JCP&L Withdraws Bid to Spin Off Transmission Assets into New Company

Tom Johnson | September 9, 2016 | Energy & Environment
Utility indicates no way to resolve outstanding issues and meet January 2017 timeframe to begin investing in new entity

transmission towers
Jersey Central Power & Light is giving up its fight to transfer its transmission assets to a new company — at least for now.

In a brief letter to the Board of Public Utilities, the state’s second-largest electric utility notified the agency it is withdrawing its petition, although it may consider resubmitting it in a different form in the future.

The proposal, already rejected once by the BPU, generated opposition from consumer advocates, and more recently, local groups opposed to a new transmission project proposed by JCP&L along the North Jersey Coast Line in Monmouth County.

FirstEnergy Corp, the parent of the utility, previously had won approval to create the new entity, dubbed the Mid-Atlantic Interstate Transmission Co., from the Federal Energy Regulatory Commission and the Pennsylvania Public Utility Commission.

The company had hoped to begin investing in the new transmission company by January 1, 2017. “However, at this juncture, nearly 15 months after the original petition was filed, there appears to be no prospect of resolving this matter in New Jersey to accommodate the above time-frame,’’ the utility’s lawyer wrote the BPU in withdrawing its plan.

In denying the original petition, the state agency said a purely transmission company did not meet the state’s definition of a public utility because it did not include any distribution assets — the poles and wires delivering power to homes and businesses.

The distinction is important because only a public utility has the power of eminent domain to acquire land to build its power lines and to bypass local review of its projects. JCP&L sought to resolve that problem by transferring five distribution customers to the new entity.

That project drew opposition from the Division of Rate Counsel. “They were giving up this asset, which had been paid for by ratepayers and were only getting book value,’’ said Stefanie Brand, the division director. “The ratepayer was not getting credit for the actual value of the asset.’’

In pitching approval for the plan, the company had told regulators the new entity would accelerate investment in New Jersey to make its system more reliable, and reduce borrowing costs for future projects.

Ron Morano, a spokesman for JCP&L, said the utility plans to work with the BPU to see if those benefits could be delivered to customers. He also said the utility is committed to continue to invest in its ongoing transmission projects, including the proposed Monmouth County reliability project. The 10-mile new transmission project is bitterly opposed in the county.

Rep. Frank Pallone, the Democratic congressman representing the area, welcomed the announcement by the utility. “There were numerous unresolved questions about the consequences of this transfer, including how ratepayers would be affected, and whether BPU would have authority over MAIT,’’ he said in a statement.