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PSC Ends Purchase of Receivables For Existing Residential Contracts
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The Maryland PSC has ordered the termination of the purchase of receivables under utility consolidated billing, for residential customers, for electricity and natural gas, effective January 1, 2025
As noted below, the PSC's specific language in the order is not clear on several issues, including any obligation for the utilities to implement on January 1, 2025 a pro-rata payment process for residential UCB, and whether any "temporary allowance" is being made for existing supplier contracts notwithstanding the ruling's stated January 1, 2025 effective date for the end of residential POR
The PSC's order specifically suspended relevant rules under COMAR only as they relate to POR for residential customers. The relevant COMAR provisions currently require utilities to pro-rate payments among supply and delivery charges if the utility does not use POR. As discussed further below, it is not clear how the PSC is addressing this current pro-ration obligation
The PSC also in the order stated, "The Commission will grant a temporary allowance for existing supplier-customer agreements," but the order did not elaborate on this statement nor did the order provide any date related to any such "temporary allowance". Nothing in the order suggests that there will be any continuation of POR for residential customers under existing or renewed contracts beyond January 1, 2025, and indeed, the order specifically cites challenges created by having some UCB receivables be subject to POR, while other UCB receivables are ineligible for POR, as justification for ending POR
As previously reported, SB 1 requires the elimination of residential POR effective January 1, 2025 for contracts entered into or renewed on or after January 1, 2025
The PSC agreed that SB1 does not require that this POR prohibition be applied to existing contracts, but found that it is in the "public interest" to end residential POR for all residential contracts, relying on the PSC's own rulemaking authority
The PSC cited inefficiencies in the utilities maintaining two different payment processing mechanisms, as well as the challenges in identifying residential grandfathered contracts that would remain eligible for POR, as justifying the end of all residential POR, including for existing contracts
"The COMAR regulations are a creation of the Commission, and third-party residential suppliers entered into customer contracts aware that regulations and many factors in the energy industry may change. The risk of a change in the regulatory environment is a risk borne by the parties to any contract," the PSC said
"Ending PORs does not violate existing contracts between a supplier and a customer. The Joint Utilities have all stated that their BSA's reference their tariffs. Suppliers entered into their customer contracts aware of the business environment, including all relevant COMAR provisions. Although the Commission understands that suppliers may have relied upon COMAR 20.53.05.06 and 20.59.05.03 in pursuing new customers, that reliance does not reduce the Commission's authority to revise its own regulations," the PSC said
The PSC specifically suspended COMAR 20.53.05.06 and 20.59.05.03 as they are, "related to Maryland utilities' purchase of suppliers' accounts receivable for residential customers."
The PSC did not suspend broadly or wholly suspend COMAR 20.53.05.06 and 20.59.05.03
As noted, these rule provisions require utilities to either use POR, or to pro-rate payments among supply and distribution charges if POR is not used
The PSC's order included a statement that, "The suspension of POR obligations on and after January 1, 2025 does impair [sic] the use of pro rata billing and collection by the utilities under the existing regulations."
It was not clear if this is a scrivener's error, or if the PSC is not requiring the utilities to implement pro-ration for residential UCB effective January 1, 2025
In a forthcoming report from PSC Staff due September 13 concerning SB1 and POR, the PSC additionally ordered that Staff shall provide a reasonable estimate for the utilities to, "fully implement this transition based on the guidelines of this ruling."
The suspension of the stated COMAR provisions as they relate to residential POR is indefinite pending a future rulemaking, the PSC ordered.
The PSC order specifically stated that the order does not address the future of POR as it relates to non-residential contracts.
Based on the utilities' compliance filings, it is still unclear if any or all of the utilities are, without significant system changes, able to maintain POR for non-residential UCB while prohibiting POR for all residential UCB
The PSC in its order did make observations concerning the use of dual billing. Given that the PSC is ending POR for all residential contracts (aside from the vague "temporary allowance" statement noted above), the dual billing issue would appear to be moot unless the utilities' systems are unable to continue non-residential UCB POR in an environment where residential UCB is not eligible for POR
The PSC said concerning dual billing, "While the Commission will await the final recommendations of Staff’s September 13, 2024 filing before rendering a decision, the Commission is concerned that the utilization of dual billing is a regression of a positive market for customers or retail choice providers and thus is not a preferred option."
The PSC reserved a ruling regarding mandatory dual billing until after Staff files the September 13 report noted above
Staff was directed to start drafting regulations to amend or appeal the current POR/pro-ration rules
COMAR 20.53.05.06 and 20.59.05.03 only relate to UCB. The PSC's order did not address whether POR may continue for residential receivables under supplier consolidated billing (specifically, residential delivery-related receivables returned by a supplier back to the utility)
PC 65
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August 27, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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