PSE&G Agrees to Keep Bills Stable but Fails to Get Go-Ahead for ‘Decoupling’

Tom Johnson | October 5, 2018 | Energy & Environment
Utility agrees to re-examine its shutoff policies, particularly for people who rely on medical equipment

energy efficiency
Public Service Electric & Gas has reached an agreement in a rate case to keep bills stable, an outcome driven by savings being returned to customers because of the effects of federal tax reform.

The settlement, still to be approved by the New Jersey Board of Public Utilities, will allow the state’s largest utility to boost annual revenue by $212 million, which is more than offset by $225 million in tax savings from the tax reform.

In the agreement with an administrative law court judge, however, PSE&G failed to win approval for a controversial mechanism to allow it to recover lost revenue when customers reduce energy use.

The provision, known as decoupling, is viewed as critical to convincing utilities to invest in energy-efficiency measures, a priority of both the Murphy administration and PSE&G.

Last week, the utility filed a plan with the BPU to invest $2.8 billion to help customers reduce energy use. The plan includes a decoupling provision PSE&G had sought in the rate case.

BPU is investigating Newark shutoff case

“We look forward to partnering with the BPU, the Division of Rate Counsel and other stakeholders to discuss decoupling or another lost revenue adjustment mechanism to meet the goals of the Clean Energy law recently signed by Gov. Murphy,’’ said Karen Johnson, a PSE&G spokeswoman.

The rate-case settlement includes a stipulation that PSE&G will re-examine its shutoff policies, particularly as they relate to people relying on medical equipment.

This past July, a Newark woman in hospice care died after her electric-powered oxygen tank stopped operating when the utility shut off power because of overdue bills.

Rate Counsel director Stefanie Brand said her office pushed for the review following the death. The state BPU also has opened an investigation.

According to the stipulation in the rate case, PSE&G agreed to enhance its outreach to customers to ensure such shutoffs do not occur in the future. Once notified of a customer’s medical emergency status, PSE&G must lock that customer account for a specific period to prevent any shutoff, among other things. PSE&G said many of the enhancements in the agreement are already being implemented by the utility.

“This is a good settlement because rates are not going up,’’ Brand said. With a push from regulators, utilities are under pressure to invest more in modernizing the power grid, increase spending on energy efficiency, as well as policies to switch to cleaner forms of energy, such as solar and offshore wind. All could lead to higher bills.

New rates would go into effect November 1

In the proposed settlement, PSE&G also agreed to reduce its Return on Equity, a measure of the profitability of a business, to 9.6 percent from 9.75 percent, Brand said.

PSE&G executives noted the case will keep customers’ bills at levels that are 30 percent lower than they paid in 2008.

“This agreement is certainly good news for our customers, who continue to benefit from our strong efforts to control costs as well as the lower taxes PSE&G is now paying,’’ said Dave Daly, the utility’s president and COO.

The agreement is expected to go before the BPU at its next meeting on October 29. If approved, the new rates will go into effect on November 1.

The typical combined electrical-and-gas customer can expect a reduction of 0.1 percent, or less than $2 a year in their bill. Commercial and industrial electrical customers, on average, will see no bill change, while gas customers on average will see a reduction of 1 to 2 percent.