Maryland Directs Working Group to Study Changes to Purchase of Receivables Program

In setting new POR discount rates at BGE (see related story), the Maryland PSC directed that the supplier coordination working group examine several proposed changes to the Purchase of Receivables program, including the treatment of late payment revenue.

Currently, late payment revenue collected by the utilities is used as an offset to POR costs. At Baltimore Gas & Electric, the current POR calculation methodology led to negative discount rates for all classes except one for the program term starting July 2012.

As a result, BGE proposed removing late payment revenues as a POR offset, or alternatively adding a credit and collections costs component.

The PSC declined to consider any changes to the BGE POR program for the term beginning in July 2012, but directed a working group to study BGE's proposals as well as alternatives from retail suppliers.

Commissioner Lawrence Brenner, speaking for himself, said that if the Commission were to accept introduction of a credit/collections cost component to the POR discount, BGE would have to prove that it experiences incremental costs to collect supplier-related arrearages in pursuing its distribution collections, which Brenner said BGE has not done to date.

Generally, Brenner said that it seems any issues associated with the negative discount rates could be addressed without the "sweeping" changes to the POR program that BGE has offered.

The PSC also affirmed that to the extent the current calculation results in negative discount rates, the over-collection from suppliers that this represents shall continue to be carried forward to be applied to future POR costs, rather than returned to suppliers.

The working group is to also examine the potential application of any POR over-collections to the costs of other retail market enhancements. Potential modifications cited during the PSC meeting were supplier consolidated billing, allowing customers to take competitive supply at service initiation (instead of mandated SOS for a billing cycle), and facilitating retail contract portability so that shopping customers who move are not forced onto SOS at their new location.