ICC Staff Says ComEd Purchase of Uncollectibles Charge Should Only Reflect Incremental Costs

Administrative costs assessed to retail suppliers under Commonwealth Edison's Purchase of Uncollectibles tariff should be limited to those costs which are truly incremental and not already included in base rates, Illinois Commerce Commission Staff said in recently filed testimony (11-0435).

As only noted in Matters (5/19), ComEd's Purchase of Uncollectibles program would discount payments to suppliers by an uncollectibles factor (2.95% at the time of filing), plus an administrative charge of about $29.

While the enabling Purchase of Uncollectibles statute allows the collection of administrative costs, "the costs should be incremental and not otherwise included in rates currently charged by the Company," Staff said.

"This is not the case for ComEd based on how these charges have been described by the Company in discovery. In response to Staff DR TEE 1.04, the Company claims that the POU Program Charge is incremental since it is for a service that is not currently offered. However, the Company also states in the same response that the positions related to this charge represent current positions taking on additional duties. There is no evidence that these same positions are not already included in the delivery rates set in the most recent ComEd rate case. The Company further states that to avoid double recovery, the revenue collected under the administrative portion of the discount rate will be accumulated and deducted from the distribution revenue requirement and recorded as miscellaneous revenue. No such adjustment was reflected in the revenue requirement of the most recent rate case," Staff said.

Staff suggested that administrative costs charged to suppliers under POU should be determined initially in a rate proceeding when it can be determined that the costs are not included in other rates charged to the utility's customers. After the initial determination in a rate proceeding, Staff said that ComEd would file annually to update the cost through an informational filing with the Commission with supporting workpapers by May 15 of each year, with a June 1 effective date.

Staff also said that suppliers electing POU should be required to provide notice to customers of such election.

ComEd states that it intends to provide a separate customer notification to describe the Rider POU charges associated with the change in the collecting party.

However, Staff said that requiring retail suppliers using POU to also provide written notification to the customer that the unpaid debt is being returned to ComEd supply, "would help reduce customer confusion."

"Customers affected by POU will be dropped from the RES [retail electric supplier], returned to ComEd bundled service and receive a letter from ComEd stating that the former RES has sold the debt to ComEd. These same customers will also receive a bill from ComEd that includes ComEd supply charges as well as RES charges in an amount that will not be traceable back to the RES's bill. Any additional explanation to the customer about the many changes that will occur to the billing of their electric service can only help with customer understanding of a somewhat complicated process. It is the RES that is initiating the action that will result in numerous changes to the customer's electric bill by electing to take advantage of this service offered by ComEd. Therefore, it is logical to expect the RES to communicate this action to its customer," Staff said.

Specifically, Staff proposed tariff language providing that a, "RES taking [POU] service hereunder is obligated to ... warrant that written notification has been sent to the affected retail customer that includes (a) the retail account is returning to ComEd supply and the RES will no longer be the supplier on the account; (b) the RES is selling the uncollectible supply charges to the utility for collection purposes; and (c) the customer will receive an invoice, either through the retail customer's normal monthly billing or separate invoice, for the supply charges sold by the RES to the utility."