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Utility "Prefer[s]" That Residential POR End At End Of Year
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All of the Maryland investor-owned electric utilities opposed the use of a pro rata mechanism for utility consolidated billing upon the end of purchase of receivables, while Potomac Edison also said that it would "prefer" if POR ended for all residential customers on January 1, 2025, with no grandfathering
The Maryland utilities, and other stakeholders, were responding to a Maryland PSC Staff report concerning residential billing in light of SB1 and SB1's prohibition on POR for residential contracts entered into or renewed on or after Jan. 1, 2025.
All references to UCB, POR and customers in this story relate to residential service, even if not specifically identified as such.
As first reported by EnergyChoiceMatters.com, Staff has proposed allowing POR to continue for residential contracts executed or renewed prior to January 1, 2025, through an anticipated end date of June 1, 2026, at which time Staff proposes that a post-POR form of UCB goes live.
Except for grandfathered residential customers to be served under POR as noted above, Staff has proposed mandatory dual billing for new and renewed residential shopping customers, to be required through the contemplated June 1, 2026 start date for post-POR UCB
See more details on the Staff report here
Grandfathered POR, Dual Billing
Potomac Edison in Maryland said that it would "prefer" that UCB with POR end on December 31, 2024 for all residential customers, including customers on existing contracts entered into or renewed prior to January 1, 2025
Potomac Edison reiterated that it has no visibility into retail supplier contract end dates, and, if POR were to continue for existing contracts, the utility would be at the mercy of suppliers' representations concerning the treatment of contracts as grandfathered and eligible for POR.
Thus, Potomac Edison said that a December 31, 2024 end date for all residential POR would ensure that Potomac Edison does not unknowingly violate SB1's prohibition on the utility's purchase of residential supplier receivables for contracts executed or renewed on and after January 1, 2025
Because no form of non-POR UCB would be ready for January 1, 2025, Potomac Edison's preferred end date for POR would mean dual billing would apply to all residential customers starting on January 1, 2025
"Dual billing may not be the optimal solution ... but it is available now and ready to be deployed without any additional programming or COMAR revisions while the utilities focus on implementing the non-POR billing solution ultimately ordered by the Commission," Potomac Edison said
While Potomac Edison expressed a preference for the policy described above, Potomac Edison said that it did not necessarily object to PSC Staff's proposal to allow grandfathered POR to continue until a post-POR form of UCB is implemented (with Staff anticipating that a June 1, 2026 date would be set for such post-POR form of UCB)
However, if POR is continued for grandfathered customers, then Potomac Edison said that the utility should not be held accountable, with respect to the utility's purchase of residential receivables, if suppliers do not provide accurate information regarding a customer's eligibility for grandfathered POR
The Maryland Office of People’s Counsel opposed Staff's proposal to allow POR to continue for grandfathered customers through the implementation of a post-POR UCB
OPC favors an end date of December 31, 2024 for all POR, and a mandate that retail suppliers use dual billing starting January 1, 2025 until a post-POR form of UCB is put in place
In contrast, the Retail Energy Supply Association (RESA), NRG Energy, Inc. (NRG), and CleanChoice Energy, Inc. (the Supplier Coalition) said that UCB with POR should continue for all residential customers until a post-POR form of UCB goes live [emphasis added]
Alternatively, the Supplier Coalition proposed that, in addition to customers who enrolled or renewed prior to January 1, 2025, the PSC should allow UCB with POR to continue for the renewal of any shopping customer which occurs on or after January 1, 2025 until a post-POR form of UCB is in place. The suppliers said that this would avoid disrupting the shopping experience for such currently shopping customers. Dual billing would be required only for new (not renewed) customers during the interim period until a post-POR form of UCB is in place
The Supplier Coalition argued that nothing in SB1 contemplates the end of UCB, even as an interim measure
"SB 1 contemplated that POR would be phased out, but it did not contemplate that dual billing would be required as the sole billing option on either a permanent or temporary basis," the Supplier Coalition said
The Supplier Coalition again reported that no supplier has indicated that it can implement dual billing within 12 to 18 months.
The Supplier Coalition argued that Sections 7-510(h) and 7-604.2(f) of SB1 "authorize" (the term used by the Supplier Coalition) the PSC to implement, by regulation or order, what the Supplier Coalition termed the "transition" to post-residential-POR.
