adequately incorporates features to inform and enhance retail competition and choice in the State. Although this workgroup will (as BGE acknowledged) directly discuss issues related to potential prepaid billing programs offered by retail energy suppliers, we caution that the workgroup’s efforts should not be dependent on whether retail energy suppliers actually state an intention to offer such programs in the near future," the PSC said

Retail suppliers had asked that the PSC stay a decision on the BGE prepaid pilot pending action on a petition from several suppliers to initiate supplier consolidated billing, which would allow retail suppliers to offer prepay service. The PSC declined to adopt a stay or link the two proceedings together.

One specific concern related to the retail market arising from BGE's pilot is BGE's proposal to waive a credit card or other payment transaction fees for the first two payments that a prepay customer makes each month.

BGE indicated that the cost of waiving two payment fees per month is estimated at $28,800 during the pilot year; $662,455 during the first-year of a potential permanent prepaid billing program; and $1,159,297 during the fourth-year of a potential permanent prepaid billing program.

The PSC noted that, "if BGE is permitted to waive two transaction fees per month and thus transfer that cost to all ratepayers, it would provide a built-in advantage for BGE’s prepaid program compared to a potential offering by a retail energy supplier, which cannot pass transaction fees elsewhere."

Despite this concern, the PSC said that, "waiving transaction fees might help ease customers’ transition to prepaid billing, and we would like to see it included in the Prepaid Pilot in some form."

"Therefore, we authorize BGE to waive one transaction fee per month during the Prepaid Pilot," the PSC ordered

The PSC said that because the BGE prepaid pilot will be limited to 1,000 customers unless the PSC takes further action, "we do not believe that it will cause the lasting damage to competitive markets that was speculated by RESA."

Among other ordered changes to the prepay program not directly linked to retail market issues is that BGE's prepaid pilot shall contain no more than 40% of low-income customers.

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