Noting Impact on POR, Maryland PSC Adopts Lower Late Payment Charges at BGE

The Maryland PSC approved Baltimore Gas & Electric's petition to temporarily lower the late payment fees applicable to customer electric and gas bills, due to a transition to BGE's new billing system.

Revenues from late payment fees have been used to offset the uncollectibles discount rate under Purchase of Receivables. As such, all other things equal, a reduction in the late payment charge will reduce the amount of revenue available to offset the POR discount.

Noting this, the PSC ordered BGE to track the late payment fee revenues under the temporary rates, and said that any impact on the POR discount rate may be addressed in a future proceeding.

The temporary late payment fee factors are required because, as BGE transitions outstanding receivables from its old to new system, only totals will be available under the new system, not the original breakout of the charges (see 11/21 for discussion).

As late payment fees only apply to certain components of the bill, BGE developed temporary factors under a conservative set of assumptions, which led to the use of lower late payment charges during this temporary period to account for the fact that not all charges are subject to the late payment fee (taxes are not included, for example); for the fact that there is a statutory limit on the amount of the fee; and to ensure no customers pay more under the temporary fees than under the standard fees.

For residential customers, the resulting temporary Late Payment Charge percentages under BGE's conservative assumptions are 0.95% for Months 1 and 2, and 1.25% for Month 3.

For commercial customers, the resulting temporary Late Payment Charge percentages under BGE's conservative assumptions are 0.15% for Months 1 and 2, and 0.20% for Month 3

In contrast, under BGE's typical mechanism, Late Payment Charges (LPCs) are first assessed at 1.5% of the monthly bill, less applicable taxes and surcharges. An additional charge of 1.5% is applied to any total amount unpaid, less the previously assessed Late Payment Charge, at the time the next bill is rendered. A 2% charge is applied to any unpaid amount at the time the third successive bill is rendered.