BPU Takes Appeal Over Multistate $1.2B Transmission Upgrade to Federal Court

Tom Johnson | March 26, 2020 | Energy & Environment
State filed suit after Federal Energy Regulatory Commission stuck to its decision to have New Jersey ratepayers foot the bill for Bergen-Linden transmission line
Credit: Chris Nunnery from Flickr (CC BY-SA 2.0)
The Board of Public Utilities has repeatedly raised concerns about how higher transmission costs are inflating bills for utility customers.

In the latest twist in a long-running dispute, the state of New Jersey is asking a federal appeals court to review a multistate debate over who gets stuck with funding the costs of a $1.2 billion transmission upgrade.

In this instance, it was ratepayers in New Jersey in a decision challenged by the state Board of Public Utilities (BPU), which objected to a ruling by the regional grid operator, PJM Interconnection. The case involved cost allocations regarding the Bergen-Linden transmission line, which left New Jersey customers footing the bill.

The BPU and Public Service Electric & Gas (PSE&G), which built the line at PJM’s direction, unreasonably left ratepayers bearing the full cost of the upgrades, even though the project allowed some electricity to be wheeled to the New York power grid.

The lawsuit, filed on Monday in the United States Court of Appeals for the District of Columbia, follows a Federal Energy Regulatory Commission (FERC) decision early this month to deny a rehearing of its decision in the cost allocation dispute.

Initially, the cost of the transmission upgrade was allocated among ConEd, the two transmission operators and PSE&G. Essentially, all parties in the case sought to terminate previous agreements tapping power from the new transmission line, with the exception of PSE&G.

Ratepayer refund

When the dispute over cost allocations arose, BPU argued the reliability issues the new transmission line addressed were driven by power transfers to New York, a point the case’s other parties disputed. As part of its complaint, BPU sought a refund for ratepayers.

In recent years, the regulatory agency has repeatedly raised concerns about how higher transmission costs are inflating bills for utility customers. Earlier this year, BPU president Joseph Fiordaliso vowed to have the agency take a serious look at rising transmission costs.

The state’s new Energy Master Plan, unveiled in January, calls for the BPU to exercise increased regulatory oversight over transmission upgrades. In part, the plan proposed the state explore nonwire alternatives to expanding the system when upgrades benefit out-of-state consumers instead of New Jersey residents.

In the case before the federal regulatory agency, PSE&G argued the decision resulted in deferential rates for New York consumers to the detriment of customers in New Jersey. But FERC dismissed those objections as beyond the scope of the proceeding.

Paul Patterson, an energy analyst at Glenrock Associates, said the state’s lawsuit is not uncommon. “It’s kind of par for the course given the regulatory nature of FERC,’’ he said.

BPU did not respond to a request for comment about the filing.