Draft Order Would Approve Purchase of Receivables at New Utility

A recommended decision would approve an unopposed settlement which would implement a purchase of receivables program at Philadelphia Gas Works -- with an initial discount rate of nearly 7% for residential customers.

Specifically, the recommended decision would adopt without modification a settlement among PGW, the Office of Consumer Advocate, Office of Small Business Advocate, and retail suppliers which would require PGW to implement a POR program and utility consolidated billing within 18 months of a Pennsylvania PUC order approving the settlement.

The stipulation resolves an investigation into whether PGW should continue as the Supplier of Last Resort. The settlement provides that PGW will continue to provide default service as the SOLR.

POR would include "basic gas supply service" and be available to Rate GS Commercial and Industrial customers (using no more than 5,000 Mcf per year) and Rate GS Residential customers.

An all-in, all-out provision would apply, by customer class. To be eligible for the Rate GS residential customer POR program, an NGS must choose consolidated NGS billing for all of their residential customer accounts and must sell all associated residential customer accounts receivable to PGW. To be eligible for the small business customer (i.e. Rate GS Commercial and Industrial customers using no more than 5,000 Mcf per year) POR program, an NGS must choose consolidated NGS billing for all of their small business customer accounts and must sell all associated small business customer accounts receivable to PGW.

A discount rate would apply to purchased receivables reflecting administrative costs and uncollectibles.

The administrative discount component would be 2.00% for all customer classes, and remain in effect until certain implementation costs are recovered. The administrative discount component will recover certain costs related to customer education mailings, consolidated billing implementation, EDI system upgrades, and EDI transactional fees.

The uncollectibles discount component would vary by class as follows:

Residential:    4.68%
Commercial:     0.28%
Industrial:     0.30%

Therefore, the total residential discount rate would be 6.68%.

PGW would also implement rate ready utility consolidated billing within 18 months of a PUC order adopting the settlement. Budget Billing will be offered to shopping customers.

In addition to traditional fixed and variable rates, PGW's utility consolidated billing system will also have the ability to administer a percentage discount off of PGW's Price to Compare, flat rates and multiple per mcf rates

The settlement provides, "PGW's utility consolidated billing system will be designed to provide, upon request, a percentage discount off of PGW's Price to Compare for a three month period but customers must affirmatively select this natural gas supplier offer and then affirmatively select the natural gas supplier again after the initial three month period."

The provision noted above is not a customer referral program.

Additionally, the settlement provides that PGW will send to all customers two customer choice education mailings. Apart from educational material, these mailings will include "supplier specific" information, though the exact content will be determined in a later collaborative.

PGW has agreed to enhance its current data exchange capabilities with natural gas suppliers by implementing Electronic Data Interchange within 18 months of an order adopting the settlement.

PGW has agreed to form a collaborative with interested parties regarding capacity and capacity related issues. The capacity collaborative will be charged with exploring modifications to the following PGW processes and procedures: 1) transportation capacity assignment; 2) storage capacity allocation; and 3) the Daily Delivery Quantities ("DDQ") and Daily Contract Quantities ("DCQ") calculations.

R-2008-2073938 et. al.