Illinois Denies Purchase of Receivables Program

The Illinois Commerce Commission has denied a purchase of receivables program at Nicor Gas.

As previously reported, the Nicor POR program would have included a discount rate of 1.5% to suppliers.

The Commission did affirm that it has the authority to approve POR, provided that the Commission finds the rider is just and reasonable. Consumer advocates had argued the ICC lacked such authority.

The utility has the burden of proof to show that POR is just and reasonable, the ICC said, and the ICC said that precedent provides that in determining whether a rider is just and reasonable, the Commission must analyze the impact on consumers.

"The question in this proceeding is whether Rider 17, as presented by Nicor, is just and reasonable, to which the Commission must determine whether the costs of implementing such a program are balanced with the benefits of such a program. In making that determination, the Commission looks, in part, at the effects of such a service on customers, who are the eventual end-users of the gas, not simply whether Rider 17 is just and reasonable to alternative gas suppliers," the ICC said.

The ICC concluded that, "[t]here is no evidence regarding the impact of this proposed rider on consumers other than potential benefits such as lower customer costs and increases in competition purported by RESA/IGS; benefits for which the Company [Nicor] does not necessarily provide support."

"The Commission finds that the evidence presented in this docket is insufficient to make a determination that the proposed Rider 17 is just and reasonable. The Commission agrees that PORCB has the potential to increase competition and lower customer costs, which are two of the benefits purported by 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 these benefits would occur," the ICC said.

"The Commission further notes that Nicor, in its Brief on Exceptions, states that it is not Nicor's position that Rider 17 has the potential to increase competition and lower customer costs. Instead, Nicor argues that alternative gas suppliers and customers will be the judge of whether PORCB service provides benefits. In essence, Nicor proposes the Commission adopt Rider 17 without determining whether the program has any benefits whatsoever. Adopting Rider 17 without determining whether there are any benefits would not be a sound business judgment, and therefore would be unjust and unreasonable," the ICC said.

"[T]he 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," the ICC said.

The Commission said, that if the Commission were to approve POR, the evidentiary record in the proceeding supports a Commission decision to deny recovery of intangible costs as proposed by Nicor, and a finding that Nicor's proposed discount factor is not supported by record evidence.

"There is no evidence in the record to support that the 1.5% Discount Factor is reasonable. 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," the ICC said.

Docket 12-0569