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Conectiv may have broken state rules New method violates tariff, PSC suspects By BILL YINGLING Staff reporter 01/21/2000
Delaware regulators said Thursday they believe Conectiv broke state rules by charging customers too much for their electricity.
Staffers at the Delaware Public Service Commission said the state's largest utility used a new mathematical formula to compute the bills, mailed during the past month. That calculation, regulators said, was programmed into the company's new computer billing system and increased many customers' energy bills.
"They have some very apparent mistakes," said Bruce Burcat, executive director of the PSC. "We just don't think that they're authorized to apply the rates in the manner that they applied them."
Conectiv executives said the rates are correct and customers are not being overcharged.
"We will address the commission's concerns through the normal channels," said Conectiv spokesman Ted Caddell.
PSC staffers are trying to resolve the dispute through negotiations with the company.
If the talks fail, Conectiv could be brought in front of the five-member commission.
That panel would decide whether the company has violated its state tariff, the set of rules and rates under which Conectiv operates.
The dispute centers on differing approaches to setting utility rates.
One approach benefits customers. Another benefits the company.
The PSC's disclosure is the latest development regarding the utility's attempt to convert to a new computer billing system.
Conectiv began using the system in December to accommodate Delaware's move toward a competitive electricity market.
But in recent weeks, more than 12,000 customers have called Conectiv about their new bills, many complaining they were overcharged.
Callers have jammed the company's customer service lines, which left many ratepayers waiting on hold for answers.
Conectiv executives said earlier this week the utility mailed as many as 8,000 erroneous bills in Delaware. They attributed most of the flaws to computer programming errors.
State regulators, who also have fielded customer complaints, said they are in the early stages of their inquiry.
"I can't say that mathematically they're out in left field. But we're looking very specifically at what they can do under the tariff," Burcat said. "It appears to [the] staff that the way they calculated this is contrary to the tariff and, in the several examples we've seen, contrary to the way they've done it in the past."
Conectiv must read meters and send bills to customers on a 30-day cycle. The company is permitted a six-day window to bill customers at rates fixed by the commission.
If the billing cycle falls below 27 days or exceeds 33 days, Conectiv must adjust the bills to reflect the equivalent of a 30-day rate.
The goal is to level out customers' payment schedules.
Many customers reported that their December billing cycles were extended -- some as many as 10 days or more.
Conectiv said it needed the adjustment to convert to its new computer system. Executives expect the billing cycle to return to normal beginning Jan. 26.
Residential customers pay two rates for electricity, a higher one for the first 500 kilowatt hours they use, and a lower one for everything above 500 kilowatts.
Under this method, customers get a discount for buying in greater volume.
To adjust bills, however, Conectiv used a formula that increased the number of kilowatt hours for which customers paid a higher rate, PSC officials said.
A longer cycle means higher bills for many customers. But Burcat said customers should make up for that in the following month when they'll be charged for a shorter billing cycle.
Burcat said the problem is that Conectiv's adjustment raises the threshold at which customers become eligible for the lower rate.
Gary Cohen, director of revenue management for Conectiv, described the calculation in an interview earlier this week and said it gives customers a slightly lower rate.
But Burcat said some customers may never reach a lower rate. And they would end up paying a higher rate for their entire bill, even though they used more than 500 kilowatts.
"They're not giving the customers any break, believe me," Burcat said.
He said the company should have either made no adjustments or charged them the equivalent of 30 days of electricity use.
Conectiv charges separate rates for two classes of residential electricity customers, those who heat their homes with electricity and those who don't.
Heating customers, who use more energy this time of year, are charged about 6 cents per kilowatt for the first 500 kilowatt hours. They pay about half that for the rest of their electricity use.
Non-heating customers are charged about 5 cents per kilowatt for the first 500 kilowatts and just over 4 cents for the rest, according to the PSC.
Burcat said heating customers are hurt the most by Conectiv's formula.
But in a written explanation of the billing system problems filed with the commission Jan. 14, J. Mack Wathen, Conectiv's director of finance and regulatory affairs, said the company has not changed its methods and that customers are not being overcharged.
The company reiterated its position Thursday. "The proration is correct and according to the PSC-approved tariff," said Conectiv spokesman Caddell.
-- Martin Thompson (email@example.com), January 21, 2000