November 1, Supplement 610 and Revisions to P.S.C. Md. E-6 and P.S.C. Md. G-9 Residential Bill Payment Alignment. Dear Mr.

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1 John C. Frain Telephone Director Fax Regulatory Strategy & Revenue Policy P.O. Box 1475 Baltimore, Maryland An Exelon Company November 1, 2017 Via Electronic Filing David J. Collins, Executive Secretary Public Service Commission of Maryland William Donald Schaefer Tower 6 Saint Paul Street, 16 th Floor Baltimore, Maryland Re: Supplement 610 and Revisions to P.S.C. Md. E-6 and P.S.C. Md. G-9 Residential Bill Payment Alignment Dear Mr. Collins: Baltimore Gas and Electric Company ( BGE or the Company ) files herewith Supplement 610 to P.S.C. Md. E-6 ( Electric Supplement) and Supplement 438 to P.S.C. Md. G-9 ( Gas Supplement ) to become effective with residential bill payments rendered on or after June 1, The purpose of this filing is to enable residential customers to make bill payments through a wide variety of methods without incurring a transaction fee. 1 The proposal will increase customer satisfaction, mitigate inequities of the current fee structure, and facilitate future innovative payment options, such as Apple Pay TM, Android Pay and recurring credit card payments. It is consistent with similar proposals from other Maryland utilities that were approved by the Commission. It will reduce the disproportionate impact of transaction fees on low and moderate income customers. And it is equitable to all residential customers. Presently, customers who make payments through third party vendors incur transaction fees while customers who pay BGE directly do not. Yet there are costs associated with direct payments to BGE, and all residential customers including those who use third party vendors pay for those costs through base rates. Thus, the proposal will remove what may be characterized as a form of a double charge to customers who use indirect payment channels. 1 Residential Customers who pay their bill through a Company-approved vendor shall not be assessed any fees for the first payment per monthly billing period. While BGE was initially prepared to support the waiver of fees for the first two payments per month, a limit of one per month is consistent with the Commission s recent order in regards to BGE s filing for a prepaid service pilot.

2 David J. Collins, Executive Secretary November 1, 2017 Page 2 The necessary revisions to the Company s Electric and Gas Retail Service Tariffs are included herein as Section 7.8 Payment Options in the respective tariffs. The Company requests a decision by the Commission before January 1, 2018, in order to complete the necessary program changes so that the fee-free transactions can be implemented in five or six months after the Commission decision. Currently, residential customers have the ability to pay their monthly BGE bills by cash, check, credit card, debit card and electronic bank account debit through Company approved payment vendors. 2 On the Company s website, the following payment methods are listed: online through BGE.com, automatic payments through BGEasy, in-person using Company approved payment vendors, by phone, and by mail via check. 3 While the majority of BGE s residential bill payments are made without a transaction fee being imposed on the individual customer, certain payment options include a convenience fee which is imposed by third party vendors on the paying customer. Specifically, when customers pay their bills via credit or debit card, or at BGE-approved pay agent locations, the customer is charged a convenience fee. 4 For BGE s residential customers, the fee is currently set at $1.50 per transaction. Customers have expressed concern with these convenience fees and have asked the Company to waive these direct charges. It is clear to the Company that the current approach of charging for credit/debit cards and pay agent fees is a major source of customer dissatisfaction. Notably, J.D. Power and Associates cites the removal of these fees as one of the ways a utility can enhance satisfaction and the customer experience. Businesses, in general, and the utility industry specifically, are moving toward the elimination of convenience fees. Washington Gas Light Company ( Washington Gas ) and Columbia Gas of Maryland ( Columbia Gas ) are accepting credit cards without a fee now. ATT, Verizon and Comcast have been doing that for some time. Governments are also moving in this direction. For example, the Maryland Department of Transportation Motor Vehicle Administration does not assess a fee when credit/debit cards are used to pay for car registrations. Other examples of Maryland State agencies where credit/debit fees are not assessed include the Maryland Transportation Authority and the Maryland Department of Natural Resources. Some local governments are also waiving credit card fees, particularly for utility services. Both Harford and Howard counties do not assess a fee for water and sewer services. According to J.D. Power and Associates, about 28% of surveyed electric utilities provide a fee-free card payment option and the Company believes it is important to keep up with the industry and provide customers what they want. 5 In fact, many businesses are moving beyond credit cards to payment mediums such as Apple Pay TM and text-to-pay. 2 Less than 1% of the residential customers make more than one payment a month using fee based channels There are two fee-free America s Cash Express locations, 407 W. Baltimore St., and 1312 Eastern Blvd., J.D. Power and Associates, 2016 Electric Utility Residential Customer Satisfaction Study.

