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PSC Commissioner: Proposed POR Discounts (>6%) Would Be "Nail In The Coffin" For Residential Market
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During a June 4 Maryland PSC administrative meeting, a majority of PSC Commissioners expressed concerns with setting residential purchase of receivables discount rates at Pepco, Delmarva, and Washington Gas Light at the levels proposed by utilities and PSC Staff, due to the potential for such significant discount rates (which are above 6% and which represent a 100%-200% increase from the current discount rates) to result in the end of residential retail supplier service, and thus exacerbating any potential under-recovered costs which are intended to be recovered from suppliers through the new discount rates during the wind-down of residential POR
As previously reported, the residential discounts are proposed to be updated as shown in the chart below Generally, the utilities are including in the discount rate updates an extra 6 months of forecast uncollectibles because while residential POR will end on Dec. 31, 2025, the receivables purchased under POR may not be categorized as uncollectible until a year later, due to the time it takes for receivables to be deemed uncollectible after various collection efforts are exhausted
Note that PSC Staff propose a slight adjustment to the Delmarva POR proposed discount rate, to reflect, among other things, an accelerated start date (June 1) to provide additional time to recover POR costs under the new, higher discount
Commissioner Bonnie Suchman said that the proposed discount rates represent quite a "haircut" for retail suppliers, and would knock out any incentive for suppliers to stay in the market
The PSC would be, "putting the nail in the coffin," of residential shopping by approving discount rates as high as those before the PSC, Suchman said
PSC Chair Frederick Hoover observed, concerning the over 100% increases in the POR discount rates, that, "we would never approve," such rate increase percentages in a traditional rate case, and the PSC in such instance would instead employ gradualism
Commissioner Kumar Barve, without alleging that there was any error in the methodology, said that he did not have comfort in the POR rate calculations, due to the use of forecasting shopping levels in the current market climate, and the extended period for forecast uncollectibles
Discussing proposals for any under- or over-recovery of POR costs, which Pepco and Delmarva (and BGE which was not before the PSC today) have proposed to address on a socialized basis among suppliers, rather than assigning unrecovered uncollectibles to the specific supplier causing such under-recovery, Suchman said that it was not clear on why a socialized approach is justified
Socialization of the residential POR reconciliation, "doesn't seem very fair," Suchman said
The PSC took the matters under advisement. Hoover expressed a desire to see if the PSC could develop a means to ameliorate the proposed increases. Hoover said that the PSC would issue an order, "relatively soon," noting that the PSC needs to act promptly (due to the need to maximize the amount of receivables which are subject to the appropriately updated discount rates)
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June 4, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Proposed Residential POR Discounts
Pepco-MD
Current 7/1/25
Discount Discount
Residential 2.6710% 8.0768%
Delmarva-MD
Current 7/1/25
Discount Discount
Residential 2.1739% 6.2589%
6.1101%*
*Staff adjustment
WGL-MD
Current 6/27/25
Discount Discount
Residential 3.2418% 6.4698%
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