When it comes to utilites, sometimes, a 64% empty glass is a good thing

Sometimes the proverbial glass is half empty. And sometimes the glass is 64% “empty” – and sometimes… that’s a good thing.

Indeed, at a time when it seems that utility provider after utility provider is looking to raise rates of struggling bill payers across the state, it's worth looking at one such situation that the Board of Public Utilities, with the support of AARP among others, along with the fastidious efforts of the Division of Rate Counsel, recently brought to a very satisfactory conclusion.

AARP participated in a recently-decided Atlantic City Electric base rate case before the Board of Public Utilities (BPU). AARP informed our members using electronic and traditional media, and rallied members to attend public hearings, at which many testified as to just how impactful these rate hikes would be to their lives. And ultimately, our voices were heard. Based on the evidence introduced and reviewed by the parties, along with this compelling testimony provided by AARP members and the public at-large, a settlement was reached and adopted by the BPU on June 21, 2013. The BPU cited our attendance and comments in their Board Order adopting the settlement.

Although the BPU did not reject the utility company rate hike proposal in its entirety, the outcome is nevertheless a good one for consumers.

Atlantic City Electric proposed to increase rates by $70.4 million. They ultimately agreed to a settlement of $25.5 million – a 64% reduction from their proposed hike. Another way to look at it- that’s just under $45 Million that will remain in the pockets of struggling Atlantic City Electric bill payers, rather than line the pockets of not-so-struggling shareholders.

This settlement also resolves all storm recovery cost-related issues associated with Superstorm Sandy and the 2012 derecho. The utility will not seek to recover any additional costs due to these storms. Consumers will see a 2.4% increase in rates - approximately $4.44/month per residential customers.

Ultimately the BPU determined – and AARP agrees – that the company had requested far more than was really necessary to address storm damages. The BPU settlement was a judicious decision balancing the needs of the company with the financial burdens on ratepayers. This is how our system should work.  

That is, rather than the rush to judgment that PSE&G and its supporters are aggressively urging. AARP supports the same judicious, thorough investigation of the PSE&G $3.9 billion rate increase to address storm damage and upgrades.

AARP supports system improvements but the substantial costs of such expenses must be judiciously weighed against other factors including holding companies accountable for legitimate failures of due diligence such as system maintenance and storm preparedness. As a formal intervener in the PSE&G case before the BPU, AARP is committed to protecting the already depleted pocketbooks of its 1.3 million NJ members and making sure that they pay only for what is beneficial and reasonable and not one single dollar more.

The BPU needs to ensure that ratepayers do not pay unnecessarily higher rates for things that they have already paid for or for things that PSE&G stockholders should be paying for. The savings for ratepayers and the economy of New Jersey could be substantial.

Is it really likely that PSE&G needs the whole enchilada? The 100% full glass to serve up to their stockholders at the 100% expense of ratepayers?

New Jerseyans already pay the 7th highest residential electric rates in the nation. A lot of people simply cannot afford to pay more. Governor Christie has been pining for a tax cut for years, but this doesn’t seem to be in the cards for the foreseeable future. So how about we provide the same struggling New Jerseyans with some relief in the form of a utility bill cut for PSE&G customers? Or at least a cut in this historically high rate increase proposal?

The truth of the matter is that the PSE&G proposal ignores a huge part of the power outage problem: tree trimming. Or in industry vernacular, “vegetation management.”  Companies must do more of this and municipal officials need to collaborate with them. The fact is, New Jerseyans may end up footing the bill for some of the newest and shiniest substations in the nation. But one if one inadequately maintained tree falls onto one power line, power can still go out for thousands. Yet despite that, companies see vegetation management as a cost, not a profit center. So they let it slide. That is why they need to be held accountable by the BPU.

Whenever the BPU rules on the PSE&G proposed rate increase, we should all know that the glass is “half full” and that what we are drinking is both truly necessary and good for the health of New Jersey, not a rush to judgment; a poison damaging to us all.