Telephone Fax

Transcription

1 Kimberly A. Curry Assistant General Counsel BGE Legal Department 2 Center Plaza, 12 th Floor 110 West Fayette Street Baltimore, MD Telephone Fax kimberly.a.curry@bge.com Via Electronic Filing David J. Collins, Executive Secretary Public Service Commission of Maryland William Donald Schaefer Tower 6 St. Paul Street, 16 th Floor Baltimore, Maryland Re: Supplement No. 435 to P.S.C. Md. G-9 Compliance Filing for Annual Re-calculation of Discount Rate for Baltimore Gas and Electric Company s Gas Purchase of Receivables Program and Request that the Commission Resolve the Issue of Negative Discount Rates Dear Mr. Collins: Baltimore Gas and Electric Company (BGE) hereby files this revision to Schedule 1 of its Gas Supplier Tariff (GST) to update the discount rates for the purchase of supplier receivables (POR). Schedule 1 provides that BGE will re-calculate the discount rate annually and incorrectly states that the updated rates must be filed by April 30. The purpose of the discount rate is to enable BGE to recover its prudently incurred costs arising from the purchase of supplier receivables as part of BGE s Gas Choice Programs. For the seventh straight year, the calculation results in a negative discount rate. Specifically, there are negative rates for both of the rate classes covered by Schedule 1. BGE respectfully requests that the Commission take action to resolve the issue of negative rates. BGE submits that resolution should be the removal of late payment charges (LPCs) from the discount rate calculation. 1 Negative rates occurred in 2011, 2012, 2013, 2014, 2015, and 2016 as well. In 2011 and 2012, the Commission directed BGE to set the negative rates to zero. In 2012, the Commission 1 Alternatively, BGE renews its request in its 2015 discount rate update that the Commission direct that the Supplier Coordination working group (SCWG) reconvene to address this issue in the near-term, and that the Commission set a date certain by which the working group must provide a report to the Commission. In 2012, the Commission directed the SCWG to convene to consider the inclusion of late payment charges in the discount rate or other options that will minimize the possibility of negative discount rates occurring in the future. See Commission s Letter Order (June 21, 2012). BGE does not believe setting rates to zero indefinitely into the future is an adequate manner to address the issue on a long-term basis. The SCWG has not submitted a report to the Commission and there has not been a working group meeting on this issue for over three years, hence a defined date by which to provide a report to the Commission is needed.

2 David J. Collins, Executive Secretary Page 2 approved BGE s tariff revision that, if the discount rate calculation results in a negative rate, BGE would set the discount rate to 0.000% and the associated costs will be included in the future year s reconciliation of costs and revenues. In the 2013, 2014, 2015, and 2016 updates, BGE set the negative rates to zero in accordance with that tariff provision. BGE again sets the negative rates to zero for the 2017 discount rates. In past filings, BGE has argued that the occurrence of negative discount rates can be minimized or eliminated by the removal of LPCs from the discount rate calculation. BGE objected to the inclusion of LPCs on four bases. First, improper subsidization results from the inclusion of LPCs. If LPCs were not included in the discount rate and instead credited to BGE s base rate cost of service, lower delivery rates would necessarily result. Second, since BGE considers LPCs as an offset to credit and collections expense, transferring late payment revenues to suppliers compensates suppliers for a credit and collection expense they do not incur under the POR construct. Third, the policy to include LPCs in the discount rate is contrary to the policy evidenced in the Commission s October 2009 utility orders adopting the discount rate method of recovery. Those orders stated the Commission is not willing to impose the cost of implementing customer choice on ratepayers, especially in a manner that absolves the suppliers of all costs and risks. This statement reflects a Commission policy to minimize adverse impacts to ratepayers in POR implementation. Yet, as described above, distribution customers are adversely impacted in the form of higher distribution rates. Finally, LPCs in the POR discount rate is inconsistent with the language in COMAR C that provides [i]f the utility chooses the option of purchasing supplier receivables, supplier receivables shall be purchased with full and timely cost recovery for the utility under terms and conditions approved by the Commission. BGE is responsible for taking collection action on purchased supplier receivables and utility receivables. The current POR discount computation does not allow the utilities to receive full cost recovery from the suppliers for this collection activity. I. Discount Rate Computed with LPCs in Accordance with the Tariff, Re-set to Zero BGE s discount rate for its Gas Choice Program is designed to recover uncollectible expenses, and program development costs. Any over- or under- collections are reconciled annually through a reconciliation mechanism. In this filing, BGE has developed a discount rate for the 12-month period beginning in June 2017 that incorporates BGE s projections for these components, as well as reconciliation for the previous 12 months. Below are the gas discount rates, by customer class: Gas Discount Rate Components Residential General Service Uncollectible Expense % % Late Payments % % Program Development % % Reconciliation Component % % Discount Rate % %

