Pennsylvania Denies Placing POR Uncollectibles in Base Rates, Sets Uncollectibles Factor

The Pennsylvania PUC denied a request from Direct Energy to recover purchase of receivables uncollectibles, as well as default service uncollectibles, through a nonbypassable charge at PPL, and also adopted an ALJ's recommendation regarding the level for the POR discount rates.

The PUC yesterday conducted a binding poll on PPL's rate case which, among other things, adjudicated several issues with respect to POR. A written order was not yet published with specific orders, but based on the discussion during the binding poll, the final order will broadly reflect the following policy.

Supply-related uncollectibles will continue to be unbundled with uncollectibles related to purchased receivables recovered via the POR discount, and uncollectibles related to default service recovered through the bypassable Merchant Function Charge. The POR uncollectibles rate is to reflect only those uncollectibles related to competitive supply, and therefore may differ from the MFC.

Additionally, the PUC voted 3-2 to adopt the ALJ's recommendation with regard to the POR uncollectibles expense factor. As only reported by Matters, the ALJ recommended denying PPL's specific POR uncollectibles rates as unsupported, since they did not reflect the specific uncollectibles experience for shopping customers.

The ALJ recommended ordering PPL to determine, "the correct amount of uncollectible expenses incurred in 2012 and the break-down of expenses between shopping and default service customers."

Per the ALJ recommendation, PPL will be ordered to file data for the uncollectible expenses of shopping and default service customers within 90 days of a final order in the proceeding, with a request to use the "correct" numbers in its Purchase of Receivables program.

The PUC also will not require PPL, at this time, to refund approximately $1 million collected from suppliers via the POR administrative discount factor, as the tariff does not provide for such refunds. PPL failed to track the incremental administrative costs of POR.

The Commission did adopt a motion from Commissioner James Cawley requiring parties, in order to avoid a repetition of this failure, to address the issue in future proceedings, "so as to provide a more equitable outcome."

"Going forward, PPL should be directed to track and make an appropriate filing with the Commission describing all revenues and incremental costs to develop, implement, and administer the POR service, including costs since inception, associated with implementation of its POR service if it desires to seek any further administrative cost recovery in the future. If, at that time, it is determined that PPL over-recovered historical administrative costs, future cost recovery will only be allowed once the historical over-recovery is netted out," Cawley's adopted motion provides.

The PUC denied retail suppliers' request that late payment revenues collected by PPL be used to offset the POR discount.

Docket: R-2012-2290597