State Agency to Investigate Improper Billing at PSE&G

Tom Johnson | January 19, 2012 | Energy & Environment
Whistleblowers' allegations, if true, could lead to criminal charges against NJ's largest utility.

The state Board of Public Utilities yesterday decided to launch an investigation into allegations that Public Service Electric & Gas improperly billed customers by shifting some of its expenses to clean energy and energy efficiency programs and then recovering those costs from ratepayers.

The agency had been urged to look into the allegations, the subject of a whistleblowers’ suit filed by three former PSE&G employees last month in Superior Court in Essex County, by the Division of Rate Counsel.

The BPU quickly approved a recommendation by staff to investigate the issue, with its new president, Robert Hanna, saying the allegations, if true, could lead to criminal charges.

“We should begin our inquiry and see where the facts lead us,’’ said Hanna, a former federal prosecutor who chaired his first regularly scheduled monthly agenda meeting in the Statehouse in Trenton.

The implications of the probe could have a significant impact on the future of New Jersey’s clean energy programs. The agency’s staff in the Office of Clean Energy earlier this year suggested the state expand its utility-sponsored solar loan programs. PSE&G’s Solar 4 All program is by far the largest of the bunch, amounting to $515 million in investments.

The allegations stem from charges by three former employees that they lost their jobs with the state’s largest utility after they refused to go along with efforts by PSE&G to defraud ratepayers in connection with the company’s Solar 4 All program, the Energy Efficiency Economic Stimulus, and Infrastructure Economic Stimulus programs.

One former employee, Stuart Stott, alleged that when a Linden solar farm came in under budget, he was pressured by his superiors to bill the cost of a $300,000 billboard, completely unrelated to the Solar 4 All program, to the project. The utility stood to gain from the investment since it earns a 10 percent profit on all costs related to the Solar 4 All program, a more than $500 million clean energy initiative approved by the agency.

“PSE&G would not only get a free billboard advertising itself, it would earn a profit as a result of its construction, all at the expense of PSE&G customers,’’ according to the employees’ complaint filed in Essex County.

In another instance, a $325,000 overpayment the utility made to the University of Medicine and Dentistry of New Jersey was passed off as an investment in the Energy Efficiency Economic Stimulus program and recovered from ratepayers, according to the complaint.

The complaint also alleged that the utility wrongly passed along the cost of $1.5 million in repairs and upgrades it made to PSE&G buildings throughout 2010-2011 to the Solar 4 All program.

“PSE&G obtained free repairs to its buildings, plus a profit, by passing those costs of the improvement on to consumers who had no choice to pay,’’ according to the complaint.

The complaint also alleges that costs associated with the replacement of 120,000 outdoor lights were recovered twice by the utility.

In a letter urging the board to initiate an investigation, Division of Rate Counsel Stefanie Brand said the allegations, if true, are serious, suggesting “they would appear to suggest a pattern of improper charges to programs for which the company receives ‘pass through’ rate recovery.’’

PSE&G spokeswoman Karen Johnson said these allegations are entirely without merit.

Adam Kleinfeldt, an attorney representing the three employees, said he could not comment on the board’s action other than to say his clients are pursuing their claims.