BGE Files Updated POR Discount Rates for Electric, Gas Service

Baltimore Gas & Electric has filed with the Maryland PSC updated Purchase of Receivables discount rates for both electric and gas service, to take effect July 1.

For electricity, the new residential discount rate is marginally higher than the current rate, but the new Type I discount rate is significantly higher than the current rate for Type I customers (nearly four times higher).

For gas, the residential discount rate is virtually the same.

BGE Filed Electric POR Discount Rates

BGE Filed Gas POR Discount Rates

BGE's filed discount rates include, as directed, the application of revenues from late payments to offset uncollectibles. For Type II and Hourly customers, these offsets actually produce a negative discount rate. However, BGE opposes such offsets, as BGE said that it would benefit suppliers to the detriment of distribution customers.

"Moving late payment revenues for purchased receivables from base rates into the discount rate will lower the discount rate to the benefit of suppliers, but will result in distribution rates to customers that are higher than they otherwise would have been. Suppliers are given the benefit of late payment revenues, without incurring any credit and collections costs. This is especially evident by the fact that the POLR Type II and Hourly late payment revenues included in their respective discount rates dwarf all of the other costs recovered through those rates ... In fact, late payment revenues for the POLR Type II customer class is twice as much as the uncollectible expense, and the late payment revenues for the Hourly customer class is three times as much as the uncollectible expense. In other words, by including these revenues in the supplier discount rate, BGE's gas and electric distribution customers are deprived of the benefit of a total of $3 million in revenues which would have otherwise offset costs recovered in base rates during the period July 2011 - June 2012," BGE said.

If the entirety of late payment fee revenue were not used to offset uncollectibles, the residential electric discount rate would increase to 1.47%, while the residential gas discount rate would increase to 3.05%. The Type I discount rate would increase to 1.72%.

The impact of removing the late fee revenue from the discount rate for other customer classes can be seen on Page 5 of BGE's filing (where the discount percentage associated with such revenue is provided in Column C).

BGE has maintained the POR Risk Factor at 0% in its update filing.

	Residential	Type I	Type II	Hourly
Uncollectible Expense	0.6378%	0.7173%	(0.1609%)	(0.0655%)
Cash Working Capital Adjustment	0.1235%	0.0275%	0.0454%	0.0269%
Program Development	0.1062%	0.2685%	0.0479%	0.0088%
Customer Lists	0.0002%	0.0000%	0.0000%	0.0000%
Reconciliation Component	(0.0523%)	0.4198%	(0.2363%)	(0.0347%)
Total New Discount Rate	0.8154%	1.4331%	(0.3039%)	(0.0645%)
Current Discount	0.6249%	0.3674%	0.2173%	0.0507%

	Residential	General Service
Uncollectible Expense	2.3407%	0.0989%
Program Development	0.7364%	0.2257%
Customer Lists	0.0003%	0.0000%
Reconciliation Component	(0.6832%)	(0.4703%)
Total New Discount Rate	2.3942%	(0.1457%)
Current Discount	2.40%	0.98%