Pennsylvania PUC ALJ Recommends Limit On Purchase Of Receivables At Another Utility (Maybe)

A Pennsylvania PUC ALJ appears to recommend that a limit be placed on the retail natural gas supplier plans eligible for purchase of receivables at Peoples Natural Gas Company LLC, though differing language used throughout the ALJ's recommended decision leaves some ambiguity

In a proposed ordering paragraph in a recommended decision (RD) in Peoples' rate case, the ALJ specifically recommends that, "The Commission adopt CAUSE-PA’s [Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania] proposals regarding the Purchase of Receivables Program."

As further discussed below, CAUSE-PA recommended that a supplier's product should be ineligible for POR if the product has a rate which exceeds the price to compare, with the rate comparison ostensibly occurring at the time of enrollment (though, as noted below, CAUSE-PA is not always explicit that the price comparison would only occur at enrollment)

In contrast, in the recommended decision's narrative concerning POR, the ALJ recommends that, "I recommend that the Commission adopt Peoples’ proposal, which incorporates recommendations of CAUSE-PA."

However, Peoples, in a reply brief, explicitly said of POR, "Peoples has not adopted CAUSE PA’s proposal," and that, "To clarify, although Peoples acknowledges certain merits of CAUSE PA’s proposal, Peoples has not 'adopted' CAUSE PA’s recommendation".

Peoples, in testimony, "did provide evidence of supplier prices to show its concern regarding the number of residential customers paying more than the PTC for commodity service."

Peoples further said in a reply brief that, "should the Commission choose to adopt CAUSE PA’s proposal, it would be prudent to necessitate clear rules for suppliers in order to guide entry and exit from the POR Program".

Peoples also said in a reply brief that, "The Company supports a balanced approach between promoting competition and protecting customers, and retail market reform may be appropriately handled in a separate rulemaking or policy proceeding."

Peoples said in a brief that retail market reforms such as a POR limit suggested by CAUSE-PA, "could be appropriate for a separate rulemaking or policy proceeding where all interested stakeholders can participate," suggesting that Peoples was not advocating for the CAUSE-PA POR proposal to be adopted in the current rate case.

Thus, while the recommended decision's ordering paragraph is explicit that "CAUSE-PA’s proposals" [plural] regarding POR should be adopted, the RD's narrative clouds the issue by describing Peoples as "incorporat[ing]" the recommendations of CAUSE-PA, which Peoples per Peoples's briefs has not done

Regarding CAUSE-PA’s "proposals" [plural], CAUSE-PA in a brief said that, if CAUSE-PA’s proposed limit on POR is not adopted, then POR should be, "eliminated in its entirety."

Peoples in a reply brief said that CAUSE-PA’s proposed complete elimination of POR was not provided in testimony, and, "should not be considered".

Other than the language quoted above, the ALJ did not discuss recommended changes to POR and whether CAUSE-PA’s proposals (plural) were adopted in toto, or subject to Peoples' additional considerations (such as a statewide proceeding on POR)

The recommended decision did not include any extended discussion of the rationale for adoption of CAUSE-PA’s POR proposals, stating only, "After considering the various positions of the parties, I recommend that the Commission adopt Peoples’ proposal, which incorporates recommendations of CAUSE-PA."

As to CAUSE-PA's proposal made during the case, as previously reported, the proposal has mostly been described as making any retail supplier plans with a rate in excess of the price to compare at the time of enrollment ineligible for POR, but, as previously reported by ECM, inconsistent language has been used to describe the proposal, with some language suggesting a supplier rate could never exceed the PTC to be included in POR

CAUSE-PA in a post-hearing brief specifically said in multiple instances that, under CAUSE-PA's proposal, to be eligible for POR, a retail supplier rate would need to be at or below the applicable default service price, "at the time of contract initiation or renewal."

However, in an initial post-hearing brief, CAUSE-PA did not universally describe its proposal as specifically applying the price cap comparison to the default service rate as occurring only at the time of enrollment or renewal, as CAUSE-PA also stated more generally that CAUSE-PA's proposal, "would require all charges for contracts or renewals of contracts entered after that period [a proposed June 1, 2027 start of the cap] be at or below the default service price to compare in order to have any charges after that date be included in the POR program". [emphasis added]

In summarizing parties' descriptions of the CAUSE-PA proposal, the recommended decision does not limit the POR eligibility provision to a comparison at the time of enrollment, and instead generally states that a supplier rate must be below the PTC to be eligible for POR:

[the RD summarizing Peoples' position]:
"In this proceeding, CAUSE-PA proposed that Peoples provide notice to suppliers participating in the POR Program, effective June 1, 2027, that it will no longer purchase receivables from those suppliers unless they provide at or below Peoples’ default service price, or Price to Compare ('PTC')."

[the RD summarizing CAUSE-PA's position]:
"In light of overwhelming evidence of excessive prices and increased collections costs associated with increased gross write offs caused by the competitive market, the Commission should require Peoples to cease its purchase of receivables (POR) from natural gas suppliers (NGSs) unless the NGS’s price is at or below Peoples’ default service price."

The recommended decision, in summarizing parties' positions, cites various cost data cited by parties, without proposing any specific conclusion concerning such data or specifically citing such data as supporting the recommended POR changes

The RD notes that approximately 95.8% of residential shopping customers pay more than the PTC for commodity service, and the average supplier price is 82% above the PTC, with some supplier prices reaching as high as ten times the PTC.

The RD notes that CAUSE-PA has said that over a 28-month period, from January 2024 through April 2026, Peoples's residential shopping customers were charged $51.9 million more than they would have otherwise been charged for default service

The RD notes, over this same 28-month period, from January 2024 through April 2026, write offs for Peoples’ residential shopping customers were 484% higher than for residential default service customers -- amounting to an average write-off of $602.13 for residential shopping accounts, compared to $124.31 for default service accounts.