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Utilities Propose New Purchase Of Receivables Programs, Discount Rates

January 11, 2023

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Copyright 2010-21
Reporting by Paul Ring •

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The New Hampshire investor-owned electric utilities have proposed new purchase of receivables programs, in response to recent state law and PUC rulemaking

All of the utilities would offer POR to governmental aggregations (including those acting as their own supplier) as well as non-aggregation retail suppliers

None of the EDCs have yet filed proposed new supplier agreements or tariffs. While EDCs generally described their proposals as "offering" POR, other language states that suppliers using utility consolidated billing will need to sign a revised agreement concerning consolidated billing and POR (but such revisions were not yet available). None of the EDCs specifically addressed whether POR would be "all-in or all-out".

All of the descriptions below reflect the EDCs' proposals, which remain subject to PUC approval. Discount rates are generally illustrative based on current data, and may change by implementation date

Public Service Of New Hampshire

Public Service Company of New Hampshire proposes to offer the POR Program to all competitive suppliers that have selected utility consolidated billing.

PSNH is proposing a discount rate comprised of an uncollectibles factor as determined by PSNH's trailing, two-year uncollectibles expense as a percentage of customer revenue over the same timeframe, and the annual amortized portion of the incremental capital expense for IT infrastructure modifications needed to accommodate POR as a percentage of supplier billings. An administrative cost component, set as $0, is included as a placeholder, but no administrative costs are currently expected

It appears that PSNH is proposing a single discount rate applicable to all customer classes, but its testimony appears to contain an error on this issue:

PSNH's testimony states:

Q. Is the Company proposing the same discount rate for all customer classes?

A. No. [sic] The Company did not consider proposing discount rates that differ by class due to the need to implement POR in two very different billing systems. Due to the need to accommodate two different systems, the Company determined that the potential benefits would be outweighed by the additional costs associated with the necessary system upgrades for facilitating multiple discount rates.

PSNH's attachment demonstrating its POR calculation appears to show only a single discount rate

PSNH's POR discount rate, using 2020 and 2021 uncollectible data, is:

PSNH POR Discount Factors, Illustrative:

Uncollectible:   0.00758
Implementation:  0.00308
Admin Costs:     [placeholder, none currently expected]
Total Discount:  0.01066 [i.e. 1.066%]

PSNH estimates an eight-month process to implement POR following Commission approval of the POR Program

DE 23-004

Granite State Electric

Granite State Electric (Liberty Utilities, or GSE) proposes to offer the POR program to all Competitive Suppliers that choose Consolidated Billing service from GSE.

Notably, Granite State Electric said that it intends to differentiate between Competitive Suppliers serving municipal aggregations and all other Competitive Suppliers using a separate identifier in the GSE's billing system, though Granite State Electric did not further address this intention (e.g. in terms of different discount rates, rules, etc).

Granite State Electric proposes that class-specific POR discounts (DPRs, discount percentage rate) be set for the classes used in its default service -- the Small and Large customer groups.

However, for the first DPR, GSE is proposing the same rate for both classes until uncollectible and other data can be collected for each class to be able to perform a class-specific DPR calculation

Granite State Electric Illustrative POR Discounts:
Customer Group:                    Small    Large

Uncollectible (UP)                0.261%   0.261%
Administrative Cost (ACP)         1.281%   1.281%
Past Period Reconciliation (PPRP)   0.0%     0.0%
Total Discount DPR                1.542%   1.542% 

GSE proposes to purchase all existing receivables upon implementation of the POR program utilizing a single discount percentage rate. The amounts purchased for the existing receivables shall be subject to full reconciliation through the PPRP.

GSE estimates a six-month period to fully implement and test POR after a Commission order is issued

DE 23-003


Unitil proposes to offer the POR Program to all Competitive Suppliers that choose Consolidated Billing service from the Company Unitil proposes class-specific DPRs (discounts) for two class groupings: (1) the Residential Service Class; and (2) the General Service Class

Unitil's DPR is comprised of three elements: the Uncollectible Percentage (UP), the Administrative Cost Percentage (ACP) and the Past Period Reconciliation Percentage (PPRP).

During the first year of the POR Program, the UP is calculated as the uncollectible expense for the applicable customer class based on actual data for Default Service Customers, divided by the total amounts billed by the Company for Default Service Supply, including late payment fees if included in uncollectible expenses.

Unitil's proposed initial (illustrative) discount rates are as follows:

Unitil Initial POR Discounts, Illustrative:
            Residential   General
UP             0.94%       0.26%
ACP            0.02%       0.02%
PPRP           0.01%       0.04%
Total (DPR)    0.97%       0.32%

Unitil proposes to purchase all existing receivables upon implementation of the POR Program utilizing the initial DPRs for the Residential and General customer classes. The amounts purchased for the existing receivables will be subject to full reconciliation through the PPRP.

Unitil expects four months is required for POR implementation

DE 23-002

New Hampshire Electric Cooperative

Citing staffing and technical issues, New Hampshire Electric Cooperative, Inc. sought a waiver of the requirement to file a POR plan at this time. NHEC did not seek a specific amount of time during which the waiver would be in effect, but proposed to file an update on any continued need for the waiver within 60 days. NHEC said that it expects to require at least three more months to develop a POR proposal

DE 23-001


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