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Maryland PSC Approves Supplier Consolidated Billing, Implementation Not Immediate, Subject To Working Group

Retail Suppliers Not Granted Disconnection Authority

May 7, 2019 -- 2:38 p.m.

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Copyright 2010-19
Reporting by Paul Ring •

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Note: was first to report at 2:38 p.,m. on May 7 that the Maryland PSC authorized SCB, with an exclusive alert to our email alert subscribers

The Maryland PSC today issued an order providing that, "supplier consolidated billing for retail electric and gas supply customers is authorized in Maryland"

However, supplier consolidated billing (SCB) implementation will not be immediate, as the PSC directed a working group to address implementation

Other highlights of the order include:

• The PSC will not allow retail suppliers using SCB to initiate disconnection for non-payment

• Subject to specifics in a working group, EDCs will be required to purchase outstanding distribution-related receivables for SCB customers returned to SOS (due to non-payment)

• A supplier's SCB bill must include the utility’s price to compare

• The PSC declined to adopt specifics regarding supplier qualifications for SCB and cost recovery at this time

A coalition of retail suppliers (NRG Energy, IGS Energy, Just Energy Group, Direct Energy and ENGIE Resources) provided the following statement on the PSC's order: "The decision to allow retail suppliers to send electric and natural gas bills to customers is a victory for consumers because it will increase competition and give customers access to more innovative products and services that meet their individual needs. Supplier Consolidated Billing, as it is known, is a natural and necessary next step in moving Maryland toward the robust market that has been envisioned for years. We are grateful for the PSC’s leadership on this issue and we look forward to working with the PSC and the rest of the industry to implement Supplier Consolidated Billing."

Regarding implementation, the PSC said, "Staff and OPC are correct that the complexity of the SCB proposal does not lend itself to immediate implementation at this time, and interested stakeholders should have sufficient opportunity to consider the many implementation issues raised by the Petition, including unintended consequences."

"Accordingly, the Commission directs that a workgroup led by Staff be convened that is comprised of representatives of the retail suppliers, the utilities, OPC, MEA, and other interested stakeholders ('the SCB Workgroup'). The SCB Workgroup will have 60 days from the date of this Order to file a timeline for implementing SCB, including a procedural schedule with deliverables for Commission approval. The Commission also directs Staff to form a Technical Implementation Workgroup ('TIWG') in conjunction with the existing EDI workgroup to address technical issues pertaining to the implementation of SCB, including tariff issues related to gas and electric billing and the resolution of system differences between utilities and suppliers," the PSC said

Regarding disconnection under SCB, the PSC said, "Without resolving the legal arguments addressing the Commission’s authority to allow SCB providers to direct utilities to disconnect customers for nonpayment, the Commission finds for policy reasons that it is not appropriate at this time to authorize SCB providers to direct service terminations."

"The Commission finds that service terminations directed by SCB providers could interfere with the utilities’ ability to ensure that any disconnection is fully consistent with the customer protections contained in the PUA and the Commission’s regulations. For example, once the utility receives a supplier direction to disconnect a customer, the utility could be left unaware if the customer subsequently makes a payment or qualifies for a customer assistance program, or qualifies under one of the many COMAR provisions prohibiting or requiring delay of termination. Additionally, the Commission finds that the involvement of intermediate parties could delay application of low-income or emergency funds and put customers at unnecessary risk of disconnection. Furthermore, the Joint Utilities demonstrated that it is not clear how normal payment posting rules would be followed for customers that have existing utility arrears and then enroll with an SCB provider," the PSC said

"At least at this time, while the SCB Workgroup addresses the implementation details of how to achieve SCB, the Commission finds it is not appropriate to extend termination authority to suppliers. However, in response to the concerns raised by the suppliers, including management of bad debt, the Commission will require that utilities purchase the outstanding distribution charges of a delinquent customer account upon the customer’s return to standard offer service, as further discussed below. For other charges, the SCB provider should resort to the traditional remedies of other non-regulated businesses, including reporting to credit agencies, seeking monetary judgments in court, and pursuing collection activities," the PSC said

"In implementing SCB, the Commission finds that suppliers should provide purchase of receivables to the utility on substantially the same terms as provided under UCB [utility consolidated billing]. The Workgroups should fully explore this arrangement and propose regulations, tariffs, and sufficient protocols (e.g., EDI/XML) to effectuate this relationship. The particulars of this process should be reviewed to ensure no undue impact on the utility. In addition, where different treatment of utility and supplier POR is justified or where additional clarity is needed, the SCB Workgroup or TIWG (collectively, 'Workgroups') should raise these issues for Commission consideration," the PSC said

"Even without allowing a supplier to direct termination of utility services, allowing suppliers to undertake SCB and POR necessarily means that supplier billing and collection practices will have some impact on a customer’s distribution-related balance. As such, the Commission finds that certain SCB and POR practices are necessary to ensure that any charges contributing to a disconnection are properly handled. The primary safeguard is requiring SCB providers to follow a payment posting priority that will minimize distribution arrearages. The Workgroups should identify and propose a fair and equitable payment posting priority and any other protections that may be necessary," the PSC said

"When a supplier is no longer serving a customer, after reasonable efforts to collect, the supplier should not be required to hold any debt attributable to the customer’s distribution charges paid under POR. Where a supplier can demonstrate the amount of unpaid distribution charges, the utility should repurchase those charges. The discount rate when a utility re-purchases distribution-related debt should be at a zero discount rate unless the SCB Workgroup can provide alternative calculations which are supported by a compelling analysis," the PSC said

The supplier will retain any debt related to its own supply charges and any non-utility costs, and the supplier can use any legal collection methods available.

