Proposed Illinois Order Would Deny New Purchase of Receivables Program (Oral Arguments Today)

A proposed order from an Illinois ALJ would deny an application from Northern Illinois Gas Company d/b/a Nicor Gas Company to institute a purchase of receivables program.

The ICC will hear oral arguments on exceptions to the draft order today.

The draft concludes that the Commission has the legal authority to approve the POR program, which is contained under proposed Rider 17, but that such approval must meet the just and reasonable standard under Section 9-201 of the Public Utilities Act. Without adopting a specific test to determine whether a rider is just and reasonable, "the bottom line is that there must be some cost benefit analysis to determine whether a proposed rider is just and reasonable," the draft states.

"If the costs of a PORCB [POR with consolidated billing] program outweigh the benefits of such a service, then the Commission cannot find Rider 17 just and reasonable," the proposed order finds.

The proposed order would find that, "the evidence presented in this docket is insufficient to make a determination that the proposed Rider 17 is just and reasonable."

The draft would find that, "The Commission agrees that PORCB has the potential to increase competition and lower customer costs, which are two of the benefits purported by Nicor and RESA/IGS. However, as Staff and CUB/AG note, other than stating that these are potential benefits, there is a distinct lack of evidence in the record that the Commission can rely on to support that such would occur. The Commission agrees with Staff and CUB/AG that there is no evidence in the record to somehow quantify the rate impact. Moreover, while RESA/IGS claim that states without PORCB programs have low participation in customer choice programs, there is nothing in the record demonstrating that greater switching in other states is a result of POR programs and not due to other factors. Accordingly, the Commission agrees with Staff, CUB and the AG, that the proposed Rider 17 lacks the requisite evidentiary basis for the Commission to determine that the Rider 17 is just and reasonable. However, the Commission stresses that nothing in this determination should be construed to mean that a future PORCB program would not be approved should sufficient evidence be presented."

To the extent such evidence were present, the draft does opine on certain designs of the Nicor POR program.

While not addressing all the contested modifications to Rider 17 in this proceeding, the draft states that, "if the Commission were to approve Rider 17, the evidentiary record in this proceeding supports a Commission decision to deny recovery of intangible costs, and find that Nicor's proposed Discount Factor is not supportable by record evidence, as is discussed more fully below."

Nicor's proposed discount factor of 1.5%, and the recovery of intangible costs, had been agreed to by Nicor and several retail suppliers in a prior settlement.

"There is no evidence in the record to support that the 1.5% Discount Factor is reasonable," the draft states. "Nicor merely states that the Discount Factor resulted from discussions with RESA and IGS, and that the Discount Factor is reasonable. This is insufficient. While Nicor states it cannot speculate as to what factors RESA and IGS considered in determining the reasonableness of the Discount Factor, Nicor did not present any evidence supporting its own contention that the 1.5% Discount Factor is reasonable. While Nicor emphasizes that the Discount Factor is only a component of the computational process and not the final end result, Nicor still must present evidence supporting that the component is reasonable, which Nicor failed to do in this proceeding."

With regard to Staff's argument that approval of Rider 17 is premature, the draft order would agree in part. "As Staff notes, Nicor failed to submit sample templates of a billing service agreement and title transfer documents, which should be available for interested parties review and comment in a proceeding determining approval of a PORCB program. However, the Commission agrees with Nicor and RESA/IGS that it is imprudent to require Nicor to conduct full scale development for a new, optional service with considerable start-up costs without first obtaining Commission approval. Additionally, while the pending Staff report from the Office of Retail Market Development regarding the state of retail gas competition in Illinois, including barriers to development of competition, would be useful information in the instant proceeding, the absence of the report does not make establishing a PORCB program premature," the draft states.

Docket 12-0569