PSEG rate hike request pros, cons placed before BPU

NEWARK – The state’s largest utility defended its five-year, $3.9 billion-dollar infrastructure upgrade – and its rate hike request – as essential in a post-Superstorm Sandy environment during a hearing Monday.

PSE&G presented its program and rate increase petition today during the first of six Board of Public Utility hearings.

On the one side were the utility, business groups and organized labor championing the PSEG plan.

On the other were environmentalists and representatives of senior citizens who argued the plan will burden those least able to pay more and without achieving the long-term environmental upgrades that are needed.

PSE&G is seeking approval for approximately $2.609 billion in electric and gas service investments over 60 months.

If the request is approved, electric rates would increase initially effective Jan. 1 by $16.411 million annually and gas rates would initially increase by $12.970 million annually, according to the Division of Rate Counsel and BPU.

According to those two, a typical residential electric customer using 780 kilowatt hours per summer month and 7,360 kilowatt hours on an annual basis would see an initial increase from $1,349.08 to $1,353.60, or $4.52, or approximately 0.34 percent.

The Division of Rate Counsel reported that based upon current projections and assuming full implementation of the five-year program as proposed, the anticipated impact for the typical residential electric customer would be as follows:

$16.32 or approximately 1.21% in Year 2;

$33.44 or approximately 2.48% in Year 3;

$48.72 or approximately 3.61% in Year 4;

$60.08 or approximately 4.45% in Year 5;

and $60.48 or approximately 4.48% in Year 6.

As for gas usage, under the company’s proposal, a residential gas heating customer using 100 therms per month during the winter months and 660 therms on an annual basis would see an initial increase in the annual bill from $731.27 to $736.07, or $4.80 or approximately 0.66 percent.

Vaughn McCoy of PSEG told the BPU today that this program will “help us to better serve New Jersey,’’ and argued the rates are “reasonable and affordable.’’

“We all remember the extreme weather events,’’ including Sandy, Irene and the freak October snowstorm, he said. Sandy alone knocked out power to 1.9 million PSEG customers, he said.

He said the costs are affordable, especially in light of the benefits being derived.

The highest potential impact on an average gas ratepayer in any year would be 5.21 percent in year 6 of the program, 2019, he said.

For the average residential electric ratepayer, the highest impact would be 4.48 percent in year 6, he added.

And he told the board that because of expiring charges in the future, bills could actually stay the same or decline.

“This will also produce jobs at a time when New Jersey needs them,” he said, a point emphasized by the many labor supporters – such as the International Brotherhood of Electrical Workers – who helped to pack the hearing hall.

But opponents of the requested rate hike were out in force as well.

They applauded speakers such as Stefanie Brand, the director of the Division of Rate Counsel, who told the board that “there is no way to spend $4 billion without an increase in rates.”

She pointed out the rate hikes are important considering many residential ratepayers have not seen pay hikes at their jobs in some time.

Further, she said that by PSEG’s own admission, if its program is approved, only 39 percent of those who experienced outages during Sandy will not suffer one or will have one of shorter duration.

Brand said that after paying for the program, “61 percent of PSEG customers will be in the same position they were in during Sandy.”

She said PSEG wants to be paid back as the work gets done. “This removes incentives to keep costs down,’’ and she said it could be considered an “illegal windfall’’ for the utility’s shareholders.

An AARP official told the BPU that elderly residents will be particularly hard hit by a rate hike, and said BPU needs to question PSEG as to why existing rates are insufficient to accomplish its goals.

Environmental groups including the Sierra Club and the Environmental Federation say the request will be wasted money if PSE&G is not required to include renewable energy, distributive generation, and energy efficiency.

Jeff Tittel of the N.J. Sierra Club told BPU that what happens with this proceeding will set energy policy for a long time to come.

“We are not stronger than the next storm to come,’’ he said, calling New Jersey a coastal state in the crosshairs of climate change and rising sea levels.

 “This plan would take ratepayer money, not to fix the grid, but to waste it on projects that will not work since the proposal ignores the future impacts of climate change,” he said. 

The environmental groups argue that increased efficiency will reduce the need for new expensive transmission lines and substations, and reduce the risk of problems caused by falling trees and flooding.

“By investing in energy efficiency, distributive generation, and clean energy technologies we will create more jobs, reduce more pollution, and save more money for rate payers,” Tittel said.

“This will also save money in rebuilding because we will not need to build as many or as large substations and transmission lines to serve areas.”

Business leaders, however, also said that the post-Sandy landscape presents a key opportunity.

Thomas Bracken, president of the state Chamber of Commerce, said that PSEG’s program “provides a window of opportunity not usually seen to make needed investments with no net increase in expected costs to consumers.”

He said that while businesspeople would prefer no rate hikes, they are realists. “They understand that performance cannot be sustained over the long term without making ongoing investments.’’

Essex County Executive Joe DiVincenzo said his county has 354,000 customers of PSEG.

“Instead of reacting, it’s time to be proactive,’’ he said in support of PSEG’s request.

PSEG rate hike request pros, cons placed before BPU