Regulator Asks For Comments On Limiting POR For Uncollectible Accounts To Shadow-Billed Default Service Amount, Rather Than Actual Supplier Charges

In its investigation of purchase of receivables (POR) for retail electric suppliers, the Connecticut Public Utilities Regulatory Authority has sought comments whether POR, for uncollectible accounts, should be limited to the equivalent shadow-billed default service receivables, or whether supplier-specific discount rates should be used

As exclusively first reported by EnergyChoiceMatters.com (details here), the Connecticut Public Utilities Regulatory Authority (Authority) is conducting a proceeding to review the costs and benefits of the current purchase of receivables (POR) method used by the electric distribution companies (EDCs).

PURA noted that, if appropriate, the Authority may order changes to, or replacement of, the current purchase of receivables method, if the Authority determines such changes or replacement are just and reasonable and in the public interest.

Conn. Gen. Stat. § 16-244c(j) states, "Each electric distribution company shall offer to bill customers on behalf of participating electric suppliers and to pay such suppliers in a timely manner the amounts due such suppliers from customers for generation services, less a percentage of such amounts that reflects uncollectible bills and overdue payments as approved by the Public Utilities Regulatory Authority."

In its Decision dated October 10, 2007 in Docket No. 05-08-05RE02, the Authority implemented this statute by requiring the EDCs to create a 'Bills Rendered' payment mechanism for POR, which requires the EDCs to pay suppliers based on bills rendered to customers less a percentage that reflects the EDCs’ uncollectible bills and overdue payments. The statute, however, required only that EDCs pay suppliers in a, "timely manner ... less a percentage ... that reflects uncollectible bills and overdue payments," PURA noted

"In the intervening twelve years, circumstances have changed and uncollectibles have risen, including amounts paid to suppliers for uncollectible accounts that were charged supply rates in excess of standard service rates, causing the Authority to question whether the existing 'Bills Rendered' payment mechanism continues to be appropriate, and what alternative options are available," PURA said

As such, PURA requested written comments on Question 1 specifically from the EDCs, and on the remaining questions from all parties:

1. What causes an account to be designated as 'uncollectible'? Provide any applicable time frame(s), amounts due, or other considerations used by the EDC in making such a designation.

2. Discuss the pros and cons of returning customers deemed 'uncollectible' by the EDC, but with an active service account, to standard service until the account is fully paid.

3. Comment on the pros and cons of a POR system that assesses each suppliers’ uncollectible accounts and pays for the supplier’s receivables at a rate that reflects the uncollectible percentage of the supplier’s customer pool.

4. Comment on the pros and cons of a POR system that limits payment to suppliers’ receivables from uncollectible accounts to billed usage times the applicable standard service rates (in other words, the EDC would fully reimburse the supplier for customer usage, but would reimburse usage associated with uncollectible accounts at the applicable standard service rates).

5. Comment on other states’ best practices regarding POR and/or reimbursement of suppliers by EDCs that alleviates the impact of burgeoning uncollectible accounts.

6. Discuss potential alternatives to the existing “Bills Rendered” payment mechanism that are permissible under General Statutes § 16-244c(j), and beneficial to all ratepayers over the status quo.