The Star-Ledger

PSE&G Cost-Recovery Bid Faces Opposition

The Star-Ledger — Wednesday, January 30, 2008

Star-Ledger Staff

A bid to block the state's largest electric utility from recovering hundreds of millions of dollars in disputed costs from ratepayers has gained support from an unlikely coalition of consumer and business groups.

New Jersey Citizen Action and the New Jersey Large Energy Users Coalition have joined the state Public Advocate in opposing Public Service Electric & Gas. The utility, in a case before the state Board of Public Utilities, wants to dismiss a ratepayer's complaint about sur charges on electric bills.

The case, brought by Oradell resident Richard Murphy, focuses on PSE&G's efforts to recover its investments in power plants after the state broke up the electric and gas utilities at the start of the decade. With deregulation, the Newark-based utility argued at the time, the newly competitive marketplace would make it impossible to recover the costs for building the plants.

The state agreed, allowing the utility to impose a surcharge of about $5 per month per customer over 15 years.

As it turned out, however, few competitors emerged and the plants, since spun off to an unregulated unit of PSE&G's parent company, have become hugely lucrative.

In his petition with the BPU, Murphy is seeking to prevent the utility from imposing surcharges that could amount to as much as $1 billion through 2017. Murphy also wants PSE&G to refund customers for surcharges already col lected.

PSE&G is pushing the BPU to dismiss the petition, arguing the agency already has reviewed the issue in a prior proceeding. To undertake a new review, the utility said, would amount to retroactive ratemaking, a practice that is prohibited.

Consumer groups argue otherwise.

"A broad decision to dismiss the petition without the proper review has the potential to negatively impact the ratepayers who were ultimately left with hundreds of millions in stranded costs after the di vestiture of PSE&G's assets," Public Advocate Ronald Chen argued in a brief filed with the agency.

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