Massachusetts Utilities Update Purchase of Receivables Compliance Plans, Discount Rates

Consistent with a prior directive, the Massachusetts electric distribution companies have filed with the DPU updated purchase of receivables compliance plans, including new discount rates.

The utilities' POR compliance plans have been pending before the DPU for two years.

The compliance plans include new uncollectibles discount rates for purchased receivables (excluding receivables existing prior to program start) as follows:

National Grid:
Residential:               1.98%
Commercial:                0.83%
Industrial:                0.18%

Nstar
Residential:               1.96%
Small C&I:                 0.45%
Large C&I:                 0.13%

WMECO
Residential:               2.13%
Commercial:                0.26%
Industrial:                0.03%
Other (Lighting, etc.):    0.04%

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At Nstar and WMECO, write-offs used in the calculation now represent all write-offs on customer receivables, except for write-offs of receivables pertaining to customers protected from shut-off year round. Uncollectible costs for these hardship receivables are currently being recovered in distribution rates, and would not be payable by the suppliers upon the purchase of their receivables.

Any existing accounts receivable for a supplier upon the supplier's initiation of the purchase of receivables program will be purchased at an alternative discount rate addressed more fully in the compliance plans, but which generally represents the weighted average of the most-recent 12-month's uncollectible risk rates assigned to each indebtedness portfolio.

Utilities also updated POR implementation and administrative costs, but a quick scan of the hundreds of pages of compliance filings did not indicate specific discount percentages associated with these amounts.

Unitil, which had previously sought a delay in its deadline for implementing POR to coincide with a new billing system, did not provide updated discount rates. Unitil said that the new billing system is now expected to be fully operational in early 2015.

However, Unitil also reported that suppliers asked whether POR could be implemented prior to the new billing system, and tendered a proposal to Unitil. Unitil has developed an alternative proposal, and said that it is coordinating a permanent solution that would be operational before the new CIS goes into effect. "At this juncture, Unitil believes that additional opportunity for discussion with the Competitive Suppliers will prove to be productive and ultimately lead to a joint proposal for POR implementation in the company's service territory," Unitil said.