3 David J. Collins, Executive Secretary November I, 2017 Page 3 As noted above, Washington Gas and Columbia Gas have ended imposing convenience fees on customers choosing to pay via credit and debit cards in certain instances. 6 Those utilities noted that there was an equity issue between customers involved - one that applies to BGE's residential customers as well. Today, those paying via credit card, debit card and at pay agents are the only residential customers directly paying the cost of their payment processing. Yet, these customers are paying not only for their payment processing costs but also for a share of the costs incurred to process payments made by other customers as well. This is due to the fact that the cost to process all other payment methods, such as checks and electronic bank account debits (including BGE.com online payments and BGEasy automatic payments), are socialized among all customers in base distribution rates. The Company has found that low and moderate income customers may well benefit the most from the Company's proposal to offer residential customers fee-free payment options. While a wide variety of customers frequently use a credit card or pay agent to pay their utility bill, it appears that the more economically challenged customers are more likely to use a credit or debit card and thus incur the convenience fee when making such a payment. BGE's proposal would mitigate this situation. Therefore, the Company proposes to offer residential customers fee-free payment options for all methods of payment when processed through a Companyapproved payment vendor. While moving forward with this approach, the Company recognizes that it must not only provide customers with billing and payment options, it must also manage costs. Accordingly, as part of this initiative, BGE will launch a marketing campaign to promote the availability and highlight the benefits of electronic payment, to include the low cost payment options available to customers. The Company requests a decision by the Commission before January 1, BGE expects that the necessary program changes to implement the fee-free transactions will take approximately five to six months to complete. Therefore, the Company proposes that the revised Tariff pages be effective June 1, The Attachment includes red-lined and clean versions of these proposed Tariff revisions. sjjj ~ Cove. Fram JCF:meg Attachment 6 Case No. 9267, Order No , p "Upon review of the record and testimony offered by the parties, the Commission approves the Company's facilitation and use of the Fee Free credit card for eligible customers..." Case No. 9417, Settlement Agreement, Section l.j). "Transaction Fees - Columbia's proposal to waive all charges, including those associated with credit card, debit card, automated clearinghouse electronic payments and walk-in payments, is approved... "

