Utility Agrees to Sharp Cut in Proposed Rate Increase, Awaits BPU Approval

Tom Johnson | April 25, 2019 | Energy & Environment
JCP&L originally sought almost $400M investment in infrastructure upgrades; settles for a quarter of that amount

Credit: JCP&L
JCP&L repairs
Jersey Central Power & Light has agreed to sharply scale back a nearly $400-million rate increase, under a tentative settlement with state regulators. The rate increase is intended to fund investments aimed at reducing outages caused by severe weather events.

The settlement with the New Jersey Division of Rate Counsel and staff of the state Board of Public Utilities would allow the utility to spend $97 million to upgrade its distribution system and make it more resilient during storms.

The state’s second-largest utility proposed a four-year, $387 million infrastructure investment program in July 2018, mostly geared to curbing the number and duration of power outages its 1.1 million customers experience.

JCP&L repeatedly has come under fire for extended power outages that occur within its service territory of 13 counties by customers, local officials and state regulators. Its proposed four-year program mirrored large investments that have been proposed by other utilities, all of which are under pressure from regulators to improve the resiliency of their power grids.

“We are pleased with the settlement,’’ said Jennifer Young, a spokeswoman for FirstEnergy Corp., the Akron-based company and owner of JCP&L. Noting the utility originally proposed a four-year program, Young said the settlement narrows the scope to an 18-month period.

“This is the right work to get us the most reliability,’’ she said.

The program was created following an analysis of JCP&L’s existing distribution system as well as lessons learned from restoration efforts following recent severe weather events. It includes more than 1,400 projects to help enhance the reliability and resiliency of overhead distribution lines, replacing equipment with new smart-technology devices, and expanding the vegetation management program to address tree-related outages.

Once the projects are complete, JCP&L expects that customers will experience fewer sustained outages under normal conditions as well as a reduction in the duration of outages. If approved by the BPU next month, work will begin in June and be completed by December 31, 2020.

The program could boost the average residential customer’s monthly bill by about 50 cents, the utility said.

In shaving the utility’s original request, the settlement reflects a bigger reduction than is typical in other utility cases, where initial rate requests generally are reduced by up to one-half of what was originally sought.

But Rate Counsel Stefanie Brand said that is not necessarily so. “It reflects both a concern about rate impacts but also a desire to see how the program works,’’ she said. Brand noted the program duration also was reduced.