Energy Choice
                            

Matters

Pa. PUC Staff, EDCs, Retail Suppliers Reach Settlement To Continue Purchase of Receivables (POR) Clawback Charge On Pilot Basis

PUC Staff Had Proposed Implementing Discount To POR

May 16, 2018

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

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com

The FirstEnergy Pennsylvania EDCs, the Pennsylvania PUC's Bureau of Investigation and Enforcement, the Retail Energy Supply Association and Respond Power, LLC have entered into a joint stipulation for the FirstEnergy EDCs to continue their purchase of receivables (POR) clawback charge for four years on a pilot basis.

The stipulation was filed in the FirstEnergy EDCs' default service plan proceeding

The FirstEnergy EDCs currently purchase supplier receivables at a 0% discount, but recently instituted a clawback charge as previously reported

The Stipulating Parties agree to a four-year extension of the EDCs' Clawback Charge pilot, to begin with charges assessed in September 2018 based on a review of data for the twelve months ending August 31, 2018 and ending with charges to be assessed in September 2021.

The EDCs will continue to use a two-prong test to determine the clawback charge. The first will identify those electric generation suppliers (EGSs) whose average percentage of write-offs as a percentage of revenues over the twelve-month period ending August 31 each year exceeds 200% of the average percentage of total EGS write-offs as a percentage of revenues per operating company. The second prong of the test will identify, of those EGSs identified in the first test, EGSs whose average price charged over the same twelve-month period exceeds 150% of the average price-to-compare for the period. For those EGSs identified by both prongs of the test, the annual clawback charge assessed each September would be the difference between that EGS's actual write-offs and 200% of the average percentage of write-offs per operating company.

The EDCs will develop an EGS-specific customer arrears report with unpaid aged EGS account balances. This report will be provided to EGSs participating in the Companies' purchase of receivables programs on a quarterly basis, beginning no later than October 20, 2018, reflecting EGS arrears for third quarter 2018.

I&E said in a brief that it supports the continuation of the clawback charge on a pilot basis only because it does not foreclose a future change to I&E's original recommendations in the case: the transition to a discounted POR program with adoption of a bypassable Merchant Function Charge

Prior to entering the stipulation, I&E had argued that the uncollectible expense from generation supply can be addressed through establishing a merchant function charge for default service customers and a POR discount rate addressed to EGSs

A witness for I&E had earlier argued that, "uncollectibles can be addressed via a Merchant Function Charge (MFC) on the default service customer side and as a POR discount rate assessed to EGS' [sic] on the shopping customer side. The use of a discount rate has been widely accepted by the Commission. Under a POR program, the EGS sells its accounts receivable, which allows it to receive immediate payment and avoid the risk of nonpayment by the customer. The EDC often purchases the receivables at a discount to recognize there is a risk that the account receivable may not be fully paid by the customers and to recognize that collection of accounts is not without costs. The discount may be attributable to uncollectible expense, i.e., bad debt of the electric generation supplier's customers, and the EDC's administrative costs for billing and collection. In the last DSP proceeding, I recommended a POR discount and may want to make a similar recommendation in a future proceeding if it appears that the clawback does not adequately address the uncollectible issue."

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Channel Sales - Associate -- Retail Supplier
• NEW! -- Director - Sales Management & Strategy -- Retail Supplier
• NEW! -- Operations Analyst -- Retail Supplier
• NEW! -- Sr. Business Development Manager -- Retail Supplier
• NEW! -- Sales Support Specialist -- Retail Supplier
• NEW! -- Natural Gas Operations Manager -- Retail Supplier
• NEW! -- Energy Consultant
• NEW! -- Director, Retail Energy Supply & Pricing -- Retail Supplier -- Houston
• NEW! -- Sales and Channel Partner Manager -- Retail Supplier