Jersey Central Power & Light is seeking to boost its transmission rates in a filing before a federal agency, sparking opposition from state regulators, the U.S. Department of Defense, and others.
In a case pending before the Federal Energy Regulatory Commission, both the New Jersey Board of Public Utilities and the New Jersey Rate Counsel in a joint filing called the JCP&L proposal unjust and unreasonable, arguing that it will result in substantial and excessive increases in transmission costs to customers.
The state’s second-largest electric utility described the proposal as having only a minimal rate increase, raising the typical residential bill 2 percent, or $2.10 per month. It is the first time the utility has increased transmission costs since 1998, according to Ron Morano, a spokesman for the utility.
“Two dollars and ten cents is a big increase. It’s $25 a year,’’ said New Jersey Rate Counsel Director Stefanie Brand. “That’s a lot of money.’’
In their filing, opponents claim the proposed new rates would be approximately 150 percent higher than transmission costs in effect in 2016, an assessment disputed by JCP&L.
If the proposal is approved by FERC, it would apply to $170 million in new transmission projects planned in 2017 by JCP&L, including ain Monmouth County. Once the new formula is approved, it also would apply to future projects, according to officials.
Investment in expensive transmission projects has become an increasingly lucrative option for utilities, in part because FERC typically approves a return on equity higher than what companies usually earn on smaller distribution projects, which are subject to review by state regulators.
At the same time, utilities are under pressure from regulators and operators of the regional power grids to invest in an aging transmission system, making it more resilient and capable of accommodating an influx of new and intermittent sources of electricity, such as wind and solar energy.
In the current case pending before FERC, opponents argue the 10.5 percent base return on equity sought by JCP&L is too steep and should be no higher than 8.7 percent. The requested return is inconsistent with market conditions, Brand said.
The critics of the rate increase also took issue with JCP&L’s efforts to recover restoration costs incurred during Hurricane Sandy four years after the storm hit the state. “JCP&L readily admits that, during the last four years, it made no effort to seek commission authorization to defer these costs,’’ the filing said.
JCP&L’s filing with the commission followed New Jersey’s denial of a plan by the utility’s parent, FirstEnergy Corp., to spin off its transmission assets into a new company.