How Residential Retail Energy’s Utility Purchase of Receivables Fuels High Prices

In 2018 when I was researching Maryland’s retail energy market, I was puzzled: How did retail energy suppliers make profits if many of their customers weren’t paying their utility bills?

I had reviewed hundreds of low-income BGE bills with sky-high retail rates, especially for gas. Many accounts on retail energy were either behind or had been terminated. At that time, 21 retail suppliers were crawling through Maryland’s low-income ZIP codes selling over-priced energy door-to-door.

The culprit was Purchase of Receivables, a retail energy regulation approved in 2009 by Maryland’s Public Service Commission.

“POR” as it’s called, was a two-part regulation. Retail supplier charges were conveniently consolidated on regulated utility bills. And regulated utilities were legally required to purchase retail suppliers’ monthly account receivables. Regulated utilities in most Northeast states are responsible for retail supplier billing, collections, termination notices, terminations, account restoration and ultimately uncollectibles. Retail suppliers pay a nominal POR fees, or at least they used to small, to essentially eliminate credit and revenue risk. Suppliers get paid, even if their customers don’t pay. POR went live on Maryland utility bills in 2010

Not an easy concept to explain, our coalition made this YouTube to graphically explain how POR works. About 3 million Northeast retail energy families are billed with POR today. Maryland will have phased out POR by the end of 2025. There are currently no new residential retail energy offers in Maryland.