3

4 Attachment 1 BGE Gas Purchase Of Receivables Discount Rate Development of Discount Rate to Charge June 2017 through May 2018

5 BALTIMORE GAS AND ELECTRIC GAS PURCHASE OF RECEIVABLES DISCOUNT RATE - DEVELOPMENT OF DISCOUNT RATE TO CHARGE- JUNE 2017 THROUGH MAY 2018 GAS: A B C D E F I=A+SUM(D - F)) Reconciliation Uncollectibles Late Payment Revs. Uncollectibles + Cash Working Program Grand Component Component (LPC) Component LPC Component Capital Development Total Charge / (Refund) Charge / (Refund) Charge / (Refund) Charge / (Refund) Charge / (Refund) Charge / (Refund) Charge / (Refund) Customers Customers Customers Customers Customers Customers Customers 6/17-5/18 6/17-5/18 6/17-5/18 6/17-5/18 6/17-5/18 6/17-5/18 6/17-5/18 Residential- $'s ($773,025) $926,678 ($348,647) $578,030 $0 $128,021 ($66,974) Residential- Purchased AR, 6/17-5/18 $42,723,190 $42,723,190 $42,723,190 $42,723,190 $42,723,190 $42,723,190 $42,723,190 Residential- Discount Rate % % % % % % % General Service- $'s ($500,361) $48,020 ($78,108) ($30,088) $0 $207,202 ($323,247) General Service- Purchased AR, 6/17-5/18 $48,178,164 $48,178,164 $48,178,164 $48,178,164 $48,178,164 $48,178,164 $48,178,164 General Service- Discount Rate % % % % % % %

6 Appendix A BALTIMORE GAS AND ELECTRIC FILING OF GAS PURCHASE OF RECEIVABLES DISCOUNT RATE - ACTUALS FOR THE PERIOD MARCH FEBRUARY 2017 Residential Beg. Imbalance Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Total Discount Rate (revenues) $110,580 $60,573 $38,592 $28,352 $23,715 $22,356 $21,102 $26,626 $53,459 $125,313 $195,111 $167,156 $872,934 Late Payment 72,437 56,550 43,883 28,617 12,636 12,378 6,242 5,400 7,093 12,618 34,872 55,922 $348,647 Less: Risk Component Total $183,016 $117,123 $82,475 $56,969 $36,350 $34,734 $27,344 $32,026 $60,552 $137,931 $229,983 $223,079 $1,221,582 Cash Working Capital - Uncollectible Expense 117, ,039 60,483 44,923 61,384 25,873 65, , , ,977 70,204 19, ,678 Program Development Amortization Total $117,846 $139,039 $60,483 $44,923 $61,384 $25,873 $65,425 $102,800 $111,490 $107,977 $70,204 $19,233 $926,678 Interest Owed (Earned) ,045 Over-Collection / (Under-Collection) $354,861 $65,248 ($21,843) $22,069 $12,126 ($24,959) $8,938 ($38,011) ($70,717) ($50,891) $30,006 $159,925 $204,059 $650,810 General Services Beg. Imbalance Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Total Discount Rate (revenues) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Late Payment 15,075 8,798 4,000 6,988 3,241 3,333 2,870 3,024 3,690 5,367 10,742 10,980 $78,108 Less: Risk Component Total $15,075 $8,798 $4,000 $6,988 $3,241 $3,333 $2,870 $3,024 $3,690 $5,367 $10,742 $10,980 $78,108 Cash Working Capital - Uncollectible Expense 5,427 8, ,796 6,518 15,245 1,789 6,503 5,241 2,250 (5,003) (3,926) 48,020 Program Development Amortization Total $5,427 $8,525 $656 $4,796 $6,518 $15,245 $1,789 $6,503 $5,241 $2,250 ($5,003) ($3,926) $48,020 0 Interest Owed (Earned) ,155 Over-Collection / (Under-Collection) $452,427 $9,734 $358 $3,430 $2,278 ($3,191) ($11,829) $1,164 ($3,396) ($1,469) $3,200 $15,899 $15,064 $483,670

