ORDER NO. 95-1263

ENTERED 11-30-95

THIS IS AN ELECTRONIC COPY

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 779

DISPOSITION: NO CHANGES RECOMMENDED

At its November 21, 1995, public meeting, the Commission reviewed staff’s report and recommendations concerning the 1.5 percent monthly rate utilities may charge customers on overdue accounts and the 6.0 percent annual interest rate utilities must credit to customer deposit accounts.

The Commission accepted staff’s recommendation that the current rates remain in effect through calendar year 1996.

DISCUSSION

Late-Payment Rate: OARs 860-21-126(3) and 860-34-120(2) specify that the Commission "...will determine the late-payment rate annually based on a survey of prevailing market rates for late-payment charges of commercial enterprises and will advise all utilities, by November 15, of each year what rate they may use to determine late-payment charges on overdue customer accounts during the following calendar year..."

Commission staff surveyed two dozen commercial accounts representative of the general range of businesses likely to be patronized by most utility consumers, such as department stores, gasoline dealers, health care professionals, residential repair and cleaning businesses, mortgage and insurance companies. The survey indicated that a 1.5 percent monthly charge is commonly applied by businesses for late payments. Some businesses charge as much as 2.0 percent per month for late payments. Other businesses charge a flat fee for late payments (for example, $10.00) in addition to a monthly finance charge of 1.5 to 1.75 percent per month. Staff’s report concludes that the current 1.5 percent monthly charge allowed for late utility payments is consistent with current practices of most commercial enterprises.

Interest Paid on Customer Deposits: OARs 860-21-210(1) and 860-34-160(1) state that "unless otherwise specified by the Commission, customer deposits shall accrue interest at a rate based upon the effective interest rate for new issues of one-year Treasury bills issued during the last week of October." It further directs the Commission to advise all utilities by November 15 of each year what rate will be paid on customer deposits during the following calendar year.

There were no new issues of one-year Treasury Bills issued during the last week of October 1995. The October 27, 1995, Wall Street Journal reports that a treasury bill maturing on October 17, 1996 (365 days to maturity) had an asking yield of 5.57 percent. As provided in the Commission’s administrative rules, this rate is rounded to six percent.

Utilities do not need to refile tariffs as there is no change in the current customer deposit rate or the late payment rate applied monthly to overdue customer accounts.

ORDER

IT IS ORDERED that:

All customer deposits held during calendar year 1996 shall accrue interest at a six percent (6%) annual rate. Pursuant to OAR 860-21-210 and 860-34-160, interest is to be prorated if the deposit is held less than one year.

 

The monthly late-payment rate which utilities may charge customers on overdue accounts remains at 1.5 percent monthly for calendar year 1996.

 

Made, entered, and effective .

A party may request rehearing or reconsideration of this order within 60 days pursuant to ORS 756.561. A party may appeal this order pursuant to ORS 756.580.