The PSC noted that, "implementing this process will require the Workgroups to engage in a careful review and consideration of existing regulations and tariffs. Careful consideration should be given to any requirements for supplier collection notices to ensure they clearly outline what charges will and will not be eligible for utility termination. In addition, the Workgroups should develop regulations to ensure that customer energy assistance payments are being applied to the appropriate charges on the SCB. Finally, the Workgroups should develop specific record keeping requirements for suppliers offering SCB, which will satisfy the utilities and the Commission that any re-purchased debt is accurately accounted for."

Regarding the content of SCB bills, the PSC said, "The Commission finds that a supplier that offers SCB is required to provide all the same consumer protections, disclosures (including the utility’s price to compare), notices, and billing information required of a regulated utility. Under PUA § 7-505, the Commission has a number of obligations related to ensuring that customers receive information related to emissions and fuel mixes as well as unbundled charges for distribution, transmission, universal service charges, customer charges, taxes, and other charges identified by the Commission. Through PUA § 7-604, the Commission has authority to 'provide for contracting, enrollment, and billing practices and procedures' for gas suppliers seeking to offer SCB. Finally, the protections provided to electric and gas customers must be consistent 'unless the Commission determines that the circumstances do not require consistency.' Therefore, any consumer protections related to SCB should cover both electric and gas bills."

"These statutory requirements represent the minimum disclosures required by law. In addition, suppliers offering SCB will need to provide all surcharge line items and comply with all applicable COMAR requirements related to consumer protections. These requirements are embodied throughout our COMAR regulations. It may be appropriate to leave some of these responsibilities with the utility, and the SCB Workgroup should explore the appropriate entity to provide each service," the PSC said

"The SCB Workgroup should carefully review the PUA, existing Commission precedent on SCB, and the filings in this docket to propose electric and gas SCB regulations in COMAR that will meet these minimum consumer protection requirements. Where compliance is not possible or there is a justification to deviate from these standards, the SCB Workgroup should identify any deviations along with the potential justification. The SCB Workgroup should also identify any additional consumer protections that should be adopted to ensure customers are protected under SCB," the PSC said

"The Petition and party comments identify some new and additional protections specific to SCB that must be explored and presented for Commission consideration. The SCB Workgroup should ensure that Staff’s and Potomac Edison/SMECO’s concerns regarding customer service levels, including dispute resolution, and access to billing and payment histories is adequate to provide necessary utility services. The SCB Workgroup should consider new disclosure and notice requirements for how both utilities and SCB suppliers communicate the varying relationships to the customer, the content of past due notices by SCB suppliers, and utility notices for customers selecting SCB. These requirements should not act as a barrier to the new and innovative offerings identified in the Petition, such as flat bills. For example, as the Commission found in reviewing the license application of Deca, the requirements of § 7-505 do not prevent a flat bill offering provided that the necessary information is available on the bill for the customer’s review," the PSC said

The SCB Workgroup was directed to examine customer education issues relating to informing customers of a new billing method, including who will be responsible for conducting consumer education as well as how it will be funded.

Regarding cost recovery, the PSC said that the Commission does not have sufficient information to determine either the costs or the appropriate cost recovery mechanism for SCB implementation at this time

The Commission directed the SCB Workgroup to identify and estimate, with as much detail as possible, these and any other costs and benefits related to SCB.

"Historically, utility investments necessary to enable the retail supply market have been recovered from ratepayers through base rates or from participating suppliers through the utility POR mechanism. SCB is an important and timely evolution in customer choice, and the SCB Workgroup should also consider varying cost recovery mechanisms and present either a consensus approach or options for Commission consideration," the PSC said

Regarding increased supplier qualifications for suppliers to use SCB, the PSC said, "a comprehensive set of supplier qualifications that protects ratepayers while balancing market access for new entrants and the interests of both participating utilities and suppliers is necessary. Thus, while the Commission does not adopt the qualifications as currently presented, any proposed regulations should comprehensively address the capabilities necessary to ensure that these functions are performed on par with existing utility offerings. Further, the regulations should be tailored to demonstrate that a supplier can meet the rigorous demands of increased customer service and dispute resolution functions, complex billing requirements, and the quality assurance and record keeping necessary to handle utility charges that may contribute to potential utility disconnections. These regulations should be developed through the workgroup process to incorporate the varying stakeholder perspectives."

The PSC found that it has authority to adopt SCB under statute, and further said SCB is consistent with policy goals "Having found that it has the authority to order the implementation of SCB, the Commission determines that as a matter of policy, SCB represents the next logical step for Maryland to fully implement the Electric Choice Act and the Natural Gas Act. A direct relationship between retail suppliers and their customers resulting from direct billing could support the growth of retail competition in Maryland," the PSC said

"The Commission finds that the existing billing arrangements of UCB and dual billing should be augmented with SCB at this time. Utilizing UCB, suppliers are limited to a section of the utility’s bill and limited in the number of characters they can use to describe their product as well as the products they are permitted to list. Dual billing requires the customer to receive multiple bills, an outcome customers generally dislike. Supplementing utility bills with offers for value-added products or services can be less effective for suppliers as some customers may view non-utility correspondence as junk mail. The number of customer complaints received by the Commission from customers professing surprise that they have been served by retail suppliers is an example of the confusion the current billing methods have engendered. In contrast, SCB should assist suppliers in establishing brand identity and clarifying the products available to utility customers," the PSC said

"Finally, the Commission finds that SCB should be available to retail suppliers as an option, not a requirement, at this time. This Order does not mandate that any retail supplier adopt or offer SCB. For many small suppliers, the expense and time required to offer SCB may be prohibitive. Other suppliers may simply find SCB incompatible with their business models. The billing methods of UCB, dual billing, and SCB are not mutually exclusive options and should be available for qualified retail suppliers, at their election. Additionally, allowing all these methods provides a greater variety of competitive offers for consumers," the PSC said

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