Assembly Panel Advances Stiffer Penalties for Utilities

Tom Johnson | September 25, 2012 | Energy & Environment
Outrage over lengthy power outages sparks bipartisan legislation

The Christie administration and the Legislature appear to be moving in lock step to stiffen penalties for the state’s utilities if they fail to quickly restore power and service after major storms.

With little debate, the Assembly Telecommunications and Utilities Committee unanimously approved a bill with bipartisan backing (A-2760), which largely reflects the key points in a proposal announced by Gov. Chris Christie.

Both lawmakers and the administration are unhappy with the response by the state’s four electric utilities to two powerful storms that pummeled the state last year.

A record 1.9 million customers were left without power after Hurricane Irene made landfall in New Jersey, and another 1 million customers were left without electricity in the wake of a rare October snowstorm.

Some customers did not have service restored for up to 10 days. And many customers — especially those served by Jersey Central Power & Light, the state’s second-largest utility with about 1 million customers — were left in the dark as they received inaccurate information or no information at all about when power would be restored.

The bill, which aims to hold utilities more accountable for service outages, is sponsored by the chairman of the committee, Assemblyman Upendra Chivukula (D-Somerset).

The legislation, similar to a bill being pushed by the Republican administration, would authorize the state Board of Public Utilities to develop and enforce uniform performance benchmarks for service reliability, disruption in service, restoration of service, and emergency communications for utilities in the state.

Since being introduced by Chivukula this spring, however, the bill has been changed to reflect some of the proposals suggested by Christie, including raising the penalties for violations of the performance standards from $100 per day under the current law to $25,000 per day, with a maximum of $2 million for violations related to a particular event.

Chivukula acknowledged that incorporating some of the administration’s recommendations made the bill stronger than the one initially filed this spring. For example, utilities could not pass on the penalties to ratepayers; the money would instead be put in a new fund to finance measures to make the power grid more reliable.

Karen Alexander, president and chief executive officer of the New Jersey Utilities Authority, told the Assembly committee that any penalties collected from companies should be deposited in the new fund, or returned to ratepayers, and not be subject to diversion to the general fund.

The latter point has become an increasingly contentious issue since a surcharge on gas and electric bills has been repeatedly diverted from clean energy programs to help plug holes in the state budget.

The bill would also require utilities to file a public emergency communication plan and to develop a strategy for dealing with flooding problems at their electrical substations, which left tens of thousands without power during the two storms last year.

Some argued the bill does not go far enough. Jeff Tittel, director of the New Jersey Sierra Club, argued there should be compensation to ratepayers and consumers for loss of food, appliances and other damage resulting from power outages.

The committee also released a bill [|A-2132]) authorizing the BPU to develop a website that allows electric and gas customers to compare rates charged by the state’s utilities to prices charged by retail energy suppliers who are offering consumers cheaper deals than those offered by the utilities.

The BPU is already working to develop such a website, according to officials.

With natural gas prices falling, residential energy customers are being offered discounts on electricity and gas — a trend which offers homeowners the possibility of lowering their utility bills for the first time since the state deregulated the energy market 12 years ago.