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ICC Staff Warns Draft Order on ComEd POR Could Harm ICC's Case Regarding Flat Admin. Charge on Appeal

July 27, 2011
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A proposed order regarding Commonwealth Edison's Purchase of Receivables uncollectibles discount rate could hurt the Illinois Commerce Commission's position on appeal regarding the POR administrative cost component, Staff said in a brief on exceptions.

As only reported in Matters (7/21), the proposed order would adopt a single, blended POR uncollectibles rate for residential and commercial customers after concluding (in addition to policy reasons) that the POR statute only provides for a single discount "rate" for POR, and thus class-specific rates are unlawful.

However, Staff, on exceptions, said that this conclusion could make it harder for the Commission to defend its decision to adopt the flat 50 cent administrative cost recovery charge for POR (which is billed in addition to the uncollectibles discount). Staff does not believe that the ICC must adopt the proposed statutory argument to adopt a blended uncollectibles rate (which Staff's exceptions would retain for policy reasons), and thus recommended that this statutory finding be removed.

Specifically, Dominion Retail, in the appeals court process, is challenging the adoption of the 50 cents per bill charge applied to accounts billed under POR to recover administrative costs.

Staff noted that, as a result of the flat charge, an infinite number of "effective" discount rates are created, since the percent of customer receivables actually discounted now varies with that customer's usage, due to the recovery of a flat charge in the discount. Under the proposed order's reasoning, the use of a flat charge would be contrary to statute since it creates an infinite number of discount rates, versus the single "rate" mentioned in statute.

Staff does not believe the use of a flat per-bill charge is contrary to statute (as it is merely one of several components of the discount rate), and said that the ICC should exclude the proposed finding relating to the statutory requirement for a single discount rate to preserve the ICC's prior position on appeal.

The Retail Energy Supply Association, Illinois Competitive Energy Association, and Commonwealth Edison all filed exceptions to both the statutory and policy conclusions in the proposed order, and recommended that separate uncollectible POR rates be used.

Each noted that the Illinois Statute on Statutes, 5 ILCS 70/1.03, provides that "[w]ords importing the singular number may extend and be applied to several persons or things, and words importing the plural may include the singular."

Accordingly, the use the singular term "rate" in the POR statute to describe the discount rate should be given no weight as requiring a single rate, RESA, ICEA, and ComEd said.

Furthermore, ComEd said that the "plain language" of the statute requires the term rate to be read as a plural, consistent with 5 ILCS 70/1.03, because the statute also requires that the discount rate, "be based on the electric utility's historical bad debt and any reasonable start-up costs and administrative costs associated with the electric utility's purchase of receivables."

Because ComEd's "historical bad debt" is reflected in Commission-approved separate bad debt factors that correspond to the unique experience of the residential and nonresidential segments, "use of these [separate] factors is wholly consistent with, if not compelled by," the POR statute, ComEd said.

RESA, ICEA, and ComEd also said that the proposed order misapplies the duty of the ICC to promote competition, as set forth in Section 16-118(a), to the POR statute as set forth under Section 16-118(c). The proposed order uses this duty to promote competition as supporting a blended discount rate in order to extend competitive offers to the most customers possible (by making residential service more attractive through a lower discount rate)

RESA, ICEA, and ComEd said that the requirement for the ICC to promote competition is specific to Subsection (a) (due to the use "therefore" in setting forth the requirement) and, as a general policy statement, cannot override the substantive provisions of Subsection (c), which the parties said require separate uncollectible rates.

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