PSC Votes To Adopt Pro-rata Of Supplier, Distribution Charges In Partial Payment Situations Under Supplier Consolidated Billing (Change From Delivery Charges First)

PSC Orders That Supplier Products Be Unbundled For Purposes Of Payment Posting

February 22, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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During an ongoing rulemaking session today on supplier consolidated billing (SCB), the Maryland PSC formally voted on several key provisions of the rules

Most notably, the PSC voted to adopt a pro-rata approach to partial customer payments under SCB.

Under the pro-rata mechanism endorsed by the PSC, the SCB supplier shall apply a customer’s partial payment of a supplier consolidated bill based on the following age-based hierarchy:

(1st) Utility arrearages and supplier commodity arrearages in order of age

(2nd) Current utility charges and current supplier commodity charges

The following provisions also apply under the pro rata

• The supplier shall apply customer payments to utility charges and supplier commodity charges of equal age by the relative proportions of their sum.

• Non-commodity charges shall be applied after all other utility charges and supplier commodity charges have been applied.

The PSC's adoption of the pro-rata methodology departed from an earlier informal vote, in which the PSC had informally signaled its preference for a partial payment mechanism in which, for each vintage of charges (arrearages and current), the distribution charges would be given first priority until fully paid, and any remaining payment amounts would be allocated to supplier charges after the delivery charges of the same vintage were paid

Although PSC Chairman Jason M. Stanek voted to adopt the pro-rata partial payment mechanism, which serves to reduce risk to retail suppliers, Stanek said that suppliers using SCB should be screening customers enrolled onto SCB to further eliminate risk. Commissioner Mindy L. Herman, who voted in favor of paying distribution charges first, likewise said SCB suppliers should be using credit checks to mitigate suppliers' non-payment risks

Granting the suppliers a significant benefit by adopting the pro-rata partial payment mechanism, the PSC declined to reverse its earlier informal adjudication of two additional issues which suppliers had sought to modify.

Specifically, the PSC ruled that suppliers which offer a bundled product must break out the cost of the "non-energy" product for payment posting purposes.

While an earlier proposal had included a provision that, if the supplier could not determine an unbundled energy cost, then the entire supplier charges would be paid last under the payment posting order (even under pro-rata), based on discussion at the PSC's meeting, the PSC appeared to require suppliers to always list unbundled costs for the payment posting mechanism, and provided no opportunity for a supplier not to unbundle, rendering the provision discussed immediately prior moot. EnergyChoiceMatters.com notes that rule language from the PSC's discussion has not yet been issued, and the rulemaking is ongoing.

Stanek described the requirement to unbundle as being, "on the back end", with respect to the payment posting mechanism. Suppliers may still bundle products and services into a single per-kWh price. However, with the PSC still going through specific provisions of the rule, it was not immediately clear, what, if any, disclosure the supplier must make to customers with respect to unbundling for the purpose of payment posting (and whether this would be required on the bill, at enrollment, on the contract, etc.). The proposed regulations before the PSC would require a supplier to disclose in the customer’s contract the percentage of a bundled charge that will be treated as commodity for payment posting

The PSC also ruled that SCB suppliers must provide utilities with access to view the customer's SCB bill

Suppliers had opposed this provision, with several suppliers stating that, "The non-energy items on the bill, how they are priced, how the bill is designed and the items presented – all of that is competitive information that is a data mining goldmine to a recipient."

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