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As reported previously, on September 30, 2024, the Commission issued a notice asking interested parties to file comments on staff recommendations regarding implementation of SB1 and implications of ending utility consolidated per SB1. The Commission’s notice also announced that it will conduct an in-person only, legislative-style hearing on Wednesday, October 2, 2024.

Excerpts from Supplier Coalition’s Comments:

{***} “The Retail Energy Supply Association (“RESA”),1 NRG Energy, Inc. (“NRG”), and CleanChoice Energy, Inc. (“CleanChoice”) (collectively, the “Supplier Coalition”).

As explained below, in adopting SB 1, the General Assembly did not intend for dual billing to be a customer’s only billing option, even temporarily, and the evidence throughout this proceeding is that: (1) suppliers are not able to offer dual billing for at least 12-18 months; and (2) even if suppliers could offer dual billing, customers do not want it, and it will confuse customers who will receive two energy bills for the first time ever. The Supplier Coalition continues to support: • The continuation of POR for existing customers; • A seamless transition for UCB for all customers, including current shopping customers and those who may elect to shop in the future; and • A pro-rata payment posting system for UCB as recommended by Staff. “{***}

{***} “The Supplier Coalition’s primary concern relates to the Report’s recommendation that, beginning January 1, 2025, suppliers with new or renewed residential supply contracts must utilize dual billing until a non-POR residential UCB method is implemented. As the Supplier Coalition has explained and as referenced in the Report, no retail suppliers have indicated that they can provide dual billing at scale for at least 12-18 months. This is approximately the same amount of time as Staff’s proposed interim period. Even assuming that suppliers can make offers consistent with SB1 after January 1, 2025, suppliers will not be able to solicit new customers, or keep current customers upon renewal, unless there is a UCB option because suppliers will be unable to bill their customers.

Notably, nothing in SB1 contemplates dual billing for residential customers or a temporary or permanent halt to UCB. This makes sense because the purpose of this provision on SB1 was to transition to non-POR, not to eliminate UCB and require dual billing which has not been developed and which residential customers do not want. In this regard, the Supplier Coalition agrees with the Commission that dual billing is not the preferred option.6 Moreover, the Retail Energy Advancement League (“REAL”) filed a letter on behalf of nearly 800 Maryland residential customers who signed a petition urging the Commission to retain UCB and not force customers to receive separate bills for distribution and supply service. 

The Supplier Coalition supports Staff’s recommendation that the Commission direct utilities to develop a revised UCB system but also encourages the Commission to continue the present form of UCB until a revised system is operational. Implementing dual billing, even on an interim basis, will result in Staff finding number 3 where a significant number of renewing residential customers will be returned to utility service simply because suppliers are unable to bill and collect payment from customers. That is not the result that the General Assembly intended, nor is it good for customers. There is a fundamental problem with a retail energy market where suppliers are not given a reasonable opportunity to solicit new customers and, upon renewal, cannot continue to serve a customer solely because there is no way for the supplier to bill them.

Additionally, the Supplier Coalition supports Staff’s recommendation to require utilities to implement pro-rata partial payment allocations for post-POR UCB. The Commission has approved the use of pro-rata twice: once when it adopted the current COMARs and again when it approved rules for supplier consolidated billing in RM 70. In each instance, the Commission selected the pro-rata payment posting over the payment posting system that is proposed, once again, in this proceeding. There is no viable reason for the Commission to deviate from its prior decisions. As Staff indicates, a pro-rata system treats supplier and utility charges approximately equally. 

In sum, the Supplier Coalition requests that the Commission allow all residential customers – including those who sign up on/after January 1, 2025, to continue to receive UCB with POR until the utilities have a new non-POR system in place. 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. Sections 7- 510(h) and 7-604.2(f) authorize the Commission to implement, by regulation or order, the transition to post-residential-POR. The Commission has not required dual billing for residential customers in 25 years of customer choice.