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5 Baltimore Gas and Electric Company -- Gas 13 In the case of agencies of the State of Maryland, if payment in full has not been delivered to the Company more than 15 days after the final date for payment of the net amount shown on the bill, interest shall accrue retroactive to the day after the final date shown on the bill at the rate of 9% per annum on the total unpaid charges. Interest shall continue to accrue on the unpaid net amount, until such time as the Company has received payment in full; provided, however, in no event shall interest on the unpaid net amount exceed 9%. Any interest charged to an agency of the State of Maryland shall not apply to any previously assessed interest charge. 7.6 Returned Check: A check received in payment of a Customer's account which is returned to the Company unpaid by the Customer's bank and which cannot be redeposited by the Company for payment will result in an additional $15 charge for the returned check. Such charge will be added to the Customer's account balance. The $15 returned check charge will be waived, upon request by the Customer, providing that no other such waiver has been made in the preceding 11 months. The Customer will be notified of the additional charge and the waiver provision each time the charge is applied. 7.7 Customers' Deposits: The Company may require from any Customer or prospective Customer a cash deposit, determined in accordance with the applicable regulations of the Commission and the applicable rules or practices of the Company, intended to guarantee payment of final bills. Such deposit shall be not less than $5 nor more in amount than two-twelfths of the estimated charge for the ensuing 12 months for residential service, nor more than the maximum estimated charge for two consecutive billing periods for nonresidential service or as may be reasonably required by the Company in cases involving service for short periods or special occasions. Simple interest on deposits at the rate prescribed by the Maryland Public Service Commission is paid by the Company to each Customer making such deposit for the time the deposit is required by the Company. Payment of the interest to the Customer is made annually if requested by the Customer, or at the time the deposit is refunded. 7.8 Payment Options: Various bill payment options are available to the Customer. The list of payment options can be found on the Company s web site. Residential Customers who pay their bill through a Company approved payment vendor shall not be assessed any fees for the first payment per monthly billing period. P. S. C. Md. -- G-9 (Suppl ) Filed 02/20/201411/01/ Effective 03/01/201406/01/2018

6 14 A Electric Retail --Baltimore Gas and Electric 7.8 Payment Options: Various bill payment options are available to the Customer. The list of payment options can be found on the Company s web site. Residential Customers who pay their bill through a Company approved payment vendor shall not be assessed any fees for the first payment per monthly billing period P. S. C. Md. -- E-6 (Suppl. 610) Filed 11/01/17- Effective 06/01/18

7 Baltimore Gas and Electric Company -- Gas 13 In the case of agencies of the State of Maryland, if payment in full has not been delivered to the Company more than 15 days after the final date for payment of the net amount shown on the bill, interest shall accrue retroactive to the day after the final date shown on the bill at the rate of 9% per annum on the total unpaid charges. Interest shall continue to accrue on the unpaid net amount, until such time as the Company has received payment in full; provided, however, in no event shall interest on the unpaid net amount exceed 9%. Any interest charged to an agency of the State of Maryland shall not apply to any previously assessed interest charge Returned Check: A check received in payment of a Customer's account which is returned to the Company unpaid by the Customer's bank and which cannot be redeposited by the Company for payment will result in an additional $15 charge for the returned check. Such charge will be added to the Customer's account balance. The $15 returned check charge will be waived, upon request by the Customer, providing that no other such waiver has been made in the preceding 11 months. The Customer will be notified of the additional charge and the waiver provision each time the charge is applied. Customers' Deposits: The Company may require from any Customer or prospective Customer a cash deposit, determined in accordance with the applicable regulations of the Commission and the applicable rules or practices of the Company, intended to guarantee payment of final bills. Such deposit shall be not less than $5 nor more in amount than two-twelfths of the estimated charge for the ensuing 12 months for residential service, nor more than the maximum estimated charge for two consecutive billing periods for nonresidential service or as may be reasonably required by the Company in cases involving service for short periods or special occasions. Simple interest on deposits at the rate prescribed by the Maryland Public Service Commission is paid by the Company to each Customer making such deposit for the time the deposit is required by the Company. Payment of the interest to the Customer is made annually if requested by the Customer, or at the time the deposit is refunded. Payment Options: Various bill payment options are available to the Customer. The list of payment options can be found on the Company s web site. Residential Customers who pay their bill through a Company approved payment vendor shall not be assessed any fees for the first payment per monthly billing period. P. S. C. Md. -- G-9 (Suppl. 438) Filed 11/01/ Effective 06/01/2018

8 14 A Electric Retail --Baltimore Gas and Electric 7.8 Payment Options: Various bill payment options are available to the Customer. The list of payment options can be found on the Company s web site. Residential Customers who pay their bill through a Company approved payment vendor shall not be assessed any fees for the first payment per monthly billing period. P. S. C. Md. -- E-6 (Suppl. 610) Filed 11/01/17- Effective 06/01/18