(Partial) Win: Purchase of Receivables Approved at New Utility

The Public Utilities Commission of Ohio has ordered that a purchase of receivables program be implemented at AEP Ohio, though specifics of the program will be addressed in a further proceeding.

PUCO ordered AEP Ohio to implement POR as part of adopting an electric security plan (governing default service) for the period beginning June 1, 2015. Click here for related story today on default service impacts under the new ESP

PUCO ruled that, "the Commission finds that a POR program should be approved for the Company, with the implementation details to be determined in a subsequent proceeding."

Specifically, "we authorize AEP Ohio to establish a POR program that complies with the following requirements: (1) receivables must be purchased at a single discount rate that applies to all CRES providers; (2) only commodity-related charges may be included in the POR program; (3) participation in the POR program by CRES providers that elect consolidated billing must not be mandatory; and (4) a detailed implementation plan should be discussed within the MDWG [market development working group], with a proposal subsequently filed for the Commission's consideration," PUCO said.

"We find that a POR program will provide significant customer benefits, including the likelihood of increased numbers of active CRES providers and product offerings in AEP Ohio's service territory, which, as the record reflects, occurred following the implementation of a POR program in Duke's service territory," PUCO said.

The working group shall address POR program rules, calculation of the discount rate, implementation and maintenance costs, collection rates and procedures, and the timing and other mechanics of the process by which AEP Ohio will purchase receivables from CRES providers.

The specific discount rate to be initially established, as well as the detailed implementation plan for the POR program, should be proposed for the Commission's consideration through a filing made in a new docket by August 31, 2015.

With approval of a POR program, PUCO authorized AEP to establish a generation-related Bad Debt Rider (BDR) set initially at zero. PUCO said that the Bad Debt Rider should be limited to CRES receivables and generation-related uncollectible expenses above the amount already being recovered through base distribution rates.

As the Bad Debt Rider will include retail supplier uncollectible receivables, it will presumably be nonbypassable, as initially proposed by AEP Ohio, though PUCO did not specifically address that issue.

Additionally, as retail supplier uncollectibles will be included in the Bad Debt Rider, any POR discount rate would seemingly only include implementation and/or administrative costs, though, as noted above, such issues were left to the working group.

Notably, although PUCO directed implementation of POR, it did not grant AEP Ohio a waiver of Ohio Adm. Code 4901:1-18-10(D), which provides that a utility company shall not disconnect service due to failure to pay CRES-related charges, as PUCO cited statutory limitations prohibiting such a waiver.

The working group is to also consider supplier consolidated billing and issues related to switching provisions in the AEP Ohio tariff (103-20D and 103-41D) that provide AEP Ohio with discretion to prevent customers in arrears from shopping and terminate their relationship with CRES providers.