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PSC to "Fish or Cut Bait" on Columbia Gas Choice Program at October 26 Meeting
July 6, 2011
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The Maryland PSC has set for October 26 a final decision on whether to continue the choice program at Columbia Gas of Maryland.
The deferral of final action until October comes after the Commission further heard arguments regarding continuation of the program at today's administrative meeting, and elected provide one final opportunity for alternatives to the two options facing the Commission at this time: ending the choice program, or placing costs of the choice program in distribution rates.
In the interim, the PSC rejected without prejudice Columbia's originally filed tariff to comply with provisions of COMAR 20.59, such as Purchase of Receivables. Additionally, the PSC directed Columbia to cease all spending on COMAR 20.59 implementation.
After the PSC ruled that implementation costs of COMAR 20.59 shall not be placed on non-shopping customers, Columbia calculated POR discount rates to implement the regulations and recover costs from suppliers. Due to the limited migration at Columbia (less than 800 customers) as well as its small total customer base, the discount rates were prohibitively high. As a result, Columbia recommended ending the choice program, since use of POR was not expected given such high discount rates, and thus any implementation costs intended to be included in the POR discount rate would go unrecovered from suppliers (and forced into distribution rates).
Staff, along with suppliers, have recommended placing implementation costs into distribution rates and continuing the choice program.
During today's administrative meeting, Commissioners were steadfast that no subsidization of retail suppliers shall occur by placing COMAR 20.59 costs into distribution rates. Although Commissioners were not eager to end the choice program, their current slate of options did not provide them any alternative that would avoid further imposition of choice administrative costs on distribution customers.
Commissioners will give stakeholders until September 9 to provide final alternative proposals that meet the Commission's concerns regarding collection of choice costs in distribution rates, and provide concrete options regarding waivers of certain COMAR 20.59 provisions and avoided costs.
Chairman Douglas Nazarian conceptually envisioned suppliers agreeing to pay-down the upfront implementation costs of COMAR 20.59 to initially alleviate the costs which must be included in the POR discount rate, to make the level of the discount more conducive to choice enrollments. Under this scenario, Nazarian was also open to a five-year amortization for implementation costs, versus the current two, which would further reduce the discount rate.
These two actions could reduce the costs which otherwise would need to be recovered from distribution customers, at least in the short term, Nazarian noted. And if suppliers are able to grow migration, these remaining costs could later be recovered from the POR discount without increasing the percentage discount rate due to the increased amounts billed under POR, and thus would not need to be recovered from distribution customers. If migration did not increase, and there are remaining costs, recovery of any remaining costs from distribution customers could be addressed at that time.
The Commission will accept replies to any alternative proposals though September 30, and set the matter for its October 26 meeting, at which time Nazarian said that the Commission will "fish or cut bait" regarding the Columbia choice program.
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