PSC Staff Proposes Continuation, For Period Greater Than 1 Year, Of POR For Existing Contracts

Mandatory Dual Billing For Other Contracts

September 13, 2024

Email This Story
Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The following story is brought free of charge to readers by VertexOne, the exclusive EDI provider of EnergyChoiceMatters.com

Retail energy suppliers in Maryland would, for an intended period of 17 months from the end of POR for new residential customers, be permitted to continue using utility consolidated billing with purchase of receivables for residential contracts entered into or renewed prior to January 1, 2025, under a recommendation from Maryland PSC Staff regarding SB1, POR, and related billing issues

All references to UCB, POR and customers in this story relate to residential service, even if not specifically identified as such. A PSC Staff report did not appear to address any non-residential UCB or POR issues

Additionally, any reference to supplier charges, or similar, means commodity-only charges, and not any non-commodity supplier charges

Staff's proposal would allow residential UCB with POR to continue through an intended end date of June 1, 2026 for existing customers (contracts existing or renewed prior to January 1, 2025).

Residential grandfathered POR is intended to end effective June 1, 2026

As further discussed below, Staff proposes to mandate dual billing for residential contracts entered into or renewed on or after January 1, 2025, with this requirement intended to last until June 1, 2026

Staff proposes that utilities implement a non-POR form of residential UCB effective June 1, 2026, as discussed further below

The June 1, 2026 date listed above for (1) the end of grandfathered POR, (2) the end of mandatory dual billing, and (3) the effective date for non-POR UCB, is premised on Staff's stated recommendation that non-POR UCB will be implemented effective June 1, 2026

Staff's recommendations concerning grandfathered UCB with POR, and mandatory dual billing for other customers, are specifically written as being, "until a non-POR residential UCB method is implemented." Thus, to the extent the date for implementation of non-POR residential UCB slides beyond June 1, 2026, Staff's recommendation as stated in Staff's report would align the end date for grandfathered POR and mandatory dual billing with the ultimate effective date of a post-POR UCB

In addressing the treatment of existing residential contracts, Staff does not favor requiring dual billing for existing residential shoppers due to, among other reasons, the likelihood that mandated dual billing for existing customers would result in a significant drop of customers to default service

Staff noted that some utilities may face logistical hurdles in being able to process such a large drop of customers to SOS on the same day. Staff also raised potential impacts on utilities' wholesale supply portfolios from the drop of a large number of customers to default service prompted by a dual billing mandate for existing customers

Regarding the continuation of UCB with POR for grandfathered residential contracts, Staff proposed compliance obligations for retail suppliers

Staff noted that utilities will not know the contract status of customers who continue to be billed under UCB with POR, and if they are eligible for grandfathering

As such, Staff recommended that the PSC "make clear" to retail suppliers that, "the full compliance obligations for dropping a customer or switching a customer to dual billing on and after January 1, 2025 when the customer’s contract ends or renews is on the supplier and not the utility."

Staff also proposed that retail suppliers shall be required to, on an ongoing basis, share with the PSC and the People's Counsel data related the number of grandfathered customers and, by month, list when such contracts expire and to how many grandfathered customers such expirations apply. After January 1, 2025, such reports would include a requirement to list the disposition of any customers whose grandfathered status has been terminated due to contract expiration (e.g., dropped to SOS, moved to dual bill, switched supplier, etc.)

For contracts entered into or renewed on or after January 1, 2025, Staff recommends that retail suppliers be required to use dual billing, with Staff citing technical limitations in the utilities' ability to implement a non-POR UCB alternative immediately

Due to these technical considerations, Staff recommends that a date of June 1, 2026 be established for the utilities to implement a form of UCB without POR (discussed further below). Mandatory dual billing for new/renewed contracts as of 1/1/2025 and later would continue through June 1, 2026

Staff asked the PSC to waive COMAR 20.53.05.03 (electric) and COMAR 20.59.05.01 (gas) to require the use of dual billing for any new/renewed residential contracts after Jan. 1, 2025

Staff said that, absent a waiver allowing for mandatory dual billing, utilities will not be able to offer residential retail electric choice to new customers, due to the lack of a non-POR utility consolidated billing solution that can be implemented by January 1, 2025, and the need to comply with SB 1's prohibition on POR for new customers

For a post-POR form of UCB, to be effective June 1, 2026, Staff recommends that the utilities be required to implement a pro rata allocation of customer payments, which is the current non-POR mechanism contained in COMAR as an alternative to POR (though no utility currently uses it)

