JCP&L May Be On Collision Course with State Regulators Again

Tom Johnson | April 20, 2015 | Energy & Environment
BPU staff tasked with examining utility’s operations, finances, customer service -- and possibly the books

Credit: Governor's Office/Tim Larsen
Richard Mroz, president of the state's Board of Public Utilities
Jersey Central Power & Light may once again be in the crosshairs of state regulators.

The state Board of Public Utilities has asked its staff to look into key areas regarding how the second-biggest electric utility in New Jersey conducts its operations, finances, and customer service. As part of this investigation, it may also audit of the company.

The directive aims to have the staff report back to the five commissioners at the agency’s next regular board meeting in May. It is the latest effort by the BPU to determine how well JCP&L, a subsidiary of FirstEnergy Corp. based in Akron, is providing safe, reliable, and affordable service to its more than 1 million customers.

The board, ratepayers, and local officials often criticize the utility for extensive power outages, which have left some customers without electricity for up to two weeks. The Division of Rate Counsel also accused the utility of earning more than regulators approved, leading to a rate case earlier this year that reduced JCP&L’s revenues by $115 million.

That decrease will lead to a modest reduction in the typical customer’s electric bill by $1.68 cents a month. JCP&L claims its costs for electricity are the lowest of any other utility in the state. The reduction in revenues could have been larger.

[related]At the same hearing last month at which the BPU lowered JCP&L’s revenues, it also gave the utility permission to recoup more than $80 million annually in storm restoration costs arising from the severe weather of the past few years, including Hurricane Sandy.

In ordering the latest inquiry into JCP&L’s operations, BPU President Richard Mroz said in March, “Even today, there lingering concerns about operations and management of the company.”

The BPU inquiry comes at a time when regulators are pressing utilities to invest in their infrastructure and other areas, such as increased tree trimming, to prevent the widespread outages that have occurred in New Jersey in recent years.

In response, JCP&L has announced plans to ramp up spending to increase the reliability of its distribution system and infrastructure — a decision also made by Public Service Electric & Gas, the state’s largest utility.

Gas utilities also are investing in upgrading the lines that deliver the fuel needed to heat homes and businesses, a strategy less controversial because of the steep drop in the price of natural gas, which has led to huge savings for customers.

With some of the nation’s highest energy costs, however, the state, which is making greater resiliency of the power grid a top priority, must strike a delicate balance.