Negligent Tree Trimming Linked to Soaring Outages at JCP&L, Consultant Claims

Tom Johnson | June 17, 2013 | Energy & Environment
Public utility fails to keep customers' lights on for nearly two months all told, in 2011

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It’s been a trying 10 years for customers of Jersey Central Power & Light.

How trying?

In 2004, there were just four major events — utility jargon for when at least 10 percent of its customers lose power. By 2011, that number soared to 62, meaning that for some part of one day in six, at least 100,000 of JCP&L’s more than 1 million customers were without electricity.

In testimony filed Friday by experts retained by the New Jersey Division of Rate Counsel, a consultant said the utility’s tree-trimming practices, including deferring cyclical trimming past scheduled years, left JCP&L vulnerable to greatly increased tree-related outages.

In retrospect, 2011 was a highly unusual year. Hurricane Irene pounded most of New Jersey in late summer, followed by a rare October snowstorm at a time when most trees still retained their foliage, toppling tens of thousands of them.

Then again, state officials and legislators have repeatedly said in the months following an even more devastating storm, Hurricane Sandy, that this might be the new normal. Since 2004, major events for JCP&L have, for the most part, been steadily rising. In 2008, there were 40 such days, which dipped to 22, the next year, but jumped again in 2010 to 56.

The numbers may not improve when the tally for 2012 is completed. During Hurricane Sandy, there were 1.3 million service interruptions, with some customers losing power on multiple occasions. Some were without electricity for up to 12 days.

According to Peter Lanzalotta, a consultant retained by the Rate Counsel, 57 percent of the 451,191 outages in the fall 2011 snowstorm were attributed to tree-related problems. On average, customers were left without power for two days.

“Deferring tree trimming, for whatever reason, tends to make the distribution system more vulnerable to major weather events,’’ Lanzalotta said in his testimony before an administrative law court judge in a rate case for the utility.

Ron Morano, a spokesman for JCP&L, declined to comment on the consultants’ conclusions, saying the company had not yet had a chance to review them.

The utility, which has been repeatedly criticized by regulatory officials for its lack of reliability, last November filed a rate case increase petition to the New Jersey Board of Public Utilities. The filing occurred after the Rate Counsel asserted JCP&L may have been earning too much in recent years, an allegation dismissed by the utility.

In recent years, JCP&L has stepped up the money it devotes to tree-trimming, increasing it from $3 million in 2009 to$10.9 million in 2012, although it is less than the $12.1 million the utility spent in 2007, according to the consultant.

In addition, JCP&L said it would develop an accelerated reliability-enhancement program to upgrade its infrastructure, which would kick in on January 1, 2014.

But Lanzalotta, a principal in Lanzalotta & Associates LLC, based in Hilton Head, S.C., argued that the state’s current electric service reliability standards are not helping to maintain and improve stability. His main beef with the standards is that the state’s minimum reliability performance regulations exclude major events, such as Sandy.

Referring to 2011 major events, “This represents too big a piece of the year during which to ignore the electric system’s reliability performance, and then claim reliability is fine,’’ he said. In its own filing, JCP&L touted its reliability performance as steadily improving, “if we ignore major storms,’’ the consultant said. ‘’However, its reliability performance, including major storms, has not been steadily improving,’’ he argued. Outside of major storms, however, the utility’s reliability has been good, the consultant said.

In other testimony filed by consultants retained by the Rate Counsel, one expert suggested the company’s current rate of return on equity, a measure reflecting the company’s profitability, of 9.75 percent should be lowered to 9.25 percent because of the low cost of capital today. It is nearly two percentage points below what the company is seeking in its rate case petition.

“Based on my review of the testimony, I find that JCP&L is financially sound and a low risk electric distribution utility presently operating in a very low capital cost environment,’’ said Matthew Kahal, an independent consultant based in Columbia, MD.