BGE Corrects Proposed POR Discount Rates

June 30, 2011
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Baltimore Gas & Electric has filed with the Maryland PSC revised proposed Purchase of Receivables discount rates for electric and gas service.

The revisions, which do not result in any significant change in the proposed discount rates, result from an error in the computation of the reconciliation component.

The resulting new total discount rates for electricity are as follows:
Residential: 0.8184%
Type I: 1.4362%
Type II: (0.3050%)
Hourly: (0.0648%)

These compare to the originally proposed electric discount rates of:
Residential: 0.8154%
Type I: 1.4331%
Type II: (0.3039%)
Hourly: (0.0645%)

The newly proposed residential gas discount rate is 2.3962%, versus the originally proposed 2.3942%. The small commercial gas proposed discount rate is unchanged at (0.1457%).

The individual components in each discount rate (and change in the reconciliation component from the original to revised rates) may be found in BGE's filing.

BGE said that there were five miscalculations in the original proposal:

1) For July 2010 - March 2011, the net book value to which the return was applied for gas was not grossed down for tax.

2) For April 2011 - June 2011, the net book value to which the return was applied for electric and gas was grossed down at 35%, yet the inverse rate of 65% should have been used.

3) For April 2011 - June 2011, the electric Hourly rate class' return was computed using the customer deposit rate, rather than BGE's authorized rate of return. BGE's Commission-approved Rate Schedule 3 permits BGE to compute the return using the authorized rate of return for the electric discount rates, however, the customer deposit rate must be used for the gas discount rate in Rate Schedule 1 per Commission order.

4) For the period April 2011 - June 2011, customer list net revenues were not carried over to the total column and therefore were not properly reflected in the calculation of the discount rates for the electric residential and gas residential classes.

5) Minor rounding adjustments were applied to ensure that the components of each class' rate sum to the grand total discount rate.

BGE's revised tariff to correct these errors still reflects its originally proposed effective date of July 1, 2011 for the new discount rates. BGE had previously requested a deferral of the effective date until July 13, 2011 (6/23), and said in its deferral request that it would file a tariff reflecting the revised effective date upon PSC approval.

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