PSC debates large increases to residential purchase-of-receivables discounts as program winds down

Commission staff told the Public Service Commission on June 4 that utilities have submitted substantially higher residential purchase‑of‑receivables (POR) discount rates as the state phases out residential POR under Senate Bill 1. Evan Thomas, on behalf of staff, said, “no new or renewed residential retail choice customers may enroll under POR after 12/31/2024, and existing residential POR contracts may no longer use POR after 12/31/2025.”

The filings reflect three related pressures: forecasted uncollectible costs through the end of 2026, the utilities’ current reconciliation balances, and sharply lower forecasted POR sales as residential customers drop from retail supply. Thomas told commissioners Washington Gas Light revised its proposed residential discount rate to 6.4698% after staff questioned its forecast methodology; Washington Gas’s originally filed rate was 4.3782%.

Staff said Delmarva Power & Light revised its residential POR discount to 6.1101% with an effective date of June 6, 2025, after staff and the company refined the forecast for falling residential shopping. For Pepco (Potomac Electric Power Company) staff recorded initially proposed rates in the 8% range and noted later internal revisions that produced still-higher figures; staff repeatedly voiced concern that very high POR rates could prompt suppliers to leave the retail market, which would make cost recovery harder.

Staff recommended the commission accept the utilities’ filings for docketing and accept the proposed reconciliation processes (including utility filings to update residential POR balances in early 2026 and final reconciliations in 2027). Staff also recommended deferring a decision on Washington Gas Light’s proposal to recover any remaining unrecovered residential POR balance through the purchase gas (SOS) charge. The Office of People’s Counsel (OPC) opposed staff’s proposed tariff language that would allocate any commission‑approved over/under‑recoveries to suppliers by their share of 2025 residential POR sales; OPC urged the commission to defer the over/under‑recovery policy question and solicit notice and comment on proposals that would instead direct over‑recoveries to other programs in limited circumstances.

Retail suppliers told the commission the rate increases are unusually large and that many suppliers have already stopped making new offers in Maryland. Brian Green for the Retail Energy Suppliers Association said the magnitude of the proposed increases — in some filings nearly double current discount rates — will “increase the level of drops” of customers from retail contracts because most current retail supply contracts are fixed‑price and cannot be renegotiated.

Commissioners pressed staff on why rates filed in consecutive weeks vary so much. Staff answered that the largest drivers are the utilities’ reconciliation balance at the time of filing and the extension of the forecast period for uncollectible costs (staff said the filings effectively bring 18 months of uncollectible costs into the calculation because some uncollectibles will materialize in 2026). Staff also said they declined to set the mathematically “minimizing” POR rate that would produce the smallest reconciliation because that higher rate would likely accelerate supplier exits and could increase the ultimate final reconciliation balance.

Outcome/direction: The commission took the POR filings under advisement for further consideration, asking staff and commissioners to seek ways to reduce the proposed increases while recognizing the need to update rates ahead of the end of POR. Chair Hoover said the commission would solicit additional input and await Commissioner Richard’s input from a concurrent FERC assignment before acting on items three through five.

Why this matters: The POR discount rate determines how much utilities deduct from what they pay retail suppliers for customer receivables; a higher discount rate reduces supplier receipts and can accelerate supplier exits, which in turn can increase the net uncollected balance that ultimately must be reconciled to someone (suppliers or ratepayers). The commission’s choice will shape the final 2026–27 reconciliation and influence supplier participation in Maryland’s retail energy market.

Votes/official action: Commissioners did not adopt a final rate at the June 4 meeting. The commission accepted certain filings for docketing and deferred a policy decision on recovery via the SOS charge; commissioners took items 3–5 under advisement for prompt follow‑up.

Sources: PSC administrative meeting transcript, June 4, 2025; staff presentations and utility supplemental filings.