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After Rejecting 5.4% POR Discount Due To Impact On Retail Market, PSC's Directive Results In 11% POR Discount
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Pepco in the District of Columbia has filed a revised residential purchase of receivables discount rate using inputs as directed by the D.C. PSC, but the resulting discount rate is actually higher than a prior alternative proposed by Pepco that the PSC had rejected
As first reported by EnergyChoiceMatters.com, the PSC rejected both Pepco's standard update to its residential POR discount, which resulted in a discount rate of 14.8693%, as well as an alternative residential discount proposed by Pepco of 5.4197%
In doing so, the PSC expressed concerns that both discount rates would negatively impact competition in the retail electric market
The PSC had stated its concern that both prior proposals from Pepco could make it "impossible" for retail suppliers to offer competitive rates to residential customers
The PSC thus directed Pepco to file a new residential POR discount reflecting the use of residential calendar year 2022 bad debt expenses and late fee revenues in the calculation, in place of the standard data used for such components
Pepco made a filing reflecting such calculation on August 16, and the calculation directed by the PSC results in a residential POR discount of 11.3079%, or more than double the 5.4% discount that the PSC previously rejected due to negative impacts on retail suppliers
As first reported by EnergyChoiceMatters.com in May, while the nearly 15% residential POR discount under the regular calculation reflects an uncollectibles factor of 6.6591%, it also included a reconciliation factor of 8.0061%.
While the PSC's directive for the revised residential discount results in a reduced uncollectibles factor of 3.1706%, the 8% reconciliation factor is unchanged, and results in the 11% discount rate
As previously reported, under the 5.4% alternative proposed by Pepco, the residential uncollectibles discount component is derived by dividing the total electric supplier uncollectible expense over the life of the POR program by the total electric revenues billed over the life of the POR program. Furthermore, the uncollectible amounts are amortized over a two-year period (2024 and 2025 filings)
The nearly 15% residential discount that results under the standard POR calculation results from a 90% increase in write-offs compared to 2022, mostly driven by increased collection activity following the lifting of the COVID termination moratorium, as well as the reconciliation noted above
The current Pepco-DC residential POR discount rate is 3.9807%
PEPPOR-2024-01
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August 16, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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