Citing case law, the Supplier Coalition argued that extending UCB with POR to all residential customers, until a post-POR billing mechanism becomes effective, would be a "reasoned elaboration" of interpreting SB1, given the PSC's long-standing policy regarding billing options available to customers (as previously reported, the PSC by order has previously emphasized that the choice of billing mechanism, such as wanting a single consolidated bill for utility service, lies with the customer). The retail suppliers noted that the PSC has never previously mandated dual billing for residential customers in the 25 years of retail choice
Post-POR Billing Payment Processing Mechanism
In separately filed comments, the various investor-owned utilities and OPC all opposed the use of a pro-rata method to allocate customer payments under UCB in a post-POR environment.
As previously reported, PSC Staff has proposed that pro-rata be used as the form of UCB once residential POR ends
In separate comments, OPC, and, jointly, Baltimore Gas and Electric Company, Potomac Electric Power Company, and Delmarva Power & Light Company (with the three utilities collectively calling themselves the "Exelon Joint Utilities"), said that a pro rata methodology would result in customers being terminated for non-payment sooner than a waterfall payment processing mechanism
OPC said that any post-POR UCB should minimize the risk of customer disconnections for non-payment, and should reflect a mechanism that can be implemented in a "cost-effective" manner
Under current rules, customers may not be disconnected for non-payment of retail supplier charges
OPC said that a pro-rata methodology would expose customers to a greater risk of disconnection because, under pro rata, some of the customer's payment would be allocated to charges for which disconnection can not occur (i.e. supplier charges), reducing the amount of the payment which is allocated towards charges for which the customer is at risk for termination (utility charges)
OPC favors a waterfall payment posting system. However, OPC said that, in the posting hierarchy, all costs for which a customer is at risk of termination (i.e. delivery charges) should be paid before any part of the customer payment is allocated to other charges, such as retail supplier charges. Thus, for example, current distribution charges would be paid before any arrear retail supplier charges. By paying all utility charges before supplier charges (even when utility charges are current and newer than past due supplier charges), OPC's favored waterfall differs from the posting process generally in place before POR was adopted
The Exelon Joint Utilities argued that under a pro rata system, customers may be confused concerning the amount of payment which is needed to avoid service termination. Customers, the Exelon Joint Utilities said, may make a partial payment erroneously believing that the partial payment will cover the delivery charges for which payment is required to avoid disconnection, with customers not understanding that the payment will be pro rated among delivery and supplier charges, with the payment potentially not covering all delivery charges, and thus leaving the customer vulnerable to termination
Such a scenario would, "likely cause reputational harm for utilities when customers making partial payments are nonetheless disconnected," the Exelon Joint Utilities alleged
Potomac Edison raised similar concerns about customer confusion, with Potomac Edison instead favoring a payment posting waterfall
However, to the extent a pro rata is adopted, Potomac Edison proposed carving out utility arrearages from the pro rata, with payments first allocated to pay any utility arrearages first, prior to any proration.
Potomac Edison proposes that, after the payment of utility arrearages, the remaining customer payment would be pro rated to the remaining charges on the bill, in relation to the proportion of supplier and utility charges.
The Supplier Coalition endorsed the use of a pro rata approach for post-POR UCB.
The Supplier Coalition noted that the PSC has twice previously elected a pro rata mechanism over a payment posting (waterfall) system
Post-POR UCB Effective Date
As previously reported, Staff contemplated that a post-POR UCB would be developed and implemented by June 1, 2026
While this date would provide 20 months, from today, for implementation, the IOUs said that their estimated timeframe for implementation (which is estimated at no longer than 18 months) is based upon having in-hand final, specific payment methodologies and policies as established by the PSC. The information needed to begin the necessary billing system changes include not only high-level policy decisions (such as pro rata vs payment posting) but also ancillary issues that must be addressed based on the chosen methodology, such as how termination notices and payments will be handled
The utilities doubted that such specific detailed post-POR policies and requirements will be established by the PSC with enough time to achieve a June 1, 2026 start date, given the utilities' up-to 18-month timeline for implementation
Mass Drop Of Customers To Default Service
To the extent dual billing is required for all shoppers and no customers are grandfathered onto UCB with POR, a large return of shopping customers to default service may occur, as retail suppliers have said that they will not be able to have dual billing capability in place by January 1, 2025
BGE could face "challenges" if a "significant" number of residential natural gas customers were to return to default service in a short time period, the Exelon Joint Utilities said
These challenges, the Exelon Joint Utilities said, arise from the need for interstate gas transportation and storage to flow gas to BGE's citygate, with the Exelon Joint Utilities observing that there is "uncertainty" concerning the disposition of the capacity that retail suppliers currently hold to serve those customers
The Exelon Joint Utilities did not raise any concern about a significant return of electric customers to SOS, given the current swing provisions in the SOS supply contracts
PC 65, PC65
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September 30, 2024
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Reporting by Paul Ring • ring@energychoicematters.com
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