Consumer Advocates Question BPU Scheme to Streamline Grid Upgrades

Critics argue against giving utilities the opportunity to push through infrastructure projects with minimal review and collect on investments more quickly

The state’s tentative move to revamp how and when utilities make investments and collect rate increases is being painted by consumer advocates as undermining protections for customers.

In written comments submitted this week to the Board of Public Utilities, critics said a couple of straw proposals put forward by the agency would diminish its authority over utilities to the detriment of ratepayers.

The proposals, announced unexpectedly at a board meeting last month, look to expedite investment by utilities in infrastructure upgrades with minimal review, while at the same time allowing those utilities to collect revenue from customers more swiftly, again without undergoing extensive review by regulators.

Although very general in nature and not yet drafted in the form of regulations, the proposals reflect a push by the sector to overhaul the century-old utility regulatory framework, simplifying a process viewed by some as time-consuming and expensive.

It also is under discussion at a time when utilities have been ramping up expenditures to make their power grids — both electric and gas — more resilient, less likely to experience lengthy outages, and able to be restored more quickly when they do.

In the wake of extreme storms, such as Hurricane Sandy, the BPU has approved more than $3 billions in investments by the state’s eight gas and electric utilities to upgrade infrastructure, a point opponents noted in their comments.

“There is no representation, much less proof, that needed infrastructure investments are not being made in New Jersey because the utilities do not receive the extraordinary accelerated recovery called for in the proposal,’’ wrote Ev Liebman, associate state director for New Jersey AARP.

Ratepayer protections

If either of the straw proposals is adopted, ‘’it would undermine fundamental century-old ratepayer protections that are the hallmark’’ of state public utility law, according to Steven Goldenberg, an attorney representing a coalition of companies using large amounts of energy.

By advancing the proposal, Goldenberg said the BPU is voluntarily abdicating its broad authority over utilities. “Ratepayers have come to rely on the board’s broad review powers to constrain utility rates to just and reasonable levels,’’ he said.

But Andrew Hendry, president and chief executive officer of the New Jersey Utilities Association, described the infrastructure investment proposal as allowing companies to invest in longer-term resiliency and reliability projects.

“Five-year cycles will give us opportunities for more efficiency, from procuring materials to high-quality labor, to more effective capital planning,’’ Hendry said, referring to the length of time for the infrastructure projects.

Division of Rate Counsel Stefanie Brand, however, questioned in her comments whether the new infrastructure proposal may tempt utilities to spend more than necessary to ensure safe and reliable service because they earn on what they spend.

The proposals, which allow utilities to implement provisional rate increases before approved, modified, or rejected by the board, were described by Brand and others as unnecessary solutions in search of nonexistent problems. Utilities already have the right to implement interim rates after nine months of filing a rate request, but rarely do, Brand noted.

In part, that is because any interim rate increase would have to be refunded once the case is settled, Brand said, because the BPU typically settles a case for much less that what the utility originally requested.

Hendry argued the provisional rate proposal would allow utilities to get capital “out working on the street faster, meaning better infrastructure and work for our labor force sooner.’’