Pennsylvania Utilities File To Maintain Clawback Charge For Purchase of Receivables (POR)

As part of a newly filed default service plan, the FirstEnergy Pennsylvania utilities have proposed maintaining a clawback charge as part of the utilities' purchase of receivables program

As first reported by EnergyChoiceMatters.com, the PUC adopted a POR clawback at the FirstEnergy EDCs as part of the default service plan for the period beginning June 1, 2017

Under such plan, the EDCs implemented a POR clawback charge for the twelve-month periods ended August 31, 2016 and August 31, 2017 for EGSs whose write-offs as a percentage of revenues are 200% higher than their peers and whose average price per kilowatt-hour (kWh) is greater than 150% of the average price to compare for the operating company in which the EGS is serving customers.

More specifically, the clawback charge calculation is a two-prong test. The first prong identifies those participating EGSs whose average percentage of write-offs as a percentage of revenues over a twelve-month period exceeds 200% of the average percentage of total EGS write-offs as a percentage of revenues per operating company. The second prong of the test identifies, of those EGSs identified in the first prong of the test, EGSs whose average price charged over the same twelve-month period exceeds 150% of the operating company average PTC for the period. For those EGSs identified by both prongs of the test, the annual clawback charge assessed is the difference between that EGS’s actual write-offs and their actual write-off amount calculated at 200% of the average EGS percentage of write-offs per operating company. The charge recovers the amount of EGS write-offs over 200% of the operating company average and is billed to the EGS annually.

The FirstEnergy EDCs reported that the clawback charge for the twelve months ended August 31, 2016 was assessed to three EGSs for a total of $573,603.23. For this twelve-month period, the Companies’ actual uncollectible expense was significantly higher than the amount of uncollectible expense recovered in base rates plus the nonbypassable DSS Riders (which recover EGS uncollectibles). Therefore, each EDC retained the amount collected to reduce the EDC's uncollectible expense. The clawback charge for the twelve months ended August 31, 2017 was invoiced to four EGSs for a total of $254,008.15. Actual uncollectible expense for this twelve-month period was less than the total uncollectible expense recovered in base rates plus the DSS Riders for Met-Ed, Penelec and West Penn. Therefore, the clawback charge will be refunded to customers, once collected from the assessed EGSs, through a new component of the DSS Riders to be effective on June 1, 2018. Penn Power’s actual uncollectible expense is higher than the amount of uncollectible expense recovered in rates. Thus, Penn Power will retain the clawback charge of $604.13.

"The [POR clawback] charge has been effective in achieving the Companies’ goal of reducing the uncollectibles borne by not only the Companies but by their customers," the EDCs said

The FirstEnergy EDCs are not proposing any changes to the POR clawback mechanism as part of their proposal to maintain the mechanism