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AG Investigation Requested in PSEG Power Deal

Senate Environment and Energy Committee calls on Attorney General Paula Dow to investigate how PSEG Power averted paying societal benefits charges for most of past decade

The state’s biggest power supplier could face an investigation by the New Jersey Attorney General’s office over a gas contract with an affiliate where it avoided paying millions of dollars in state-mandated energy surcharges for most of the past decade.

Sen. Bob Smith, the powerful chairman of the Senate Environment and Energy Committee, called on Attorney General Paula Dow to investigate how PSEG Power averted paying the societal benefits charge despite being the largest customer of Public Service Electric & Gas. Under the state’s deregulation law, passed in 1999, all gas and electric customers are supposed to pay the surcharge to help pay for a range of clean energy and energy assistance programs for low-income ratepayers.

"We welcome any and all reviews," said PSE&G spokeswoman Karen Johnson. "The fact is that the gas delivery arrangements that apply to PSEG Power are beneficial to PSE&G’s retail gas customers." She added that the treatment of PSEG Power’s generation facilities "was approved by the New Jersey Board of Public Utilities in a number of open, on-the-record proceedings."

The request followed a report in NJ Spotlight (see PSE&G's Largest Gas Customer Dodges Major Utility Fee) that the power supplier had not paid the surcharge (the story was also printed by The Star Ledger). The article also revealed that PSEG Power did not pay two other energy-related fees on the gas it uses from its sister affiliate, PSE&G, the state’s largest gas and electric utility. By one lawyer’s account, the societal benefit charge would have amounted to $47 million last year alone.

The surcharge is assessed to all utility customers, but it has grown dramatically in recent years as New Jersey has stepped up efforts to promote energy efficiency and renewable energy, such as solar and wind power projects. A big chunk of the funds also go to help low-income households pay their utility bills. Last year, the fund amounted to $740 million.

“Millions of hardworking families pay this surcharge every year to support valuable programs that are helping to responsibly transform the way we deliver energy," Smith said. “Yet a company that posted record profits of $1.2 billion last year seems to have avoided these charges altogether. If this law was intentionally subverted, then the matter needs to be rectified."

The failure to pay the surcharge has been assailed by consumer advocates and representatives of other power suppliers, who argue by averting the fee, it forces homeowners and other ratepayers to subsidize PSEG Power. Others in the case argue the deal discriminates against other power suppliers because PSE&G, the utility offers its sister company a discount on the gas to run some of its power plants. The result is competitors plants have run less frequently and they have shelved plans to expand their generation in New Jersey.

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