Pennsylvania PUC Approves Purchase of Receivables Program at New Utility

The Pennsylvania PUC has approved a purchase of receivables program at Equitable Gas Company, LLC, but largely adopted the program parameters as proposed by Equitable, which had been protested by retail suppliers

The PUC's final order reverses an ALJ's initial decision which would have denied the POR program outright due to lack of supplier interest in the program as designed by Equitable (see prior stories for details).

As adopted by the PUC, POR service will be available to Pool Administrators providing service to non-Customer Assistance Program accounts for residential and small commercial and industrial customers served under Rate Schedule FDS, and Rate Schedule FPS with annual consumption of 300 Mcf or less, whose receivables are only for commodity charges for basic natural gas supply services. The term "basic natural gas supply services" shall include charges directly related to the physical delivery of natural gas to retail customers.

Retail suppliers had sought to include customers with usage up to 5,000 Mcf/year in the POR program. The PUC denied this proposal.

Moreover, as adopted by the PUC, in order for a Pool Administrator to take POR service for a particular customer class (residential, or small commercial), the Pool Administrator, and its affiliates, must place all eligible accounts in that class on POR service. In other words, a Pool Administrator may elect POR for residential customers and not elect POR for small commercial customers, and in such case the Pool Administrator would be required to include all eligible residential accounts in POR, and none of the Pool Administrator's small commercial accounts could be placed on POR.

Retail suppliers had said that this all-in requirement would discourage POR participation, but the PUC adopted the requirement.

Customer accounts that are billed for non-basic natural gas supply services will not be eligible for the POR program, and thus such accounts could be dual billed without affecting the ability to use POR.

The PUC did not adopt a specific POR discount charge in its final order. However, the PUC did express concern with Equitable's proposed use of the 2009 uncollectible experience in the calculation of the discount, as such uncollectibles were significantly higher than those recorded in 2010 and 2011.

"The substantial disparity between the 2009 figure and the 2010 and 2011 figures raises serious questions as to whether the resulting skewed average represents Equitable’s 'actual uncollectible rate,'" the PUC said.

The PUC "encourage[d]" Equitable to revisit its discount rate in the context of its Merchant Function Charge proceeding. The POR program will not move forward until the MFC is in place and placement of the Price to Compare on customers' bills is accomplished

Additionally, the POR program will not commence until a supplier expresses interest, which none have done under the current design.

The PUC's final order also addressed three alternative proposals by Equitable to address volatility and an upward trend in its system average Btu content, which correlates to the increased flow of Marcellus Shale gas on its system.

The PUC denied all three Btu Adjustment alternatives proposed by Equitable as impermissible single-issue ratemaking.

Docket: R-2012-2304727 et. al.