Last week, the Board requested comments on the electric utilities' proposal to phase-out the retail margin currently applicable to BGE-FP and BGS-CIEP customers with peak usage of over 750kw. The issue is expected to considered at the Board's December 1, 2009, Agenda meeting.

NEM submitted comments opposing the reduction, phase-out or elimination of the Retail Margin. NEM noted that in the utilities’ Joint Filing of June 30, 2009, they suggested that the Retail Margin could be eliminated because, in their view, its “incubating purpose” had been satisfied because a significant percentage of BGS-CIEP load has migrated to competitive suppliers. NEM disagreed with the utilities assessment of the purpose and effect of the Retail Margin. The Retail Margin was intended to be a proxy for marketing and administrative expenses incurred by competitive marketers to serve migrating customers. These, by their very nature, are on-going costs and should continue to be included in Basic Generation Service (BGS) pricing. In the neighboring jurisdiction of New York, a Merchant Function Charge works similarly to provide consumers with a basis to compare utility default service and competitive market offerings. Moreover, NEM also disagreed with the utilities that the market has reached a point of maturation that would justify the discontinuation of the Retail Margin. The full text of NEM's Comments is available on the NEM Website.

The Commission approved a settlement pertaining to a POR program and Merchant Function Charge for PPL. The settlement is limited to 2010. The POR discount rate for residential customers under the program will be 1.37% comprised of an uncollectible accounts expense factor of 1.32% and a POR administrative factor of .05%. Participating suppliers must use consolidated billing. Suppliers participating in the residential POR Program will agree not to reject for enrollment a new residential customer covered by the residential POR Program based on credit-related issues and agree not to require a deposit for providing service.

The discount rate for small C&I customers under the POR program will be 0.17% comprised of an uncollectible accounts expense factor of 0.12% and a POR administrative factor of 0.05%. A supplier choosing PPL’s consolidated billing option for all or part of its small C&I accounts will be required to sell its accounts receivables to PPL Electric for those small C&I customers for whom PPL issues a consolidated bill. An EGS may continue to issue its own bills for all or a part of its small C&I customers, but it will not be eligible to participate in the POR Program for those small C&I customers that receive dual billing.

PPL will unbundle its generation related uncollectible accounts expense from distribution rates to be collected through an MFC charge effective January 1, 2010. The MFC charge for residential customers will be 1.32%, and the MFC charge for small C&I customers will be 0.12%.

The Commission also determined that, “PPL may commence service termination actions with respect to any shopping customer whose account has been purchased by PPL, if PPL is not paid by the shopping customer, in the same manner as is permissible under current Commission regulations.”

The full text of the Order is available from NEM headquarters.