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Utility Files To Set Purchase Of Receivables Discount Rate To 0%

Will Seek Change In POR Rate Calculation

April 20, 2018

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

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Pepco has filed with the District of Columbia PSC an annual update to its purchase of receivables (POR) discount rate

Under the filing, Pepco would set the POR discount to 0% for all customer classes. Currently the POR discount is 0% for all SOS classes except for the defunct Schedule AE (2.0608%)

The proposed new POR discounts filed by Pepco (D.C.) are as follows, by SOS, or market-priced service, rate schedule, to be effective June 1, 2018:

Rate Class                  Current  Proposed

R, MMA, Rider RAD           0.0000%  0.0000%

GS-LV ND, T, SL,
   TS, TN (SOS)             0.0000%   0.0000%

GS-LV, GS 3A, GT LV, 
   GT 3A, GT 3B, RT (SOS)   0.0000%   0.0000%

GSLV-ND, GS-LV, GS 3A, 
   GT LV, GT 3A, T, SL, TS 
   (Market-Priced Service)  0.0307%   0.0000%

The 0% discounts reflect the "zeroing-out" of negative discount rates that otherwise results from the discount rate calculation

The negative discount rates are driven, in part (though not wholly) by the application of late payment revenues as an offset to uncollectibles. In this year's POR update, the reconciliation factor and interest factor were also negative

Pepco said that it will seek to remove late payment fee revenues as an offset included in the POR discount rate calculation

"Going forward ... it is Pepco’s position that late payment fees should not be used to reduce the Discount Rate of the POR program. The Company will therefore propose to exclude late payment fees from the POR discount when it makes its next update in 2019," Pepco said

"Allowing late payment fees by third party customers to be credited to Third Party Suppliers who are not incurring late payment fees or collection cost constitutes an unjustified bonus for suppliers. Suppliers are not obligated to pass the reductions in the Discount Rate along to customers, rather it is at the expense of Pepco’s customers for reasons set forth below. Specifically, the Company will use these late payments to lower the collection costs in distribution base rates so that all customers benefit from lower rates because of late payment fees. If these payments are continued to be credited to Third Party Suppliers, all distribution customers are forgoing this benefit; distribution rates will increase the revenue requirement by the amount of this revenue given to Third Party Suppliers," Pepco said

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