People's Counsel: Purchase of Receivables Would "Distract" Pepco-DC From Reliability Function

The District of Columbia Office of People's Counsel said that implementing a purchase of receivables program at Pepco would "distract" Pepco from solving reliability and storm-related issues facing the utility.

Pepco's specific design for a POR program was first reported by Matters on June 26

"In the wake of Pepco's continuing poor performance in providing reliable service as evidenced by its protracted and unduly delayed restoration of electric service after the June 29, 2011 storm, OPC cannot support adding a non-essential duty to Pepco's responsibilities."

"OPC believes such a task would distract the Company from developing solutions to address the reliability issues and storm restoration issues that have plagued this city for the past ten years."

OPC opposes POR implementation, but in the event a program is adopted, OPC said that: "First, the POR program should not begin until after Pepco installs its new billing system in 2014, second, the discount rate established by the Commission should cover both the incremental and fixed costs for the POR program, and third, the POR program should not increase rates for consumers."

Retail suppliers objected to several aspects of Pepco's specific POR plan, as anticipated, with comments from the National Energy Marketers Association, Retail Energy Supply Association, and Washington Gas Energy Services.

Primarily, retail suppliers objected to:

• A delay of POR implementation until 2014;

• The exclusion of late payment revenues Pepco collects as an offset to the uncollectibles discount rate.

• The inclusion of a potential risk factor in the POR discount

• The exclusion of non-commodity offerings in the receivables purchased by Pepco

The Retail Energy Supply Association commented: "Despite the many benefits of a POR program, Pepco has proposed to delay implementation of its POR program until some point in 2014, the benefit of which, according to Pepco, would be that it would not incur approximately $150,000 in implementation costs to re-program its existing billing system. Instead, Pepco implies, but does not explicitly state, that there would be no implementation costs if the POR program were rolled out along with the new billing system in 2014. Pepco presents no analysis to support its apparent position that District customers benefit from Pepco avoiding $150,000 in POR-related costs or from further delay of a POR program. In fact, in Maryland, Pepco accomplished its POR implementation using internal labor and did not seek to recover any additional costs (beyond those already included in base rates) related to initial programming of POR. RESA contends that customers would be better served with an immediate POR program and not be forced to wait until some undetermined time in 2014."

In any event, RESA calculated that the $150,000 in costs for immediate POR implementation would only result in a discount rate of 0.188% for a three-year period (assuming a 50% increase in residential shoppers to 37,000).

RESA said that such a small discount rate would not materially impact a supplier's decision to use POR.