Extending POR as requested would be a “reasoned elaboration” that is consistent with how the Commission has treated billing methodologies over time.8 Extending UCB with POR for all residential customers until June 1, 2026, or until the utilities develop new non-POR systems is a reasonable extension of the timeline to effectuate the intent of SB 1. Alternatively, the Supplier Coalition requests that the Commission allow customers who renew with their current supplier from January 1, 2025 through June 1, 2026 to remain on UCB with POR so that their experience is not disrupted.” {***}

Excerpts from BG&E’s Comments:

{***} “As the Exelon Joint Utilities made clear in their August 9, 2024 compliance filings submitted in response to Order No. 91238,4 a specific deadline by which utilities must make a full transition to a non-POR residential billing system cannot be identified until the Commission determines the method that will replace POR and the details about the chosen method are established (which may require the establishment of a working group). The Exelon Joint Utilities noted in their compliance filings that the utilities require at least 12-18 months from the date the Commission provides the necessary requirements to implement all the changes necessary to eliminate POR and update necessary functionality for other programs to work in a non-POR environment. Given that the Commission has not identified a date by which it will make these determinations, the Exelon Joint Utilities cannot commit to making a full transition to a non-POR residential billing system by June 1, 2026. Indeed, Staff’s Report contemplates that the Commission may not be able to make determinations on the very issue of pro rata versus a payment posting methodology as well as how the new methodology will function without additional information,5 which will only further delay any potential implementation date by which utilities can make a full transition to a non-POR residential billing system.” {***}

{***} “Staff notes the likelihood that a significant, but unknown, percentage of current residential retail supply customers would be returned to Standard Offer Service (“SOS”) and gas service (default commodity service) by suppliers if dual billing remains the sole method of providing residential retail choice and existing residential retail supply contracts cannot be billed through residential POR UCB after January 1, 2025.7 In the event this does occur, there should be no impact to electric SOS as the SOS Full Requirements Service Agreement executed by wholesale suppliers requires the suppliers to potentially provide up to 5MW of incremental load.8 Therefore, BGE, Pepco and DPL should be able to absorb most, if not all, of the load of customers coming back to SOS. However, BGE could face challenges if a significant number of residential shopping customers were to return to default gas commodity service in a short time period as interstate gas transportation and storage capacity is needed to get gas to BGE’s City Gate and there is uncertainty about what would happen with the capacity suppliers have procured to supply the returning residential customers.” {***}

{***} There are numerous problems with requiring utilities to transition to a pro rata partial payment allocation methodology. First and foremost, a pro rata methodology will result in customers who make partial payments being disconnected sooner as opposed to a payment posting methodology. Under the current payment posting methodology used by the Exelon Joint Utilities today, a customer’s partial payment is first allocated towards any utility arrearages before any supplier arrearages. This ensures that a customer’s utility arrearage, for which customers can be disconnected, are kept to a minimum. This payment posting methodology has been previously approved by the Commission – for example, the respective electric service tariffs for Pepco and Delmarva Power specify the payment posting priority for partial customer payments. In contrast, under a pro rata methodology, a customer’s partial payment will be allocated between the utility and supplier arrearages, thereby resulting in a larger residual utility arrearage. This will inevitably result in customers being disconnected sooner than under a payment posting methodology. Another problem with implementing a pro rata allocation methodology is that, as the Exelon Joint Utilities made clear at the August 7, 2024 Commission hearing, the billing systems of the Exelon Joint Utilities are not currently set up to provide for a pro rata methodology.10 If the Commission were to require utilities to adopt a pro rata allocation methodology, significant time and expense would be required to design and implement such a methodology from scratch. In contrast, the Exelon Joint Utilities are already using a form of payment posting, and having this structure in place already could result in it being less time consuming and costly to implement a payment posting methodology. 