7 Appendix B BALTIMORE GAS AND ELECTRIC FILING OF GAS PURCHASE OF RECEIVABLES DISCOUNT RATE PROJECTIONS FOR THE PERIOD MARCH MAY 2017 GAS PURCHASE OF RECEIVABLES- MARCH 2016 THROUGH MAY PROJECTED: Residential 2/2017 Imbalance Mar-17 Apr-17 May-17 Total Discount Rate (revenues) 104,856 50,369 24, ,746 Late Payment 72,437 56,550 43, ,871 Less: Risk Component Total $177,293 $106,919 $68,405 $352,617 Cash Working Capital Uncollectible Expense 77,223 77,223 77, ,669 Program Development Amortization Total $77,223 $77,223 $77,223 $231,669 Interest Owed (Earned) ,267 Over-Collection / (Under-Collection) $650,810 $100,483 $30,126 ($8,393) $773,025 General Services 2/2017 Imbalance Mar-17 Apr-17 May-17 Total Discount Rate (revenues) Late Payment 15,075 8,798 4,000 27,874 Less: Risk Component Total $15,075 $8,798 $4,000 $27,874 Cash Working Capital Uncollectible Expense 4,002 4,002 4,002 12,005 Program Development Amortization Total $4,002 $4,002 $4,002 $12,005 Interest Owed (Earned) Over-Collection / (Under-Collection) $483,670 $11,346 $5,071 $274 $500,361

8 Appendix C BALTIMORE GAS AND ELECTRIC FILING OF GAS PURCHASE OF RECEIVABLES DISCOUNT RATE - PROJECTED FOR THE PERIOD JUNE MAY 2018 GAS PURCHASE OF RECEIVABLES- JUNE 2017 THROUGH MAY PROJECTED: Residential Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Total Discount Rate (revenues) Late Payment 28,617 12,636 12,378 6,242 5,400 7,093 12,618 34,872 55,922 72,437 56,550 43, ,647 Total $28,617 $12,636 $12,378 $6,242 $5,400 $7,093 $12,618 $34,872 $55,922 $72,437 $56,550 $43,883 $348,647 Cash Working Capital Uncollectible Expense 77,223 77,223 77,223 77,223 77,223 77,223 77,223 77,223 77,223 77,223 77,223 77, ,678 Program Development Amortization 10,668 10,668 10,668 10,668 10,668 10,668 10,668 10,668 10,668 10,668 10,668 10, ,021 Total $87,892 $87,892 $87,892 $87,892 $87,892 $87,892 $87,892 $87,892 $87,892 $87,892 $87,892 $87,892 $1,054,698 Interest Owed (Earned) Over-Collection / (Under-Collection) ($59,275) ($75,256) ($75,513) ($81,650) ($82,492) ($80,799) ($75,274) ($53,020) ($31,969) ($15,455) ($31,341) ($44,008) ($706,051) General Services Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Total Discount Rate (revenues) Late Payment 6,988 3,241 3,333 2,870 3,024 3,690 5,367 10,742 10,980 15,075 8,798 4,000 78,108 Total $6,988 $3,241 $3,333 $2,870 $3,024 $3,690 $5,367 $10,742 $10,980 $15,075 $8,798 $4,000 $78,108 Cash Working Capital Uncollectible Expense 4,002 4,002 4,002 4,002 4,002 4,002 4,002 4,002 4,002 4,002 4,002 4,002 48,020 Program Development Amortization 17,267 17,267 17,267 17,267 17,267 17,267 17,267 17,267 17,267 17,267 17,267 17, ,202 Total $21,269 $21,269 $21,269 $21,269 $21,269 $21,269 $21,269 $21,269 $21,269 $21,269 $21,269 $21,269 $255,222 Interest Owed (Earned) Over-Collection / (Under-Collection) ($14,280) ($18,028) ($17,936) ($18,399) ($18,245) ($17,579) ($15,901) ($10,526) ($10,288) ($6,193) ($12,471) ($17,268) ($177,114)

9 Attachment 2 Clean and Redline Tariff Pages

10 Baltimore Gas and Electric Company Gas Supplier Tariff 29 The Discount Rate is as follows: Rate Schedule Discount Rate Residential Schedule D % General Service Schedule C % BGE will file the calculation of the Discount Rate with the PSC by April 30 of each year with the revised percents to be effective with the purchase of receivables beginning in June pending Commission approval. P.S.C Md. G-9 (Suppl.435) Filed 05/01/17 - Effective 06/01/17

11 Baltimore Gas and Electric Company Gas Supplier Tariff 29 The Discount Rate is as follows: Rate Schedule Discount Rate Residential Schedule D % General Service Schedule C % BGE will file the calculation of the Discount Rate with the PSC by April 30 of each year with the revised percents to be effective with the purchase of receivables beginning in June pending Commission approval. P.S.C Md. G-9 (Suppl ) Filed 04/27/16 05/01/17 - Effective 06/01/1606/01/17