Pepco Proposes 2014 Start for Any District of Columbia Purchase of Receivables Program

Pepco has recommended that any purchase of receivables program required by the District of Columbia PSC be delayed until the introduction of a new billing system, currently scheduled for 2014 (FC 1085).

As first reported by Matters, the District of Columbia PSC ordered Pepco to submit a purchase of receivables implementation plan, "for the purpose of possibly implementing a POR program in [the] District of Columbia," specifically directing Pepco to submit a POR program design that, "is similar in design to the Maryland POR program," in place at Pepco.

Pepco submitted a POR design that largely tracks its Maryland program; however, for the District, Pepco is proposing to not use late payment revenues as an offset to the POR discount rate, as is the design in Maryland.

"Because suppliers are paid immediately under the POR program, it is not appropriate to provide them the benefit of late payment fees," Pepco said.

The initial discount rate would consist of an Uncollectible Expense component, a Program Development Operation Cost component, and a Risk Factor.

After the initial year, a Reconciliation component would also be added to the discount rate calculation.

While Pepco's filing contemplates class-specific discount rates, Pepco did not propose specific groupings of rate schedules for each class (although some language suggests only two discount rate groupings, residential and non-residential). The Maryland POR class distinctions are not transferable to the District because Maryland POR discount rates are broken down by SOS Type, which differ from the SOS classes in use in D.C.

Aside from one component discussed below, Pepco did not propose specific discount rate levels in its filing.

The Uncollectible Expense component percent would be calculated by dividing the estimated electric supplier uncollectible expenses associated with each rate schedule by the electricity revenues billed for all electricity suppliers for that rate schedule.

The Program Development and Operation Cost component would include the incremental cost to develop the programming necessary for the company's systems to bill customers for the purchased receivables. However, Pepco said that certain indicated incremental costs would not be incurred if the Commission permitted the company to implement POR simultaneously with the aforementioned new billing system, as the indicated incremental costs would at that juncture be absorbed by internal labor, and as part of routine business.

If POR were implemented prior to the new billing system, Pepco listed incremental costs as $150,000, and said that it would require a minimum of 9 months from the date of a Commission Order to implement POR in the District.

The Risk Factor component would be set at zero.

The Reconciliation component rate would calculated by dividing the imbalance, including interest earned or owed, separately for residential and non-residential customers by estimated electricity revenues billed for all electricity suppliers for those rate schedules.

Similar to Maryland, if there are unrecovered costs associated with the purchase of eligible electric supplier receivables and an insufficient number of electricity suppliers are using Pepco consolidated billing to support the recovery of those costs, Pepco would be permitted to impose a charge on electricity suppliers to recover such costs.

At the start of the POR program, all non-current balances will be billed by Pepco for 90 days. Pepco will remit to the supplier at the end of the 90-day period any customer payment(s) collected as a result of these billings.

Pepco did not specifically propose tariffs for a District of Columbia POR program, but listed the different treatment of late payment fees as the only "material" difference from its Maryland POR program.