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Pepco is proposing an alternative POR rate for consideration by the Commission.  

From Motion: 

Pursuant to Rule 105.8 of the Commission’s rules of practice and procedure, Pepco respectfully asks for leave to reply to the June 17, 2024, comments by the Suppliers in this proceeding. Leave is necessary in this case because the Commission’s May 17, 2024, Notice, which allowed for comment on Pepco’s April 30, 2024 filing, did not explicitly provide for reply comments. However, reply comments in this instance will provide the Commission with a more fulsome record and proposes an alternative similar to the one presented by the Suppliers, and should aid the Commission in its decision-making in this proceeding. Accordingly, Pepco respectfully requests that the Commission accept the Company’s limited reply comments.

II. LIMITED REPLY COMMENTS As explained in the introduction, Pepco filed its updated POR filing on April 30, 2024. As explained in its filing, Pepco’s filing and proposed Discount Rate calculation follow past practice and Commission orders and are calculated based on observed POR activity from January 2023 through December 2023. Suppliers’ comments focus on the result – the difficulty that the proposed Discount Rate poses to the competitive market – but do not directly criticize the methodology. Suppliers then propose that the Commission consider alternatives and point to Pepco’s affiliate, Delmarva Power & Light (“DPL”), which has amortized POR-related costs in an effort to lower POR rates.

Pepco is sensitive to the effects of this rate on the competitive market and can propose an alternative similar to the one used by DPL. Pepco did not propose such an alternative in its April 30, 2024 update filing because, and in contrast to DPL, Pepco did not have the type of historic undercollection issues that had been experienced by DPL in Maryland and Delaware. That said, in an effort to find a middle ground and aid judicial economy, Pepco proposes for Commission consideration a method similar to that used by DPL, which would result in a Discount Rate of 5.42% rather than the 14.87% proposed originally, which was based on the methodology previously used by Pepco and approved by the Commission. Based on this methodological change, the Residential Uncollectible Expense Component rate is derived by dividing the total Electric Supplier uncollectible expense over the life of the POR program by the total Electric Revenues Billed over the life of the POR program. Additionally, 2023 uncollectible amounts are amortized over a two-year period (2024 and 2025 filings). However, Pepco notes that based on the available 2024 write-off data, the amounts are trending consistently with 2023 and if this continues through the end of 2024, this change might be more challenging to address next year and in future filings.

However, Pepco would note that changing the methodology may also require a waiver of the language in its currently-approved tariff, Section 1(a). Pepco would propose changes, which are in bold and underlined:

Schedule 3: District of Columbia – Discount Rate for Purchase of Receivables (POR)

1) The initial (unadjusted) Discount Rate for Residential Service Customers served under Schedules R (including Rider RAD) and MMA, Non-Residential Small Commercial customers served under Schedules GS ND, T, SL, OL LED, TS and TN, Large Commercial customer served under Schedules GS-LV, GS 3A, MGT LV, GT LV, MGT LV, GT 3A, GT 3B and RT customers served under Schedules GS-ND, GS-LV, GS 3A, MGT LV, GT-LV, MGT LV, GT 3A, T, SL, OL LED, TN, and TS of the Retail Electric Service Tariff is calculated as follows:

a) The Uncollectible Expense Component percent is calculated by dividing the Electric Supplier uncollectible expenses associated with each rate schedule by the electricity revenues billed for all Electricity Suppliers for that rate schedule. For Schedules R (including Rider RAD) and MMA, the Uncollectible Expense Component is calculated by dividing the Electric Supplier program to date uncollectible expenses associated with each rate schedule by the program to date electricity revenues billed for all Electricity Suppliers for that rate schedule.

This minor change to the tariff, if the Commission agrees such change is warranted, would allow the Commission and the Company additional flexibility for this year and the future in similar situations. [ *** ] 

Motion (07/01/2024)
PEPPOR-2024-01 (04/30/2024) 
(Purchase of Receivables)