State Agency Presses Case for Drastic Cuts in JCP&L Rates

Tom Johnson | July 28, 2014 | Energy & Environment
NJ Rate Counsel seeks to resolve 3-year-old petition targeting utility’s excessive profits, lack of investment in infrastructure

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Jersey Central Power & Light should give retroactive refunds to its customers if the state decides to roll back its rates, according to a filing by the state Division of Rate Counsel.

The unusual motion reflects the frustration by some with how long it has taken the state Board of Public Utilities to decide on a three-year-old petition by the Rate Counsel, which argued that JCP&L was earning more than regulators had approved and investing too little in maintaining its infrastructure.

BPU and the Rate Counsel have been mostly in agreement during the lengthy rate case involving the state’s second largest utility, which has more than one million customers.

Both agencies recommended during administrative hearings that rates be dropped by more than $200 million. In its own filing, JCP&L originally sought to increase its revenues by $31 million.

The rate case may not be decided until the end of the year, according to the filing by the Rate Counsel. Its motion asks the BPU to establish provisional rates, effective August 1, that would require refunds from that date if the agency decides the company has been earning too much.

“For too long now, JCP&L’s customers have been waiting for the rate decrease justified by the evidentiary record,’’ said Division of Rate Counsel Director Stefanie Brand. “Rate Counsel believes the facts in the case warrant such extraordinary relief.’’

JCP&L is reviewing the motion and will file its response by Aug. 4, according to Scott Surgeoner, a spokesman for FirstEnergy, the owner of the utility.

Such refund requests are not uncommon in other regulatory jurisdictions, according to Paul Patterson, an energy analyst at Glenrock Associates in New York.

“What’s a bit unusual here is how long this case has taken to be adjudicated. It’s been going on for three years,’’ he noted.

Ev Liebman, associate director of New Jersey AARP, agreed. “Ratepayers are entitled to relief as soon as possible,’’ she said. “It should not take years for it to happen.’’

Rate Counsel’s motion echoed that argument, saying JCP&L customers are still paying rates identified as unreasonable and excessive almost three years ago.

“There is no justifiable reason to compensate utilities for regulatory lag, but not ratepayers, in circumstances such as these in this case,’’ the motion said.

Brand placed much of the blame on JCP&L, which won extensions on filing documents and failed to file a study requested by Rate Counsel.

The huge rate decreases being sought by the two state regulatory agencies are unusual for New Jersey. Typically, the state’s utilities request rate hikes and the BPU shaves those requests, but the agency rarely orders a reduction in rates.

JCP&L has faced withering criticism from customers, local officials and regulators over delays in restoring power to homes and businesses during extreme storm events, such as Hurricane Sandy. Ninety percent of the utility’s customers lost power during Sandy, with some left without lights or power for 12 days or more.

If the BPU approves rate increases in excess of $200 million, customers could see their bills cut by one-third, according to projections.