In addition, a pro rata allocation methodology is likely to be more confusing for customers. For example, a customer unable to pay their entire bill may make a partial payment of a certain amount believing that the amount would be sufficient to avoid disconnection. However, under a pro rata methodology, a portion of the customer’s payment will be allocated to any supplier arrearage, thereby leaving a larger utility arrearage on the customer’s account, which in turn could lead to the very disconnection the customer was trying to avoid. This will not only cause confusion for customers who do not understand how their payment is allocated but would also likely cause reputational harm for utilities when customers making partial payments are nonetheless disconnected.” {***}

Excerpts from Potomac Edison Comments:

{***} “While the Company does not necessarily object to this timing or interim billing structure, it must reiterate that the Company has no way of knowing the execution or expiration date of an existing contract, or whether any transactions that occur after January 1, 2025, are new contracts, renewed contracts, or simply a pricing change. 3 This is important because under Staff’s proposed construct, a pricing change pursuant to an existing contract after January 1, 2025, would still be eligible for POR. The Company would be forced to act in complete reliance on a supplier’s attestation as to what type of transaction is occurring and the terms of the contract. Leaving aside the fact that it is not clear at this point whether suppliers will be ready to communicate the status of a contract through an Electronic Data Interchange (or “EDI”) message by January 1, 2025 (and that the Company will not be ready to deny enrollments on that basis by that time), any incorrect information could put the Company at risk of violating the law unknowingly.

For this reason, the Company would prefer the Commission set January 1, 2025, as the date certain on which all residential POR will end. As the Commission has already determined, this is consistent with the law, and within the Commission’s authority.5 Dual billing may not be the optimal solution, particularly according to many suppliers, 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. If a future date is chosen, the Company would like clarity that it is not expected to police, nor be held accountable for, the attestations of suppliers with regard to their contract terms.” {***}

{***} “As provided in its comments throughout the working group, Potomac Edison prefers a payment posting partial payment allocation over pro-rata. Potomac Edison believes that a pro-rata approach will be very confusing to customers, and inevitably lead to a higher volume of customer phone calls as well as customer complaints. If the Commission elects to proceed with pro-rata, the Company proposes an alternative to Staff’s proposal: utility arrears, regardless of age, will settle first, and then the remaining monies paid by the customer will be settled in proration to the remainder of the charges listed on the bill in relation to the proportion of supplier and utility charges. The Company believes this approach is the best option for customers and the most logical and cost-effective payment posting method for allocation of customer partial payments between the various types of items on utility consolidated residential bills.” {***}

Excerpts of OPC Comments: 

{***} “The Office of People’s Counsel submits these comments in response to the Commission’s September 17, 2024 Notice of Hearing and Opportunity to Comment. 1 In that notice, the Commission asked stakeholders to address Staff’s Report on Parties’ Recommendations Regarding Acceptance or Modification to Utility Purchase of Receivables Compliance Plans (“Staff Report”).

As discussed below, Staff’s report provides numerous recommendations and identifies many areas of interest for comment. While OPC generally agrees with many of Staff’s recommendations, OPC takes issue with the extension of purchase of receivables (“POR”) under utility consolidated billing (“UCB”) beyond January 1, 2025, and with the use of a pro rata partial payment allocation. OPC recommends that the Commission prohibit POR for all residential supply contracts beginning on January 1, 2025. OPC further recommends that the

Commission adopts dual billing as at least a near-term solution for implementing the prohibition on POR contained in SB 1. To the extent the Commission chooses to adopt an alternative to dual billing, OPC recommends that the Commission adopt a payment posting allocation for partial payments (as opposed to a pro rata partial payment allocation). Finally, OPC recommends that the Commission approve a payment posting hierarchy that permits customer payments to be applied entirely to utility charges before being applied to outstanding supply charges.

BG&E’s Comments
PotomacEdison’s Comments  (09/30/2024)
RESA/CleanChoice Comments (09/30/2024)
OPC’s Comments  (09/30/2024)
WGL Energy’s Comments (09/30/2024)
PC 65
Accounts Receivable Related to Residential Electric and Gas Supply