Utility Says PSC Should Consider Requesting Increased Transparency From Retail Suppliers On Rate Offerings

Says Retail Suppliers' Limited Customer Screening, Teaser Rates May Be Source For High Uncollectibles

Seeks Change To POR Program

September 2, 2025

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Reporting by Paul Ring • ring@energychoicematters.com

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Pepco has recommended that the District of Columbia PSC, "consider requesting increased transparency from retail suppliers around rate offerings and pricing structures."

Pepco's recommendation came in comments concerning the future of the purchase of receivables programs in the District of Columbia

As previously reported, the DC PSC opened an inquiry into the future of POR due to, among other things, residential POR uncollectible balances that would have pushed the total POR discount rate to 15% under the standard POR discount rate calculation (see more background here)

Pepco in comments to the PSC said that "[o]ne contributing factor" to the spike in uncollectibles, "may be limited screening of customers’ ability to pay by some third-party suppliers."

Pepco further said, "Additionally, certain marketing practices -- such as offering low introductory rates that later increase substantially -- may lead to customer dissatisfaction and payment issues."

"These dynamics can result in higher write-offs, which ultimately affect the discount rate and the cost recovery mechanism for the utility," Pepco said

Pepco said in comments that, "A lack of visibility into supplier pricing and customer risk profiles has contributed to elevated levels of write-offs and uncollectibles, particularly in the residential segment. Enhanced transparency would allow for more accurate assessments of supplier practices and customer affordability and could inform future adjustments to the POR framework."

Pepco further said, "This consideration is especially relevant as the Commission evaluates whether the current structure adequately reflects the financial risks borne by the utility and whether suppliers are appropriately accountable for their enrollment practices and customer management."

Pepco encouraged the PSC to, "explore solutions that strengthen supplier accountability and customer protections."

While not making a recommendation on the continued offering of a POR program, Pepco made several observations about a potential end of POR

Pepco stated, "Discontinuing the POR program would shift the responsibility for collections and administrative functions of receivables from the utility to retail suppliers. This change would require suppliers to assume full accountability for their business practices and customer management. While this shift does not necessarily imply a contraction of the supplier market, it would place greater emphasis on supplier-led operations and customer engagement."

Pepco further said, "Additionally, the discontinuation of the POR program would underscore the importance of comprehensive oversight by the Commission. This would include, but not limited to, handling consumer complaints, enforcing rules that protect consumers from misleading market practices, and closely monitoring supplier conduct to ensure compliance and fair treatment of consumers."

Pepco supports modifying the POR discount rate calculation, "to better reflect the actual costs of administering the program."

Both Pepco and, in separately filed comments, Washington Gas Light proposed that the PSC cease using late payment fee revenues as an offset to uncollectibles in the POR discount rate calculation

Pepco alternatively recommended that, if late payment fee revenues remain as part of the POR discount rate calculation, then an administrative adder should be added to the POR discount, "to more accurately reflect the costs associated with administering the program and collecting overdue balances."

In separately filed comments, both Pepco and WGL opposed adjusting the POR discount to reflect changes in commodity rates

WGL suggested that, if the Commission is inclined to continue with the POR program, the PSC could consider lengthening the period over which the utility recovers its current under-collection.

WGL also stated, "Washington Gas believes that, should the POR program be discontinued, it is imperative that the process of doing so be thoughtful to prevent customer confusion resulting from any retail suppliers exiting the market due to this policy direction change."

The Retail Energy Supply Association said that the current spike in the residential discount rates, "appears primarily driven by COVID pandemic-era arrearage dynamics and related service disconnection moratoria."

RESA noted that, since the adoption of the POR program (in 2013 for Pepco and 2019 for WGL), the discount rates had been relatively stable until the pandemic-related arrearages

RESA said, "For residential POR, discount rates for residential customers have risen to levels so high that suppliers cannot reasonably compete. This development appears to be driven primarily by pandemic-era arrearages and disconnection moratoria. These extraordinary circumstances temporarily inflated bad debt expenses. The current excessive POR arrearage and discount rate issues are not reflective of the long-term uncollectible expenses associated with POR."

RESA suggested the following POR changes for consideration:

• Reconciliation: "Under normal conditions, the POR discount rates should be updated annually. This annual reconciliation moderates short-term changes in uncollectibles, while providing for timely utility cost-recovery. In times of anomalous uncollectibles, the Commission could consider more frequent reconciliation to avoid sudden, large fluctuations in the POR discount rates."

• Multi-year amortization: "Large imbalances should be recovered over several years to prevent rate shock and maintain supplier confidence."

RESA further recommended that the Commission convene a POR Working Group to explore potential reforms and provide detailed recommendations. RESA said that this group should consider:

• Normalization of uncollectibles to remove pandemic-era anomalies.

• Smoothing mechanisms for under- and over-collections to avoid volatility.

• Exploring complementary tools, such as Supplier Consolidated Billing, to enhance innovation while retaining POR.

• Utility cost recovery, ensuring Pepco and WGL can recover reasonable costs with transparency in filings.

• Market monitoring, through regular publication of shopping participation and arrearage data to measure program performance and track developments in uncollectibles.

The D.C. Office of the People's Counsel sought a further extension until Sept. 15 for initial comments (which had been due Sept. 1), with OPC stating, "This request is made in good faith and not for the purpose of delay. The additional time is necessary to complete an internal review of OPC consumer database material, coordinate with expert consultants, and prepare a detailed response on this complex issue which affects numerous District ratepayers."

PEPPOR-2025-01 et al.

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