Pa. PUC Approves PECO Gas POR, Leaves Uncollectibles in Base Rates

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November 5, 2010

The Pennsylvania PUC has approved PECO's natural gas Purchase of Receivables program as recommended by an ALJ, with uncollectibles associated with both competitive supply and sales service remaining in base rates (P-2009-2143588).

A written order was not issued yesterday, but Chairman James Cawley said, in a statement, that the PUC is not requiring PECO to move bad debt expense into a Merchant Function Charge, and similarly into the POR discount rate, at this time.  Bad debt recovery shall be addressed in PECO's next base rate case.

The recovery of bad debt was the only contested issue in the proceeding.  The PUC said that it denied exceptions to the recommended decision from the ALJ, and the only exception was Trial Staff's opposition to recovering bad debt through base rates, as Trial Staff favored the unbundling of bad debt.  The ALJ's recommended decision was first reported by Matters (8/12).

The POR program will thus only include a temporary 1% discount to recover implementation costs.

The gas POR program is to begin January 1, 2012.  PECO will be permitted, starting January 1, 2012, to terminate customers for any unpaid receivables prior to January 1, 2012.

Only receivables associated with basic gas supply will be eligible for purchase by PECO.  Basic gas supply does not include a non-gas supply product (e.g., service contract for appliances, or payment for usage reductions), or carbon-neutral products not tied to the actual provision of natural gas to customers (e.g., carbon offsets derived from forestry programs), or security deposits assessed by a supplier.  For residential customers, basic gas supply shall also not include early contract cancellation fees or late fees.

For residential customers only, any supplier utilizing utility consolidated billing shall be required to utilize utility consolidated billing for all of the supplier's residential customers, and all such residential accounts shall be included in PECO's gas POR program.  However, if a supplier is providing a residential customer with a service or product that does not meet the definition of "basic gas supply," or if the supplier is providing a service or product to residential customers that PECO's consolidated billing system cannot accommodate, the supplier shall be permitted to issue a separate bill for such service or product, if the supplier provides written certification to PECO that the service or product cannot be billed under utility consolidated billing.

While voting to approve the settlement, Cawley said that the provision allowing PECO to terminate the POR program after providing three months prior notice to suppliers does not provide the necessary certainty to optimally enhance natural gas supply competition in Pennsylvania.  "I sincerely hope that the Company will not exercise this right," Cawley said.

   
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