Retail Supplier Seeks Changes to Maine Rules for Standard Offer Receivables, Procurement

Electricity Maine, LLC has petitioned the Maine PUC for a rulemaking to revise the rules governing Standard Offer and retail supply receivables, and to change the procurement length for Standard Offer contracts.

Among other things, Electricity Maine, LLC sought deletion of the current preference provided to Standard Offer receivables. Standard Offer suppliers essentially have their receivables purchased by the utility, as they are paid their billing minus a fixed retainage factor for uncollectibles which is established prior to the Standard Offer bidding and can be reflected in the bid prices. Electricity Maine said that while the retainage charge is adjusted periodically, it is not reconciled during the term of the Standard Offer service.

"During the term of its service, the SO Provider is exposed to no additional risk of uncollectible accounts -- it receives payment in full for its service to all of its customers, less the predetermined uncollectible adjustment, irrespective of the actual number or amount of unpaid Standard Offer bills," Electricity Maine said.

"In stark contrast, CEPs [retail suppliers] solely are responsible for uncollectible accounts and must either absorb the bad debt or expend significant resources in attempting to collect these accounts," Electricity Maine said.

Electricity Maine proposed deleting the current rule provision, Subsection 4(D) of Chapter 301, establishing this Standard Offer receivables treatment.

"Although the T&D Utility would continue to bill and receive payments through consolidated billing, the SO Provider would bear the cost and risk of uncollectible accounts, as is currently the case with the CEPs," under Electricity Maine's revision. "The T&D Utility would remit to the SO Provider or the CEP those payments the utility collects, but the SO Provider and CEPs would be treated equally under the Commission's Rules with respect to uncollectible accounts," Electricity Maine said.

"Alternatively, the Commission could revise its rules to provide a POR mechanism for both SO Providers and CEPs utilizing consolidated billing," Electricity Maine said.

Additionally, Electricity Maine proposed that T&D, Standard Offer, and retail supply uncollectibles all be treated with the same preference, and that partial payments be allocated proportionally among all three charges (with arrearages of all three charge types receiving priority on a proportional basis).

Currently, past due retail supply charges are paid only after past due T&D and Standard Offer charges are paid. Once past due charges are paid, the remaining portion of any partial payment is applied first to current T&D utility charges, then to current SO Provider charges, and last to current CEP charges.

Additionally, Electricity Maine said that if the T&D utility puts a payment plan in place with a customer, the plan does not include payment of the retail supply bill and all payments go first to the amount due to the T&D utility under the plan. "The effect of these provisions is that CEPs experience higher levels of bad debt and their collection of bad debt extends out over longer periods of time," Electricity Maine said.

"Electricity Maine also proposes to amend Section 6 to provide for a single payment plan, arranged by the T&D Utility, with any payments made under the plan being allocated proportionally among the T&D Utility, SO Provider, and CEP, based on the percentage of charges on the customer's bill. Payments would be applied first to past due charges, applied proportionally based on the percentage of charges on the customer's bill, and then to current charges, also applied proportionally based on the percentage of charges. This change would result in only one payment plan, arranged by the T&D Utility, with which the customer must agree and comply," Electricity Maine said.

As to Standard Offer procurements, Electricity Maine proposed that the Commission award Standard Offer contracts every six months for 100 percent of the Residential and Small Commercial class. Currently, small customer default service is laddered over three years, with one-third of supply bought annually on 36 months contracts.

"This policy change would allow competition for the Residential and Small Commercial load to occur under the same conditions as those that exist when the Standard Offer is bid. Such a change would help avoid differences in market timing -- differences that currently are causing a significant migration of customers in and out Standard Offer service and CEP service. Such migration is an artificial result of market timing and increased costs to both CEPs and SO Providers. With greatly increased CEP competition for the Residential and Small Commercial load, the leveling of Standard Offer rates is no longer necessary and, in fact, hinders competition," Electricity Maine said.

Docket 2013-00180