TRENTON – A coalition of consumer and business groups called Wednesday for scrutiny of $8 billion in proposed energy utility rate hikes.
The N.J. Coalition for Affordable Power, whose members represent constituencies as diverse as AARP and the Chemistry Council, accused power companies of using Superstorm Sandy as an excuse to sidestep traditional rate-hike processes, increase profits, and burden ratepayers such as senior citizens struggling to survive in a post-hurricane New Jersey.
However, a spokesman for New Jersey’s largest utility, PSEG, said that the coalition members have a fundamental misunderstanding of the nature of the rate-making process and of the special circumstances created by last year’s superstorm.
But the coalition – whose members also include N.J. Public Interest Research Group, N.J. Main Street Alliance, and N.J. Citizen Action – stressed it was not opposed to reasonable rate hikes that can be justified by utilities going through the normal process before the Board of Public Utilities.
They are opposed to proposals such as the $4 billion PSE&G Energy Strong, which the company says is a 10-year plan to improve infrastructure, reduce power outages, and create over 5,800 jobs.
Coalition spokespeople said today that it is a prime example of the kind of post-Sandy, hurried initiative that lacks a good, public, cost-benefit analysis in order to assess its effect on ratepayers.
“There is a difference between what is truly needed and what is opportunism,’’ said attorney Steve Goldenberg of the N.J. Large Energy Users Coalition. “We don’t want to see an abuse of ratepayers.”
One of those ratepayers is Monroe Township senior citizen Claire Edelman, who said that after Sandy her electricity bill one month was $238. “What else can you cut,’’ she said. “You cut back on food.”
Hal Bozarth, head of the Chemistry Council, pointed out that the coalition brings together groups that don’t often agree – large and small businesses, senior citizens and consumer advocates – because for years utilities did not spend adequately on upgrades as they were supposed to.
“Part of the money that was supposed to upgrade the system clearly went somewhere else,” he said, and in addition, utilities are guaranteed a 10 percent rate of return.
However, Michael Jennings, a spokesman for PSEG, said that the coalition members misunderstand the processes involved.
The guaranteed return, he explained, is on equity only.
He said that $400 million has been spent on upgrades to the distribution system, and that utilities submit annually to BPU financial information for scrutiny.
But because of the unusual and extreme weather of the last three years – two hurricanes and two major snowstorms right after them, plus the risk this may be the new normal – utilities have to be afforded an option of accelerating a process than can last years and can involve upgrades that are not mandated, he explained.
“Otherwise, there would be no guarantee they would get their money back,’’ he said.
But the coalition members emphasized that they believe that the process is at risk of turning into one that lacks accountability and transparency while victimizing ratepayers.
New Jersey, they said, has some of the nation’s highest utility rates: seventh highest residential rates, eighth highest industrial rates, ninth highest commercial rates.
“This is not pocket change,’’ said Evelyn Liebman of AARP.
Yet the PSEG Energy Strong proposal, for example, is not without backers.
It has drawn support from governments and business groups. Jennings said the state Chamber of Commerce and the South Jersey Chamber of Commerce have signed on. In addition, 38 municipalities around the state and several counties have urged quick approval of the program.
Thomas Bracken, president and CEO of the state Chamber, said they support the PSE&G proposal because business leaders recognize that strong infrastructure is essential.
“PSEG is taking a very progressive approach to that,’’ he said.
Yet it is the hurried nature of this process that worries coalition members.
“They are using the storm to run around the typical rate-making process,’’ said Dena Mottola Jaborska of N.J. Citizen Action.