Staff Petitions Maryland PSC to Open Investigation Into Negative POR Discount Rates

The Maryland PSC Staff has petitioned the PSC to open an investigation into the causes of negative discount rates for the purchase of electric and natural gas supplier receivables

Staff asked that the investigation be opened to: (1) determine the causes of and prospective correction for recurring negative discount rates for the purchase of supplier receivables and (2) determine appropriate use(s) of any excess money retained by any electric or gas company historically as well as in the future as a result of zeroing out negative discount rates.

"Due to the ratepayer money at stake and the issues of equity raised by recurring negative discount rates, Staff requests that the Commission establish a proceeding to examine the cause(s) of the persistent occurrence of negative POR discount rates and address possible modifications to the POR discount rate calculation to avoid negative POR discount rates in the future," Staff said, noting that a working group process has not developed a consensus solution to the issue.

Generally, the use of late payment revenues collected by utilities on supplier charges as an offset to uncollectibles are driving the negative discount rates. The PSC, previously finding that negative discount rates would result in the incongruous result of having utilities pay suppliers for using POR and utility consolidated billing, has reset any negative discount rates resulting from the POR calculations to zero.

According to an attachment to Staff's petition, Baltimore Gas & Electric over-collected about $1.2 million under electric POR during 2012 and 2013, while Delmarva Power over-collected abut $1.5 million. Potomac Edison over-collected $100,000 over the same period, while Pepco, which does not yet calculate late payment charge revenues as a POR offset, did not accrue a POR over-collection during 2012-2013.

Staff said that the requested proceeding will require that the parties address the treatment of late payment charges under the provisions of utility supplier tariffs and consider other aspects of the formula for POR discount rates to the extent they may affect either the treatment of uncollectible expenses or late payment charges as the root causes of a negative discount rate. Staff further requested that the proceeding invite comments on appropriate use(s) for any excess money retained historically and prospectively by any electric or gas company due to zeroing out negative POR discount rate calculations

Finally, Staff requested that stakeholders be allowed to present possible methods by which any excess money being retained by electric or gas companies as the result of past POR discount rates may be appropriately expended.