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Utilities Seek To Assign Uncollectibles Costs After End Of POR To Retail Suppliers, Socialize Any Remaining Balance Among Suppliers
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Three Maryland utilities, each ultimately owned by Exelon, have proposed that receivables purchased by the utilities under their residential purchase of receivables programs, which later become uncollectible after the end of the POR programs on December 31, 2024, should still be recovered from retail suppliers on a socialized basis for those suppliers participating in POR as of December 2024
Baltimore Gas & Electric, Pepco, and Delmarva each submitted separate filings concerning updates to residential POR discount rates to address the current and projected outstanding balances under POR prior to the December 31, 2024 residential POR end date in Maryland
However, there may be supplier receivables purchased by the utilities in the final months of the residential POR programs which, after completion of the utilities' standard collections process and after the POR end date, are later deemed uncollectible (i.e. written off). These amounts would previously have been addressed in future POR discount rates
As the POR program will no longer be in place, the utilities are proposing to, after the end date of POR, assign to retail suppliers the costs of any previously purchased receivables which become uncollectible, in addition to any other outstanding balances under the POR programs
In other words, the utilities are seeking to recover from retail suppliers any unrecovered uncollectibles for receivables purchased under POR even if the receivables are not written off until after the end of the POR program
BGE, Pepco, and Delmarva each propose two reconciliations for residential POR after its end date: an initial reconciliation following May 2025 (filed by July 31, 2025) and a final reconciliation filed by January 1, 2026
The utilities said that these proposed reconciliations and dates would allow their write-off processes to largely be completed. Under such standard processes, BGE will write-off an amount seven months after a final bill, if there is no activity in the last 60 days of this seven month period. Pepco/Delmarva will write-off an uncollectible 120 days after the final bill due date (which, under the collections process, may be seven months after the initial bill)
The utilities propose that any retail supplier who had residential receivables purchased by the utility in December 2024 be subject to the POR reconciliations described above
Amounts to be collected from, or returned to, such retail suppliers under the reconciliations are proposed to be socialized based upon each retail supplier’s relative share of the residential receivables purchased over the entirety of calendar year 2024.
Each utility filed two options to update the residential POR discount rate through the end of the program.
The first option (option 1) is based on POR balance forecasts through December 2024
The second option (option 2), which is the discount preferred by the utilities, instead sets the POR discount rates based on forecasts for late payment revenues, uncollectible expense, and (for BGE electric only) cash working capital through May 2025 (in light of potential future write-offs for receivables purchased under POR)
Both options would update the residential POR discount rate effective October 1, 2024
As noted below, the preferred, second option results in higher discount rates
In fact, at Delmarva, updating the residential POR discount based on option 1 forecasts through December 2024 would result in a significant decrease in the POR discount, to 0.3398% from 2.1739%, based on a January to September 2024 reconciliation factor of -2.5417% (i.e. a credit). However, Delmarva proposes to set the residential POR discount at 5.2262%, using uncollectible expense forecast through May 2025 under option 2
The utilities said that the second, higher discount rate option would better align recovery of the POR balance with cost causers (as noted above, the post-POR reconciliations would only apply to suppliers active in December 2024) and would better recover any balances prior to the POR end date
The utilities propose to update the residential POR discount rates as follows:
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Interim POR Discounts >10% Proposed At Multiple Utilities
September 3, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Maryland Residential POR Discount
10/1/24 10/1/24
Current Option 1 Option 2
(Preferred)
BGE Electric 2.3921% 3.5421% 6.2451%
BGE Gas 3.3389% 9.1722% 12.0862%
Pepco 2.6710% 7.2548% 11.3314%
Delmarva 2.1739% 0.3398% 5.2262%
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