At Public Hearing, Customers Tell JCP&L to Boost Reliability, Not Rates

Tom Johnson | April 9, 2013 | Energy & Environment
Ratepayers link long outages to utility's reluctance to invest in its infrastructure

Few folks want their bills to go up, but the overriding sentiment of those who spoke yesterday at a public hearing on a request by Jersey Central Power & Light to boost utility rates voiced pleas to have the company improve the reliability of its service.

The hearing in Toms River kicked off what is now likely to be a lengthy process in deciding whether the state’s second-largest utility has been earning more from its customers than regulators have approved. Also on the agenda: what kind of payback can JCP&L expect on the $800 million spent restoring power to customers after various storms in the past few years.

While some customers conceded that some sort of rate increase might be justified, others argued that the utility cannot saddle ratepayers with the entire cost of restoration. They suggested instead that the long outages during Hurricane Sandy and other storms reflected more of a failure on JCP&L’s part to invest in its electric distribution system.

At the hearing, customers talked about experiencing repeated power outages over the past few years; several said they were without electricity for up to 12 days after the superstorm. JCP&L has been heavily criticized by state regulators, legislators, and local officials over its slow response in restoring power to customers in recent years.

“They only attended to those things that broke,’’ said William Hobday of Lakewood, echoing comments of others who spoke during the hearing. “They should have been improving the infrastructure all along.’’

When utility crews from other states came to New Jersey to help restore power, he said he was told that the JCP&L equipment is so antiquated, it was almost impossible to find parts to repair it.

“Don’t ask the ratepayer to dig down too deep because you haven’t done your job,’’ added Noreen Gill, a 72-year-old resident also from Lakewood. Gill blamed management for the widespread and lengthy outages that occurred after Hurricane Sandy last October.

The utility initially filed last November a rate increase proposal of $31.7 million, in a petition to the New Jersey Board of Public Utilities. It was based on an assertion by the state Division of Rate Counsel that JCP&L may have been earning too much in recent years, an allegation dismissed by the utility.

That issue was key to Ken Lindhorst, an Ocean County homeowner. He indicated that the state needs to determine if the utility has been earning too much and if its rate of return at 9.75 percent is too generous — given the cost of capital today. If the state determines the utility is earning too much, it should put the onus of the restoration costs on JCP&L, he said.

In February, the utility amended its filing, seeking to recover $603 million in storm restoration costs. If that request is granted, it would increase the typical residential customers’ bill by 4.8 percent. However, the BPU last week sent a letter to the administrative law court judge hearing the case, asking that the storm restoration costs be separated from the rate-base case proceeding.

Last month, the state agency decided to launch a separate proceeding to probe what expenses the state’s four electric utilities incurred during the recent spate of extreme weather. It is unclear whether the administrative law court judge will accede to the request. The utility claims the issue is more appropriately decided in a rate-base case proceeding, according to Ron Morano, a spokesman for JCP&L.

In addition, JCP&L said that it would develop an accelerated reliability-enhancement program to upgrade its infrastructure, which would kick in on January 1, 2014. The utility would recover the costs of the program, which have not yet been detailed, through a non-bypassable increase in distribution costs.

Only one person, a union representative from the International Brotherhood of Electrical Workers for the local that includes JCP&L employees spoke up in defense of the rate increase.

“Denying JCP&L full cost recovery will be self-defeating to those who want quick restoration,’’ argued Ed Stroup, president of IBEW 1280. Doing so, he predicted, would result in the utility cutting back its investments in its infrastructure and not being as aggressive in hiring out-of-state crews in future emergencies.

There will be additional public hearings on the rate case proposal in Morristown and Freehold. At the conclusion of those, the matter will move before the administrative law court judge in an evidentiary hearing, before ultimately being decided by the BPU.