Nicor Tariff Filing Reveals Proposed POR Discount Rate, Other Program Details

The discount rate for receivables purchased by Nicor Gas under its proposed POR program would be 1.5%.

As proposed by Nicor Gas, the Purchase of Receivables with Consolidated Billing program (PORCB) would be available only in conjunction with the company's competitive alternative retail supply services under Rider 15 Customer Select and Rider 16 Supplier Aggregation Service. Rider PORCB adds a purchase of receivables for Qualified Alternative Gas Suppliers' ("Q-AGS") gas supply charges to the existing utility consolidated billing program.

The receivables will be purchased by Nicor (the Company), without recourse, at a discount of 1.5% as part of the mechanism for the Company to recover the costs of providing this service. Nicor Gas will pay the Q-AGS no later than two days after the due date of the monthly Nicor Gas bill that includes those charges as issued by the Company to the customer.

The Discount Factor of 1.5%, which includes a capital recovery cost factor of .5%, shall be applied to Qualifying Receivables purchased by Nicor Gas from the Q-AGS. A Capital Recovery Adjustment (CRA) charge or credit will be applied to Q-AGS' monthly Supplier Aggregation Service bills to recover or refund any differences between the intended monthly Capital Recovery Charge and the actual Capital Recovery Costs recovered through the .5% portion of the Discount Factor. The reconciliation component of the CRA shall be the difference between the actual capital recovery cost revenue requirement for the reconciliation period and the amounts collected through the application of the .5% capital recovery cost component of the Discount Factor plus amounts collected or refunded to Q-AGS' through the CRA, by class, during the prior 24 month application period.· The reconciliation component will be amortized over a nine month period, following a review of the biennial reconciliation by the Commission.

Q-AGS electing the Rider PORCB service shall continue to pay the existing Third Party Billing Service charge of $0.25 per bill

Nicor Gas proposes to recover all costs to provide POR from the Q-AGS electing Rider PORCB and from the Q-AGS customers that are eligible to receive the service.

A Purchase of Receivables Adjustment, PORAc, shall be calculated separately for eligible residential and eligible non-residential customers. The charge shall be based on administrative and operational costs, estimated uncollectible costs, intangible cost recovery and a reconciliation component. The PORAc will be included in the customer's Monthly Customer Charge.

The administrative and operational costs are those incremental expenses specifically incurred by the Company to administer and operate the purchase of receivables component of Rider PORCB on an ongoing basis. The estimated administrative and operational costs will be divided by the total forecasted number of customers under Rider PORCB. "This calculation will equitably allocate the costs attributable to administering Rider PORCB to all customers in the program," Nicor said.

The intangible cost recovery factor is designed to allow for recovery of up to a maximum of .5% of Qualifying Receivables. Revenues associated with the recovery of intangible costs are proposed to be recorded below the line in Account 417, Revenues from Non-Utility Operations, and will not be used reduce the Company's revenue requirements in a future rate case or regulatory proceeding.

The supply uncollectible adjustment reflects differences between estimated uncollectible rates and the uncollectible rate embedded within the Discount Factor of 1.5%.

The reconciliation component shall be the difference between the actual Rider PORCB costs and revenue incurred, by class, during the prior 24 month application period. The reconciliation component will be amortized over a nine month period, following a review of the biennial reconciliation by the Commission.

On or before August 31 following each 24 month reconciliation period, Nicor Gas shall file a petition with the Chief Clerk to initiate the reconciliation process. The petition shall include a reconciliation of the actual PORA costs and the actual PORA revenues booked, including a review of the discount factor applied in the purchase of receivables. Furthermore, it shall include a reconciliation of the actual Capital Recovery Costs and actual Capital Recovery revenues booked during the period.

A Q-AGS taking POR service must sell to the Company such Q-AGS's Qualifying Receivables either for (a) all Eligible Residential Customers and all Eligible Non-residential Customers (b) all Eligible Residential Customers only or (c) all Eligible Non-residential Customers only. A Q-AGS is not precluded from serving specific non-residential customers, without Rider PORCB, through either dual billing or the supplier's own consolidated billing program.

The estimated time to implement Rider PORCB is two years from the beginning of the implementation project