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PSC Floats Mandating Retail Suppliers Use Dual Billing, Temporarily, To Comply With New Statute
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The Maryland PSC has initiated a proceeding, PC 65, to address the prohibition on residential purchase of receivables (POR) under SB 1, and one of the PSC's questions in initiating the process may suggest that the PSC is entertaining a requirement that compels retail suppliers use dual billing on a temporary basis as utilities modify their systems to comply with SB 1
As previously reported, SB1 provides that a residential electricity supplier may not sell
to an electric company, and an electric company may not purchase from the electricity supplier, accounts receivable, with a similar provision applying to natural gas retail suppliers and utilities
SB 1 provides that these POR prohibitions shall apply to retail supply agreements entered into or renewed on or after January 1, 2025
The PSC noted that, at a recent meeting which was focused on whether this POR prohibition applies to delivery-related receivables sold back to the utility under supplier consolidated billing, the issue of whether SB 1 requires residential POR to continue for existing customer contracts, entered into prior to January 1, 2025, was raised
In response, the PSC today observed that, "To be clear, POR is a financial arrangement between retail suppliers and utilities, not retail suppliers and customers."
However, the PSC did solicit briefs from stakeholders on the question of whether the POR prohibition should apply to all residential receivables, or only those residential receivables related to customer contracts entered into or renewed after January 1, 2025.
The PSC scheduled an August 7 hearing on this question
The PSC directed utilities to file compliance plans to implement the POR prohibition (discussed further below) and issued several questions to the utilities
Notably, the PSC directed the utilities to respond to the following: "Provide technical guidance on implementing dual billing for residential retail supply customers on a temporary basis as a mechanism for compliance with the prohibition."
While the PSC's direction did not discuss further the use of mandatory dual billing as a means of temporary compliance with the POR prohibition, while the utilities update their system and put in place alternative methodologies to address partial payment situations (noted below), EnergyChoiceMatters.com notes that the PSC has previously found in several instances that the customer is the entity that shall be provided with the choice of bill method [dual or single (consolidated)], though such policy was determined through PSC order which can be modified
The PSC also directed the utilities to provide timelines and list challenges and other information concerning implementation of the following alternative payment processes that would be used in place of residential POR under utility consolidated billing, applicable in instances in which the outstanding bill exceeds the customer's payment
• Use of a pro-rata allocation of customer payments as currently authorized under the rules as a utility-selected alternative to POR (no utility is currently using this methodology)
• Use of the payment processing methodology in place before the POR rule was implemented, which generally allocated payments to various categories and ages, with no pro-ration, on a waterfall basis, with the first priority category being allocated all customer payments until such category's charges were paid in full, with any remaining payment next allocated to the second-priority category, and so forth. Generally, this methodology included a preference for first paying past due and delivery charges
Among other things, for each of the above-cited payment processes, the PSC asked utilities to describe challenges in implementing these processes for some utility consolidated billing (UCB) customers, while maintaining POR for other UCB customers
The statutory POR prohibition does not apply to municipal aggregations, and the PSC asked the utilities to note any challenges in maintaining residential POR for CCAs
The PSC further directed utilities to file compliance plans for a POR prohibition under two scenarios -- one under which POR ends for all residential accounts as of January 1, 2025; and another under which POR ends only for residential accounts that entered into or renewed agreements on or after January 1, 2025.
Among other things, the compliance plans are to include:
• The specific mechanism the utility proposes to use for receivables in light of the POR prohibition. If the utility’s proposed mechanism is not the current pro-rata authorized as a POR alternative per COMAR 20.53.05.06 and 20.59.05.03, the utility is directed to explain why
• The timeline for the utility’s preferred method of implementation, including any need for temporary measures
Compliance plans are due August 9
PSC Staff was directed to convene stakeholders and, no later than September 13, 2024, to file the parties’ recommendations regarding acceptance or modifications to the utilities' compliance plans. Staff by September 13 shall also recommend whether a rulemaking is needed to amend the current POR rules
The PSC noted the accelerated nature of its review and invited Staff to propose an alternative procedural schedule, though the PSC stressed that any modified schedule must account for the need to implement a residential POR prohibition no later than January 1, 2025.
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July 23, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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