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In Order No. 91303 issued on August 27, 2024, the Maryland Commission directed staff to file a report with its recommendation regarding implementation matters related to implementation of SB1 regarding the end of POR for residential customers and other related billing matters.  Staff was directed to file this report by September 13, 2024.

As directed, Staff filed the Staff Report on September 13, 2024 with its recommendations.

Under a recommendation from Maryland PSC Staff regarding SB1, purchase of receivable (POR) and related billing issues, Staff’s report recommends that new residential electric and gas supplier customers be permitted to continue using utility consolidated billing with purchase of receivables for residential contracts entered or renewed prior to January 1, 2025.

Staff’s proposed recommendation would allow residential UCB with POR to continue through June 1, 2026, for existing customer contracts existing or renewed prior to January 1, 2025.

Highlight’s of Staff’s proposed recommendation:

The residential grandfathered POR would end effective June 1, 2026. 

The June 1, 2026, date would be: (1) the end of grandfathered POR, (2) the end of mandatory dual billing, and (3) the effective date for non-POR UCB.  Staff’s recommendation is premised upon the recommendation that non-POR UCB will be implemented effective June 1, 2026.

Dual billing would be mandated for residential contracts entered or renewed on or after January 1, 2025, and last until June 1, 2026.

The utilities would be required to implement a non-POR form of residential UCB effective June 1, 2026. 

Staff’s report would align the end date for grandfathered POR and mandatory dual billing with the ultimate effective date of a post-POR.  UCB Grandfathered UCB with POR and mandatory dual billing for other customers, are to continue “until a non-POR residential UCB method is implemented.” 

For existing residential contracts, Staff does not favor requiring dual billing for existing residential shoppers due to, among other reasons, the likelihood that mandated dual billing for existing customers would result in a significant drop of customers to default service.

Staff noted that some utilities may face logistical hurdles in being able to process such a large drop of customers to SOS on the same day. Staff also raised potential impacts on utilities’ wholesale supply portfolios from the drop of many customers to default service prompted by a dual billing mandate for existing customers.

Staff recommended that the PSC “make clear” to retail suppliers that, “the full compliance obligations for dropping a customer or switching a customer to dual billing on and after January 1, 2025, when the customer’s contract ends or renews is on the supplier and not the utility.”

Staff also proposed that retail suppliers shall be required to, on an ongoing basis, share with the PSC and the People’s Counsel data related the number of grandfathered customers and, by month, list when such contracts expire and to how many grandfathered customers such expirations apply. After January 1, 2025, such reports would include a requirement to list the disposition of any customers whose grandfathered status has been terminated due to contract expiration (e.g., dropped to SOS, moved to dual bill, switched supplier, etc.).

For contracts entered or renewed on or after January 1, 2025, Staff recommends that retail suppliers be required to use dual billing, with Staff citing technical limitations in the utilities’ ability to implement a non-POR UCB alternative immediately. Staff therefore recommends that a date of June 1, 2026, be established for the utilities to implement a form of UCB without POR (discussed further below). Mandatory dual billing for new/renewed contracts as of 1/1/2025 and later would continue through June 1, 2026.

Staff request that the PSC waive COMAR 20.53.05.03 (electric) and COMAR 20.59.05.01 (gas) to require the use of dual billing for any new/renewed residential contracts after Jan. 1, 2025.

For a post-POR form of UCB, to be effective June 1, 2026, Staff recommends that the utilities be required to implement a pro rata allocation of customer payments, which is the current non-POR mechanism contained in COMAR as an alternative to POR. The proration solution would allocate customer payments on a pro rata basis between utility delivery and retail supplier charges (with pro rata coming into play in terms of customer partial payments).

Notwithstanding its recommendation for pro rata, Staff believes that a payment posting priority system would ultimately be less costly to implement than pro-rata.

While Staff recommends a pro rata methodology, Staff asked that the PSC now decide on adopting either pro rata or payment posting priority so that implementation of post-POR UCB may begin.

Staff said that the PSC should consider whether the choice of pro rata or payment posting should be made on a statewide basis or should allow for variation among the utilities.

Regarding the specifics of a pro rata methodology, Staff generally proposed, for a single fuel customer not on a payment arrangement, that proration of equal age supplier and utility charges (e.g. arrearages, followed by current charges) shall be weighted by dollar amount. Arrearages (by same age) would be paid first on a pro rata basis, followed by current charges paid on a pro rata basis.

Staff requested that the PSC rule by October 1, 2024, on Staff’s recommendations regarding grandfathered POR, mandatory dual billing, and the choice of the method for post-POR UCB payment handling.

Staff’s recommendation of a June 1, 2026, effective date for a post-POR form of UCB is made barring, “substantial technical evidence to the contrary presented in the response to this report[.]”

Regarding other matters raised by mandatory dual billing as a “short-term” compliance mechanism, Staff recommended as follows:

• Staff recommends that the Commission approve utilities applying financial assistance solely to utility charges for dual billed customers
• Staff recommends that the Commission approve utilities setting utility payment arrangements solely based on utility arrearages for dual billed customers
• Staff recommends that the Commission approve utilities setting utility budget billing solely based on utility charges for dual billed customers
• Staff recommends that the Commission approve utilities setting late fees solely based on utility charges for dual billed customers
• Staff noted that there are currently no rules limiting supplier late fees for dual billing customers, though the supplier consolidated billing rules do limit supplier late fees. “Regarding customer late fee protections for supplier residential dual billing customers, if the Commission wishes to make a decision on this matter, Staff recommends that it do so initially by Order to be followed up with a rule making at a later date,” 
• For post-POR UCB, Staff recommends that residential supplier charges be subject to the same late fees applied to default service charges, and that utilities remit late payment revenue on post-POR UCB residential supplier charges to suppliers.
• Staff recommends that supplier charges remain on UCB for 90 days prior to being returned to the supplier for collection, consistent with current rule.
• For post-POR UCB, Staff recommends that utilities transmit to suppliers payments for supplier charges within 5 business days of receipt of payment from the customer, or within 5 business days of UCB customer payment of supplier charges within a customer payment window.

PC65
Senate Bill 1:  Accounts Receivable Related to Residential Electric & Gas Supply