Media Release
| For Immediate Release | Contact | Phone |
| August 14, 2006 | Dena Mottola, NJPIRG | 609-540-6609 (office) |
| Phyllis Salowe-Kaye, NJCA | 973-220-3823 (office) |
Statement of New Jersey Consumer Advocates:
U.S. Senatorial Candidates Must Oppose Energy Buy-Out
TRENTON — New Jersey Public Interest Research Group and New Jersey Citizen Action's Executive Directors stood together in front of the State House today to call on Senatorial Candidates Robert Menendez and Tom Kean Jr. to oppose Exelon's takeover of PSEG unless the companies agree to a plan that would create a more competitive electricity market that protects New Jersey consumers.
"This buy-out poses the biggest threat to the state's energy consumers since deregulation of the energy market in 1999. As one of the biggest pocketbook issues facing state residents today, the candidates for US Senate can not remain silent on the issue. They must insist that this buy-out be rejected unless it is crafted to ensure consumers are protected from sharply rising utility rates," said Dena Mottola, Executive Director of NJPIRG.
Exelon's bid to buy-out PSEG would create the largest energy company in the nation, with enough market power to give the new company a stranglehold on rates in the region. Testimony by the New Jersey Board of Public Utilities (BPU) staff expert Judah Rose estimates that market power could cost all New Jersey ratepayers $2.3 billion annually, an average annual increase of $540.
Mottola continued, "Exelon Corp and PSE&G's offer, now on the table, throws a pittance of rate relief at energy consumers, while failing to solve the bigger market power problems." Their terms include a pay out of $32 per ratepayer annually, or $2.66 a month, if shared over two years ($16/yr and $1.33/month if shared over four years), an amount that does not come close to the possible $540 a year annual increase that would result from market power control over rates.
Despite the concerns of NJPIRG, NJCA, Public Advocate Ron Chen, and the staff of the BPU about the potential effect of this buy-out on rates in the region, Exelon and PSEG have thus far failed to offer meaningful solutions that would mitigate their control of market power. Instead, they continue to focus their negotiations on ancillary issues.
"Market power concerns can not be ignored or brushed aside. We need our Senatorial candidates to stand up for consumers and oppose this merger as currently proposed, and continue to oppose it until the company offers terms that meet the BPU's positive benefit standard for jobs, safety, reliability, and most importantly, competition in the energy marketplace," said Phyllis Salow-Kaye, Executive Director of New Jersey Citizen Action.
The proposed Exelon buy-out of PSEG, like other energy mergers, is both a federal and state level issue. Unfortunately, the federal government has offered no critical analysis of the deal, and has done little to protect ratepayers from the probable harmful effects of this bid. In sharp contrast, the New Jersey Public Advocate and New Jersey Board of Public Utilities have worked to carefully review the proposed buy-out bid. On August 4th, the BPU rejected the companies' offer on the table, resuming negotiations last week.
In June 2005, only six months after the merger was announced and without a single day of evidentiary or public hearings, the Federal Energy Regulatory Commission (FERC) approved the deal. Further, when the agency issued its approval, it wholly adopted the companies' terms and offered no substantive analysis of the terms and their possible effects on consumers and rates in the region.
FERC's rubber stamp approval came as no surprise to consumer advocates. FERC has not rejected a single merger in the past 11 years. FERC's market power guidelines have a variety of flaws, including the fact that there was no examination of the effect of market power on New Jersey's unique auction system that sets electricity rates across the state. And Betsy Moler, former FERC Chairwoman, is now Exelon's Executive Vice President of Government Affairs and Policy.
"This energy merger is unprecedented, with the potential to establish the largest energy utility in the nation. A buy-out of this proportion has national, precedent-setting implications, as the number of energy utilities across the nation increases," said Salow-Kaye. "Unless the deal brings positive benefits to NJ and alleviates market power concerns, Senatorial candidates Tom Kean, Jr. and Robert Menendez must oppose this deal," concluded Mottola.
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The New Jersey Public Interest Research Group — When consumers are cheated or the voices of ordinary citizens are drowned out by special interest lobbyists, NJPIRG speaks up and takes action. We uncover threats to public health and well-being and fight to end them, using the time-tested tools of investigative research, media exposés, grassroots organizing, advocacy and litigation. NJPIRG’s mission is to deliver persistent, result-oriented public interest activism that protects consumers, encourages a fair, sustainable economy, and fosters responsive, democratic government.
New Jersey Citizen Action is the state's largest citizen watchdog coalition, representing more than 60,000 family members and over 110 affiliated groups.
