Illinois Staff Recommend Denial of Nicor Purchase of Receivables Tariff

Staff of the Illinois Commerce Commission have recommended that the Commission deny Nicor's proposed purchase of receivables tariff, testifying that no benefits to POR have been shown, and that therefore related expenses have not been shown to be prudent.

As previously reported, the Nicor POR program would include a discount rate of 1.5% to suppliers. There would also be a customer charge to recover: (1) administrative and operational costs; (2) the difference between what Nicor recovers from the discount between receivables and collected revenues and actual uncollectibles; and (3) alleged intangible costs, Staff said.

"Nicor has not demonstrated that it would be prudent to initiate a PORCB [POR with consolidated billing program]," Staff said.

While Nicor has argued that only prudently incurred costs are recovered from cost causers, "that statement avoids the issue," Staff said.

"It presumes that the expenditures are prudent regardless who pays the costs," Staff said.

"For the costs to develop a PORCB to be prudently incurred, there must be evidence that its benefits are, or could be expected to be, higher than its costs. Since there is no such evidence in the record, the Commission should reject the application," Staff said.

While Nicor argued that customers benefit when they choose to participate in the competitive marketplace facilitated by POR, "Nicor does not provide an estimate for the value of customer benefits," Staff said.

Staff noted that the Office of Retail Market Development is currently studying the retail natural gas market in response to a legislative directive, and that POR could be addressed in that forum once ORMD completes its investigation.

The Citizens Utility Board (CUB) and Illinois Attorney General said POR is unnecessary as there are 26 retail suppliers serving approximately 232,568 Nicor residential customers and 37,142 commercial customers, "or approximately 13% of Nicor’s customer base, as of January 14, 2012."