BPU Rules Encourage Utility Infrastructure Investments, Speed Rate Increases

Consumer advocates argue regulations may undercut ratepayer protections, are unnecessary under current system

PSE&G workers in Totowa are replacing aging cast-iron and steel mains with new plastic pipelines.
The state has moved ahead to propose new rules governing how utilities may make investments in projects and begin to collect higher rates from customers when seeking increases in revenues — steps critics say undermine protections for ratepayers.

The package of rules, not yet made public, was approved by the New Jersey Board of Public Utilities on Friday, a month after the commissioners unexpectedly balked at approving the changes at a previous meeting.

The proposals were refined by staff apparently enough to convince commissioners to unanimously reverse their initial opposition and also dispute criticism that the rules diminish the agency’s authority over the state’s utilities.

Even so, one commissioner, Joseph Fiordaliso, acknowledged having some lingering questions as to what the board is trying to achieve by changing current regulations: “Some day someone will explain to me exactly what we are trying to fix,’’ he lamented.

That sort of sums up the chief criticism about the proposals raised by the Division of Rate Counsel Director Stefanie Brand, who wondered what problems the agency was trying to solve.

The proposals are touted by proponents as helping utilities make the investments needed in aging gas, water, and electric infrastructure systems more readily, as well as easing rules for utilities to collect rate increases when proposed more swiftly.

It comes at a time when there has been a huge investment by utilities in their infrastructure over the past eight years, largely with the backing and support of the BPU. Since 2009, more than $8 billion has been invested by the state’s utilities to modernize and strengthen their power grids and infrastructure.

Critics of the rules argue that those investments prove the state supports those types of investments routinely. BPU President Richard Mroz argued the new rules will provide a framework for how to handle future investments.

Andrew Hendry, president and CEO of the New Jersey Utilities Association, noted he has yet to see the proposals, but added the organization is pleased the agency is dealing with issues that have been raised for years.

One of the rule proposals clarifies an existing rule, rarely used, that allows utilities, after nine months, to begin collecting proposed rate increases before the board finishes its review of the request.

Steven Goldenberg, an attorney who criticized the rules in comments submitted to the agency, was not convinced they will work for customers. “I worry they may have unnecessarily given ground on issues very important to ratepayers,’’ he said.

The rules will be published in the New Jersey Register later this month. Given the complexity of the administrative process, however, it will be a race for the board to adopt the rules before the end of the Christie administration, which will leave office early next January.