Maryland PSC Staff Recommend Adjustments to BGE POR Discount Rates

Maryland PSC Staff have recommended modifications to Baltimore Gas & Electric's proposed updates to the electric and natural gas Purchase of Receivables discount rates.

Staff's changes address two issues.

First, Staff would adjust the reconciliation component to reflect interest paid at the rate used for customer deposits. BGE's proposed electric discount rates use an interest rate equal to BGE's authorized Rate of Return, as specified in the POR tariff.

However, Staff said that BGE's Rate of Return is not the appropriate interest rate, as it is designed to compensate BGE's investors for its long-term distribution investments, as opposed to the short-term nature of any POR over- or under-collection.

The PSC previously ruled that interest in the gas discount rate shall equal the rate used for customer deposits, and Staff sought to apply the same standard to the electricity discount rates.

Second, the application of late payment fee revenue resulted in negative discount rates for larger non-residential customers under BGE's proposed rates. To avoid skewed incentives from negative discount rates (which would essentially pay suppliers for using the BGE billing system), Staff recommends setting these discount rates at 0%, with any over-recovery in costs applied to offset any future POR expenses.

The current discount rates, and those proposed by BGE and Staff, are below:

Electricity

Gas

	Residential	Type I	Type II	Hourly
Current Discount Rate	0.6249%	0.3674%	0.2173%	0.0507%
BGE's Proposed Discount Rate	0.8184%	1.4362%	- 0.3050%	- 0.0648%
Staff's Proposed Discount Rate	0.8234%	1.4218%	0.0000%	0.0000%

	Residential	General Service
Current Discount Rate	2.40%	0.98%
BGE's Proposed Discount Rate	2.3962%	- 0.1457%
Staff's Proposed Discount Rate	2.3962%	0.0000%