Regulator Issues Final Order On Proposal To Increase Billing Fee On Retail Suppliers

Order Also Changes Priority For Retail Supplier Charges In Partial Payment Situations

October 2, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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A final order from the Illinois Commerce Commission in Nicor's natural gas rate case rejected a proposal from the Illinois Attorney General to increase the Nicor billing charge applicable to third party providers, including retail suppliers

Nicor Gas currently charges Customer Select (choice) suppliers $0.25 per bill for the provision of billing service.

Alleging an increase in Nicor's billing costs, the AG had sought to increase the billing fee for third-party providers to $0.36 per bill

The ICC said in its order that, "The Commission agrees with Nicor Gas, RESA and ICEA that the Company should conduct a cost study related to the billing service charge before imposing a 45% increase in the per-bill charge to Customer Select suppliers for billing service. The Company has committed to providing an updated analysis of the cost of third-party billing service in its next rate case, and the Commission finds that Nicor Gas’ proposal provides a reasonable course of action to address this issue."

"Therefore, the Commission finds the AG’s proposal to increase rates for third-party billing services to be inappropriate and premature at this time and declines to adopt it, as well as the AG’s corresponding proposal to impute additional Test Year revenues based on that increase," the ICC said

The final order also addresses payment priority in partial payment situations.

Currently, when customers make partial payments of their utility bills, Nicor Gas applies a priority protocol to determine which components of the customer’s bill will be fulfilled using the partial payment. If the customer is subject to disconnection, Nicor Gas first applies the partial payment to fulfill any of the customer’s obligations to Nicor Gas that will defer or avoid the disconnection process. If the customer is not subject to disconnection, or if disconnection can be deferred or avoided, Nicor Gas applies the partial payment to the customer’s obligations in the following order: first to fulfill any obligation to maintain a deposit with Nicor Gas; second, to any obligations under a Deferred Payment Arrangement or a Medical Payment Arrangement; third, on a pro rata basis to Nicor Gas and warranty charges that are past-due; fourth, on a pro rata basis to third-party supplier charges that are past-due; fifth, on a pro rata basis to Nicor Gas and warranty charges that are not past-due; and finally, on a pro rata basis to third-party supplier charges that are not past-due.

The AG had argued that Nicor Gas' current practice of prioritizing payments for warranty services on equal footing with current Nicor Gas charges on a pro rata basis, and above third-party past-due and current supplier charges (1) contradicts a prior Commission order; and (2) exposes customers to late fees, collection action and potential gas service shut-off, in violation of 83 Ill. Adm. Code Part 280.

The AG cited a prior ICC order which had held that, "Payments should be applied first to any overdue regulated charges, then to overdue supplier charges, next, to current regulated charges, and finally, to any current supplier charges. We agree that payment of overdue regulated charges is paramount to insure continued service to customers. However, it is of equal importance that suppliers remain in the market to allow competition to flourish. We believe that this can only be accomplished if suppliers are assured of payment."

In the final order, the ICC said, "The Commission agrees with the AG that the CUB Order prioritizes utility service charges over non-utility service charges."

"The plain language of the Order is clear that payments to gas suppliers must be prioritized with past due charges from the utility otherwise the market will not remain competitive," the ICC said

"The Commission directs Nicor Gas to modify its Customer Choice tariff language to prioritize partial payments as follows: (1) overdue regulated charges; (2) overdue supplier charges; (3) current regulated charges; and (4) current supplier charges. This priority structure ensures that the optimal goal of avoiding disconnection is met, as well as maintaining consistency with 83 Ill. Adm. Code Part 280. The Commission directs Nicor Gas to implement these changes within 120 days of the date of this Order," the ICC said

Nicor Gas also provides third-party billing services to Pivotal Home Solutions (PHS), an unaffiliated company that sells warranty services products

The AG, making allegations concerning PHS’s record of customer dissatisfaction including a class-action lawsuit, had requested that the Commission prohibit Nicor Gas from including PHS charges on customer bills, or, in the alternative, subjecting PHS to a code of conduct similar to that applied to retail energy suppliers

The Commission took note of the AG’s position regarding PHS’s alleged record of customer dissatisfaction and detailed allegations of misconduct, including a class-action lawsuit, but said that, "This information, as presented in the record, does not warrant a Commission action prohibiting Nicor Gas from including PHS charges on customer bills at this time."

"However, in an attempt to appropriately examine the claims presented by the AG, the Commission directs Staff to file a Staff Report within 120 days recommending whether the Commission should open a formal investigation addressing Nicor Gas’ Third Party Billing Tariff, as it pertains to PHS. Staff’s Report shall also consider the AG’s proposal to add additional language, including a code of conduct and disclaimer to customer bills," the ICC said

The final order also addressed an uncontested issue related to a natural gas storage study

In a 2017 rate case, the Commission directed Nicor to prepare a study assessing the implications of how Traditional Transportation customers and Customer Select suppliers use Nicor's on-system storage under the current terms and conditions of service, and to present the results of the study in its next rate case. Nicor Gas reports that it prepared that study, which concluded that Customer Select and Transportation customers currently use Nicor Gas’ eight aquifer storage facilities in a manner that does not support the short- and long-term reliability of those facilities. Nicor explained that, even though these customers comply with current tariffs and practices, their patterns of storage utilization conflict with optimal storage cycling needed to sustain the operational integrity of the aquifer storage fields, and that action is needed to preserve the reliability and integrity of the storage facilities. Nicor Gas states that it continues to analyze methods for resolving these issues.

Parties in the case agreed that Nicor should initiate a separate proceeding to consider proposals to remedy the problem identified in the storage study by June 30, 2020. "The parties did not contest this proposal, and as a result, the Commission approves this recommendation," the ICC said

Docket 18-1775

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