Maryland Orders WGL to Apply Late Payment Revenues to POR Discount; Residential Discount Now Under 1%

The Maryland PSC ordered Washington Gas Light to use revenues from late payment fees as an offset to the purchase of receivables discount, resulting in a lower POR discount rate which will go into effect with January 2013 billings.

Specifically, using late payment revenues as an offset in the discount rate, along with a four-year amortization of IT costs which the PSC adopted, results in the following new discount rates at WGL:

Residential: 0.98%

Non-residential: 0%

The POR formula actually resulted in a negative 0.43% discount rate for non-residential customers, but consistent with precedent, the PSC set the negative discount rate to 0%.

The PSC voted 3-1 to apply late payment revenues as a POR offset in order to treat WGL consistent with the treatment of other utilities which have been directed to use late payment revenues as a POR offset. Previously, WGL had only been ordered to track late payment revenues, but the PSC had not previously applied such revenues to the POR discount prior to yesterday's order.

The Commission said that to the extent there are policy reasons to treat gas utilities, or WGL specifically, differently (such as due to the absence of a cash working capital mechanism) than the electric utilities with respect to late payment revenues and POR, the Commission is open to revisiting the issue in the future, but it was not prepared to treat WGL differently at this time based on the record in front of it.

Had the PSC not applied late payment revenues to the POR discount, the discounts would have been

Residential: 1.55%

Non-residential: 0.02%