Utilities Propose How To Address Reconciliation Of Purchase Of Receivables Given Prior Order Which Maintained Prior-Year Discount Rates

August 10, 2021

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

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National Grid and Nstar have both filed proposals with the Massachusetts DPU on how to address reconciliation of the Standard Complete Billing Percentages (SCBPs) -- the term of purchase of receivables (POR) discounts -- given the DPU's prior order to maintain the current SCBPs

As first reported by EnergyChoiceMatters.com, in an annual POR discount proceeding, the DPU in April ordered that the current SCBPs shall remain in effect, subject to investigation and reconciliation, unless the Department orders otherwise, as the DPU noted the impact that the COVID-19 customer disconnection moratorium has had on uncollectibles (resulting in negative discount rates due to the lack of charge-offs from the moratorium)

See our prior story here for more details

The basic elements of National Grid's proposal are to: (1) keep in place the Standard Complete Billing Percentages (SCBPs) at 2020 levels as approved by the Department in Massachusetts Electric Company and Nantucket Electric Company, D.P.U. 21-POR-01 (April 30, 2021); (2) continue its review of the calculations of its 2020 past period reconciliation percentage (PPRP) and the uncollectible percentage (UP), which are components of the SCBPs; and (3) address the 2020 PPRP and UP, as well as make any recommendations for any associated changes to the SCBPs, in its 2021 POR filing.

In a new filing with the DPU, National Grid said, "In preparation of the Company’s 2021 POR filing to be submitted on March 15, 2022, the Company proposes to assess the situation, including the calculation of the UPs [uncollectibles percentage] and PPRPs [past period reconciliation percentage], which are components of the SCBPs[.] As service terminations only resumed on August 2, 2021, by the time of the 2021 POR filing, the Company will not have had the benefit of a normal twelve months of uncollectibles data. A reconciliation investigation undertaken before the Company has experienced a typical twelve months of service termination data might not provide a meaningful calculation of uncollectibles because the conditions that the Department found in D.P.U. 21-POR-01 warranted continuation of POR Discount rates at 2020 levels (i.e., a lack of service terminations and write offs) would still be present during the remainder of calendar year 2021. In addition, there would be only a partial year of normal termination activity data to reconcile. Reconciliation prior to the Company obtaining a full twelve months of normal data after resumption of service terminations could complicate the reconciliation process, and lead to multiple filings that attempt to true-up the SCBPs and payment periods."

"Moreover, even with twelve months of business-as-usual net charge-off data, the data may not yield PPRPs, UPs, and SCBPs that the Department would consider reasonable. In its Initial Filing in this proceeding, the Company showed positive UP but negative PPRP, resulting in a negative SCBP, which led the Department to maintain the status quo instead of implementing the Company’s 2021 SCBPs. As customers may continue to avail themselves of deferred payment plans and other programs even after resumption of collections activities and service terminations, net charge offs are likely to continue to be lower than pre-COVID levels and may yield results that impact the SCBP calculation beyond the 2021 POR filing in March 2022. At the time of the 2021 POR filing, therefore, the Company will assess whether or not the Company will recommend making changes to the SCBP or to wait until a later date," National Grid said

National Grid represented in its filing that Constellation supports the company's approach, and that SFE Energy does not object

Separately, Nstar (Eversource) told the DPU that it proposes to investigate and reconcile the actual 2021-2022 SCBPs and payment periods as part of the Company’s 2022 POR filing, to be submitted to the Department on March 15, 2023.

"It is the Company’s understanding that service terminations resumed in July 2021 for residential customers. Therefore, the Company’s 2021 POR filing, to be submitted on March 15, 2022, will not have the benefit of a full 12 months of data of uncollectibles after the resumption of service terminations. A reconciliation investigation undertaken before the Company has a full twelve months of service termination data will likely not provide a meaningful calculation of uncollectibles because the conditions that led the Company to propose to maintain its POR Discount rates (i.e., a lack of service terminations and write offs) would still be present. In addition, there would be only a partial year of data to reconcile. Reconciliation prior to the Company obtaining a full twelve months of data after service terminations resumed would complicate the reconciliation process, and lead to multiple filings that attempt to true-up the SCBPs and payment periods. Accordingly, it is in the interest of administrative efficiency that the Company file, and the Department review, a reconciliation of POR costs in March 2023," Nstar said

Dockets 21-POR-01, 21-POR-02

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