It Never Ends: More Briefing Scheduled for Massachusetts Purchase of Receivables

After an October 8 technical conference failed to reach a consensus, the Massachusetts DPU has set forth a schedule for additional briefing of remaining outstanding issues regarding the implementation of electric purchase of receivables.

At the technical conference, parties specifically discussed the purchase of existing receivables but did not reach a conclusion.

The Department said that the following issues also remain to be resolved:

• Uncollectible percentage ('UP') and past period reconciliation percentage ('PPRP') calculations;

• Exclusion of certain customers types;

• Right of offset;

• Timing of challenges for billing errors; and

• Risk-related provisions (i.e., liability, indemnification, financial assurance, etc.)

To facilitate the Department’s analysis of these issues, the DPU directed parties to submit briefs addressing these issues, including the purchase of existing receivables, by November 1, 2013.

The DPU also issued a series of briefing questions.

Among other things, the DPU asked:

• In D.P.U. 10-53-A at 12-13, the Department directed the electric distribution companies to calculate the bad debt rate based on the uncollectible experience of all distribution customers, rather than that of only those customers of competitive suppliers participating in the program ('POR customers'). Please state whether you agree that, even though the calculation of the bad debt rate will not be limited to POR customers, the POR program is intended to be revenue-neutral.

• During the August 27, 2013 and October 8, 2013 Technical Conferences, there was discussion regarding whether the distribution companies should exclude from the calculation of their bad debt rates the uncollectible experience of certain customer types for whom the Department has afforded the companies special ratemaking treatment (e.g., hardship accounts, arrearage forgiveness accounts).

a. Please state which of the two options for calculating bad debt rates (including or excluding these customer types) will best estimate the expected payment behavior of POR customers (and thus, will best ensure revenue neutrality).

b. During the discussion, some suppliers stated that including these customer types would result in the distribution companies double-recovering the bad debt costs of these customers, once through the Department-approved ratemaking treatment, and again through the POR program.

• State whether the discount rates for existing receivables must be established prior to implementation of the POR program, and provide a timeline for when the discount rate must be established vis-a-vis the implementation date of the POR program.

D.P.U. 10-53-B/-C/-D/-E