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PUC Approves Stipulation In Which Utility Provides Mitigation Credit To Offset Default Service Uncollectible Adders (Non-POR Market)
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The Maine PUC approved without modification a stipulation among Versant Power ("Versant" or the "Company"), and the Maine Office of the Public Advocate
(the "OPA") to establish the Standard
Offer Uncollectable Adders at Versant's Bangor Hydro
District ("BHD") and Maine Public District ("MPD") territories, for multiple default service years
The Standard
Offer Uncollectable Adders are part of the bypassable Standard
Offer default service rate, and essentially work as a purchase of receivables program, with discount, for the wholesale Standard
Offer suppliers
The Standard
Offer Uncollectable Adder is meant to reflect estimated uncollectables that the utility will face in collecting default service customer bills. A Standard
Offer Uncollectable Adder is established and fixed prior to establishing the prices for each
standard offer term and each standard offer class.
The utility bills customers on behalf
of the wholesale standard offer supplier. Billed amounts associated with the Uncollectable Adder are
retained by the utility and are not turned over to the standard offer supplier.
For example, if
the uncollectible adder is 2% and the standard offer price is $0.10/kWh, the standard
offer supplier would be paid $0.098 (98% of 10 cents) for each kWh billed in standard
offer service. The standard offer supplier is paid the standard offer price
less the pre-established uncollectible adder for all billed sales regardless of whether the
utility collects those amounts from the customer
The PUC has said that Standard Offer bad debt is treated this way to allow wholesale bidders to know upfront their cost for bad debt and, thus, eliminate risks and unknowns associated with
actual uncollectible or bad-debt expense.
A higher Uncollectable Adder means higher standard
offer rates for customers.
The "historical methodology" for the Standard Offer Uncollectable Adder establishes an Uncollectable Adder rate that forecasts the standard offer retainage
account balance (i.e. uncollectibles), as of December 31, equal to three months of average net standard offer write offs for a particular customer class
In 2024, Versant had proposed significant increases to the Standard
Offer Uncollectable Adders in several of its service areas and customer classes, due to accumulating uncollectibles. The Adders had previously been set at 0% for certain classes, including residential customers
Several of Versant's original proposals would have resulted in Standard
Offer Uncollectable Adders of about, or in excess of, 5% for several classes and service areas, including residential and small commercial customers. Versant subsequently proposed lower increases in the Adders for 2025, such as setting the BHD residential/small non-residential Adder at 3.45%, versus the originally proposed 5.82%, but still much higher compared to the then-current 0%.
The PUC in 2024 denied both sought levels for an increase in the Uncollectable Adders, and instead set the Adders as follows for 2025:
The newly approved stipulation establishes new Standard
Offer Uncollectable Adders that are, for some classes, significantly higher than the current adders, but which also reflect credits from Versant to decrease the balance in Versant's standard offer retainage accounts (uncollectibles). These credits serve to offset the amount that could otherwise potentially have been collected through higher default service Adders (or, alternatively, had the matter been fully litigated, the amounts could have potentially been disallowed for customer recovery, due to allegations that Versant's collection practices were not prudent)
Specifically, with the PUC's approval of the stipulation, Versant will make a one-time credit of about $1.7 million to the standard offer retainage accounts
The PUC said that the stipulation, "mitigates
the impact on ratepayers through the one-time credit of $1,750,226[.]"
Additionally, in the future, Versant may be obligated to contribute additional credits to the standard offer small customer class retainage accounts if the historical methodology to set the Adders results in a Standard Offer Uncollectable Adder rate higher than the 2026 Adders set forth below. The
maximum credit that Versant shall have to make to the BHD and/or MPD small customer retainage accounts
under this provision is $200,000 in total.
The adopted stipulation provides that the standard offer uncollectable adder rates for Versant’s BHD and MPD classes in the 2026 standard offer bidding procedure shall be as follows:
For Versant’s BHD and MPD small classes (residential/small non-residential), the uncollectable adder rates set for 2026 as listed above shall remain in effect for the standard offer bidding procedure applicable to the
2027 and 2028 calendar years, unless the historical methodology for 2027 and/or 2028 results in a
lower uncollectable adder rate, in which case the lower rate using the historical methodology will
be used for that standard offer year.
In the standard offer bidding procedure for 2029, Versant shall calculate its
uncollectable adder for the BHD and MPD small classes using the historical methodology. If the
calculation of the uncollectable adder for the BHD and/or MPD small classes utilizing the
historical methodology results in an uncollectable adder rate higher than the adders for 2026 as listed
above, Versant shall make an additional credit to the BHD and/or MPD small retainage accounts
to reduce the applicable rates for 2029 to match the rates set forth for 2026 as listed above. The
maximum credit that Versant shall have to make to the BHD and/or MPD small retainage accounts
under this provision is $200,000 in total.
Beginning in the standard offer bidding procedure
for the 2027 calendar year, the uncollectable adder for the BHD and MPD medium classes
will be calculated pursuant to the historical methodology
The stipulation resolves all issues related to the prudency of Versant’s standard
offer credit and collection activities with respect to the Company’s standard offer uncollectable
adder and standard offer retainage accounts, up through June 30, 2025.
The stipulating parties agree that Versant makes
no admission as to imprudence on the part of Versant related to collection activities in the
proceeding.
The PUC in adopting the stipulation noted, "the Stipulation’s
terms concerning prudency and further action by the Commission and the parties are
appropriately limited to the Company’s credit and collection practices solely in
connection with the standard offer and not distribution service or any other issues."
Docket No. 2024-00248
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September 12, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Adopted 2025 Uncollectable Adder
BHD
Residential/small non-residential: 1.45%
Medium non-residential: 0.70%
Large non-residential: 0.00%
MPD
Residential/small non-residential: 1.65%
Medium non-residential: 1.25%
Large non-residential: 0.00%
Adopted 2026
Standard Offer Uncollectable Adders
BHD
Residential/small non-residential: 3.43%
Medium non-residential: 2.31%
Large non-residential: 0.00%
MPD
Residential/small non-residential: 3.20%
Medium non-residential: 0.00%
Large non-residential: 0.00%
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