For JCP&L Customers, Torturous Road to Lower Rates May Be Nearing End

Tom Johnson | March 16, 2015 | Energy & Environment
BPU may decide three-year-old rate case involving state's second-largest utility this week

JCP&L Logo
The more than one million customers of Jersey Central Power & Light may find out this week if state regulators will reduce their electricity bills in a more than three-year-old rate case.

The state Board of Public Utilities is expected to act on an administrative law court judge’s decision to reduce revenues for the state’s second-largest utility by $107 million at its monthly meeting in Trenton on Wednesday.

The much-litigated case involves a petition filed by JCP&L in which the utility initially sought a $37.1 million increase in its rate base. In hearings before an administrative law court judge, the BPU and New Jersey Division of Rate Counsel sought to reduce rates by $170 million or more.

Rate Counsel Stefanie Brand originally initiated the case with a filing to the BPU, arguing JCP&L was earning more than what state regulators had approved. The BPU can modify, reject, or accept the administrative law court’s decision, which was released early in January.

Besides deciding whether customers bills will drop or increase, the case also revolves around the reliability of the utility’s operations, particularly how JCP&L performs in major storms. The BPU, rate counsel, local officials, and its customers frequently criticize JCP&L for the time it takes to restore power during big storms, such as Hurricane Sandy.

The administrative law court judge, however, sided with the company when it came to providing reliable service to its customers. “In almost all respects, Judge (Richard) McGill found the company’s arguments regarding operations and performance to be persuasive,’’ the utility said in a brief responding to the court’s decision.

JCP&L also rejected arguments made by rate counsel that the utility’s customers “have suffered from poor reliability too long and should be provided a relief immediately’’ in its brief. It wants the BPU to establish a JCP&L-specific improvement plan to deal with those problems. In its reply brief, the utility called the office’s arguments “based on nothing more than circular reasoning.’’

Between 2004 and 2011, the number of major events — outages affecting more than 10,000 customers for the utility — rose from four to 62, according to rate counsel’s brief.

Last week, JCP&L said it would spend $24 million in 2015 to step up its tree-trimming efforts in its franchise territory — a major source of outages in the mostly suburban area covered by the utility.

Other aspects of the case under review involve much more arcane aspects of utility regulation, including how JCP&L depreciates its assets and what its return on equity should be. Both issues, depending on how they are decided, could have a big impact on the company’s bottom line.

The length of time it has taken for this case to be decided has frustrated many, including BPU President Richard Mroz, rate counsel, and other interveners in the case such as the New Jersey chapter of AARP.

It is unclear whether the BPU will also act on a petition by rate counsel, if rates are rolled back, the adjustments would be reflected in customers’ bills dating back to last August.