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Potomac Edison Updates Discount Rate For Purchase Of Receivables
Potomac Edison is recommending that a residential POR discount rate of 4.5274% be made effective November 1, 2024.
From Letter:
[ *** ] In its June 12, 2024, letter order accepting PE’s updated POR discount rates and tariff revisions effective June 1, 2024, the Commission directed PE to file by September 1, 2024, the following information:
(1) an update on ongoing POR balances for residential customers, (2) any recommended changes to the residential POR rate for the remaining months of residential POR, (3) a plan for determining and resolving final residential POR balances, and (4) an explanation of how the Company will address residential retail supply billing conducted through utility consolidated billing once the POR prohibition has taken effect.
In response to the requirements set forth in (1) and (2) above, PE is attaching Exhibit 1 which includes an update of the residential POR balances with actual results through August 2024, forecasted supplier purchased receivables through December 2024, forecasted late payment revenues through December 2024, and forecasted uncollectible expense through December 2024.2 As shown in Exhibit 1, Page 1, the column titled “Res SOS Costs Through Dec Recovery”, the residential POR discount rate would be 3.9977%.
However, in response to requirement (3) above, the Company is recommending that a residential POR discount rate of 4.5274% be made effective November 1, 2024, as part of the Company’s recommended plan for determining and resolving final residential POR balances and the uncollectible expense associated with those final balances. The Company’s recommended update of the POR discount rate is also set forth in Exhibit 1 Page 1, the column titled “Res SOS Costs Through May Recovery.” This update represents the same updates as included in the above paragraph, with the exception that late payment revenues and uncollectible expense are forecasted through May 2025 (the end of the traditional annual POR discount rate effective period), with such amounts designed to be collected during November-December 2024. PE is recommending the POR discount rate of 4.5274% be approved in an effort to mitigate the impact of any eventual trueup to the related expenses after January 1, 2025. Effective January 1, 2025, the residential POR discount rate would be eliminated and PE recommends that there be a final reconciliation process consisting of the following: (1) an initial reconciliation filing by July 31, 2025, to reconcile between the forecasted amounts included in Exhibit 1 and the actual amounts, and (2) a final reconciliation filing 6 months later, by January 1, 2026, allowing the Company’s uncollectible process to be completed on any relevant accounts.
The Company also notes that BGE recommends that any retail supplier who serves residential customers as of December 2024 (i.e. BGE purchased residential receivables from the retail supplier in December 2024) would be included in the final reconciliations. Amounts to be refunded or charged to retail suppliers in these final reconciliations would be socialized based upon each retail supplier’s relative share of the residential receivables purchased over the entirety of calendar year 2024. This treatment is reasonable as it balances identification of suppliers who should bear the uncollectible expense associated with accounts receivable written off January 1, 2025 and after. The Company does not object to such a mechanism but may, after final reconciliation, propose a different approach in the event the reconciliation yields the potential for an alternative proposal for Commission consideration.
In response to item (4) above, the Company submits that it has been actively engaged in discussions with Staff and other stakeholders in the PC 65 working group which Staff convened to assist with its report submitted to the Commission on September 13, 2024. The Company looks forward to submitting further comments after fully reviewing the report, participating in the hearing scheduled for October 2, 2024, and an eventual Commission order detailing how the Company should move forward in compliance with Senate Bill 1 and the prohibition of residential POR after January 1, 2025. [ *** ]
Potomac Edison Letter (ML# 312426) (09/19/2024)
