Maine’s utility regulators won’t allow Central Maine Power Co. to shift the cost for unbilled electricity to ratepayers if the company didn’t act prudently, a top Public Utilities Commission official said Monday.
The Portland Press Herald/Maine Sunday Telegram reported that about 3,400 new CMP customers did not get bills for months because the company was short-handed and unable to keep up with the task of setting up new accounts. The company has said it hasn’t kept a tally of the uncollected bills and may shift the lost revenue to other customers under a revenue stabilization procedure in place with the Maine Public Utilities Commission.
PUC officials on Monday asserted that the commission, not CMP, will make that call, and the commission could decide that the company’s shareholders, not Maine ratepayers, should pick up the tab.
“We haven’t approved anything,” said Harry Lanphear, the commission’s administrative director. “If we find the utility’s practices in this particular incident to be not prudent, we will protect the ratepayers.”
The revenue stabilization procedure allows the company to charge a higher rate if revenues fall below an agreed-upon benchmark. It also allows for customer rates to be cut if the company’s revenues are higher than expected, which is currently the case. Because of higher-than-expected revenues, CMP reduced customer rates to return $11 million to ratepayers from July 2016 through next June, company spokeswoman Catherine Hartnett said.
Hartnett said CMP may seek to shift the cost of the unbilled electricity to ratepayers under that plan if those expenses cause the company to miss this year’s revenue target, but she said the company will abide by whatever decision the commission makes on the matter.
On Monday, the company and the commission held a technical conference in Augusta to begin the process of setting the company’s rates for July 1, 2019 through June 30, 2020. Commission staff questioned company officials about accounts receivable and collections efforts, suggesting that the issue of unbilled electricity will be a focus of the rate-setting process.
Lanphear said the commission most likely will handle the cost of the unbilled electricity in the rate-setting process, although it could deal with it after reviewing a separate management audit. The company is undergoing an audit following complaints from customers about high bills received after it switched to a new billing system in October 2017. The management report audit, conducted by an outside firm, is expected to be turned over to the commission this month.
The company said because it was slow in setting up the new accounts, it decided to bill its new customers only for the 30-day period after the account was established. The total amount of bills that the company decided not to send to customers hasn’t been disclosed, although the amount of electricity used should have been captured through the company’s “smart meters.”
In one example obtained by the Portland Press Herald/Maine Sunday Telegram, the company set up service for a construction company working on the new Portland headquarters for Wex, a payment processing firm. The construction firm used more than 43,000 kilowatt-hours of electricity after the service was set up in April, but the company only billed it for electricity used in September – 385 kilowatt-hours at $955. The full cost of the electricity since April should have been about $6,400, but CMP chose not to bill the contractor because it felt it was responsible for the delay in billing.
Because CMP is a regulated utility, its return to shareholders cannot exceed a certain threshold. The company and the commission agree each year to a target revenue figure. If revenues come in below the target, the company’s rates are increased to make up the difference. If the revenue target is exceeded, rates are cut to return some money to ratepayers.
David Littel, a former PUC commissioner, said the revenue arrangement is common in other states, as well as Maine. It was put in place in recognition of the business uncertainty caused by electric efficiency efforts. CMP wanted some financial protection in case efficiency efforts resulted in a big drop in consumption – and its revenues – he said. In exchange, rates can be reduced in the face of higher-than-anticipated revenues to protect customers.
He said that the goal of the benchmark and any rate adjustments is stability.
“There ideally shouldn’t be a lot of play,” he said.
Hartnett said the revenue adjustments allow CMP some financial stability while promoting energy efficiency.
“That allows us to align our business structure with policy regarding efficiency and conservation,” she said.
Hartnett said the company is still working on its financial analysis as part of the rate hearings and hasn’t determined whether the unbilled electricity will lead to rate adjustments.
“We need to evaluate if there are any impacts on the customer” before determining if the 2019-20 rate needs to be adjusted because of the billing issue, she said.