The proration solution would allocate customer payments on a pro rata basis between utility delivery and retail supplier charges (with pro rata coming into play in terms of customer partial payments)

The ratio of payment application between delivery and supplier charges remains an open question, though Staff has proposed that pro rata (within the same aged charges) be weighted by dollar amount (discussed further below)

Staff does not favor use of a payment posting priority as a post-POR form of UCB. Under payment posting priority, a hierarchy for payment processing is developed, with the first category for payment applications required to be fully satisfied before moving to the next payment application category (e.g. utility distribution arrears are paid in full first, then supplier arrears, then current distribution charges, then supplier current charges). A payment posting priority mechanism was the system in place before POR was implemented. In partial payment situations, supplier charges are placed behind the equivalent age utility charges, and suppliers will not receive any payment if the partial payment is less than the charges due under the first category of utility arrearages

Staff said that implementation costs for a pro rata payment system at Potomac Edison and WGL are not excessive, but noted that there are no implementation cost estimates for pro rata at BGE, Pepco, and Delmarva.

Notwithstanding its recommendation for pro rata, Staff believes that a payment posting priority system would ultimately be less costly to implement than pro-rata.

While Staff recommends a pro rata methodology, Staff asked that the PSC now make a determination on adopting either pro rata or payment posting priority so that implementation of post-POR UCB may begin

Staff said that the PSC should consider whether the choice of pro rata or payment posting should be made on a statewide basis, or should allow for variation among the utilities.

Regarding the specifics of a pro rata methodology, Staff generally proposed, for a single fuel customer not on a payment arrangement, that proration of equal age supplier and utility charges (e.g. arrearages, followed by current charges) shall be weighted by dollar amount. Arrearages (by same age) would be paid first on a pro rata basis, followed by current charges paid on a pro rata basis

Same age supplier and utility charges would be treated equally under this pro ration, Staff said

Staff's pro rata proposal above, including the requirement to be weighted by dollar amount, contrasts with language in the current pro rata COMAR which makes reference to proration on a "total bill" basis

While Staff does not favor use of a payment posting priority mechanism, to the extent the PSC were to adopt payment posting priority, Staff generally recommended that utility arrears be paid first, then supplier arrears, then current utility charges, then current supplier charges, for a customer not on a payment arrangement

Staff requested that the PSC rule by October 1, 2024 on Staff's recommendations regarding grandfathered POR, mandatory dual billing, and the choice of the method for post-POR UCB payment handling

Staff's recommendation of a June 1, 2026 effective date for a post-POR form of UCB is made barring, "substantial technical evidence to the contrary presented in the response to this report[.]"

Regarding other matters raised by mandatory dual billing as a "short-term" compliance mechanism, Staff recommended as follows:

• Staff recommends that the Commission approve utilities applying financial assistance solely to utility charges for dual billed customers

• Staff recommends that the Commission approve utilities setting utility payment arrangements solely based on utility arrearages for dual billed customers

• Staff recommends that the Commission approve utilities setting utility budget billing solely based on utility charges for dual billed customers

• Staff recommends that the Commission approve utilities setting late fees solely based on utility charges for dual billed customers

• Staff noted that there are currently no rules limiting supplier late fees for dual billing customers, though the supplier consolidated billing rules do limit supplier late fees. "Regarding customer late fee protections for supplier residential dual billing customers, if the Commission wishes to make a decision on this matter, Staff recommends that it do so initially by Order to be followed up with a rule making at a later date," Staff said

• For post-POR UCB, Staff recommends that residential supplier charges be subject to the same late fees applied to default service charges, and that utilities remit late payment revenue on post-POR UCB residential supplier charges to suppliers.

• Staff recommends that supplier charges remain on UCB for 90 days prior to being returned to the supplier for collection, consistent with current rule

• For post-POR UCB, Staff recommends that utilities transmit to suppliers payments for supplier charges within 5 business days of receipt of payment from the customer, or within 5 business days of UCB customer payment of supplier charges within a customer payment window.

PC65, PC 65

ADVERTISEMENT

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Director of Policy and Research, Retail Energy
• NEW! -- Director, Load Forecasting -- Retail Supplier
• NEW! -- Wholesale Markets Analyst -- Retail Supplier
• NEW! -- Origination Analyst -- Retail Supplier
• NEW! -- Settlements Analyst -- Retail Supplier
• NEW! -- Billing Supervisor

HOME

Copyright 2024 EnergyChoiceMatters.com. Unauthorized copying, retransmission, or republication prohibited. You are not permitted to copy any work or text of EnergyChoiceMatters.com without the separate and express written consent of EnergyChoiceMatters.com