AARP to BPU: Crucial defects continue to plague fatally-flawed “Energy Strong” proposal

TRENTON- Today, on behalf of AARP, Barbara R. Alexander testified at evidentiary hearings on PSE&G’s multi-billion “Energy Strong” proposal, which would represent the largest rate increase in New Jersey history, yet would only provide modest benefit to a small minority of customers.

Yet 100% of PSE&G customers would pay.

Alexander served for 10 years as Director of the Consumer Assistance Division of the Maine Public Utilities Commission. Since 1996, she has served as an independent consultant focusing on issues concerning regulatory and statutory policies concerning consumer protection and quality and reliability of service among other areas. She has testified in rate cases, investigations, and rulemaking proceedings before over 15 state regulatory agencies in the US and Canada.

Among the key defects that Alexander outlined as part of her testimony:

• PSE&G fails to include any enforceable performance standards or measurements to assure the promised reliability improvements.
• PSE&G proposes to shift risks entirely to ratepayers as to whether the Energy Strong investments will perform as projected or ameliorate customer outage duration or frequency as predicted. The bill impacts are very high and the defects identified above make these higher rates questionable, particularly for lower income consumers.
• PSE&G fails to provide any analysis or evaluation that justifies how or why its proposed investment, taken as a whole, would be appropriate or needed. There is no evidence that PSE&G took a “bottoms up” approach to create the list of projects included in Energy Strong or that alternatives were considered and rejected in favor of the list of expensive projects they are proposing.
• The proposal is designed to respond to rare events and is not, by the company’s own admission, needed to meet its statutory or regulatory mandates to provide reliable service. In addition, the proposed investments are not designed to provide improved performance to most customers even during major storms. The Company’s own analysis shows that 100 million customer hours of interruption would occur even with these investments under an event similar to Superstorm Sandy.

 

All told, the proposal is bereft of essential details, including engineering studies or any reliable cost/benefit analysis. The proposal is so lacking in details, in fact, it would essentially serve as a “blank check”.

Alexander also cited Florida as an example of a state that authorized a “hardening” project without tacking a surcharge onto the bills of already overburdened consumers. There, following a series of devastating hurricanes, the Florida Public Service Commission ordered utilities to develop and file storm detailed hardening plans. Once approved, Florida Power and Light implemented these plans without a special surcharge. Instead, the company seeks recovery as part of regular base rate cases.

PSE&G’s full multi-billion dollar Energy Strong Proposal represents one of the largest utility capital investment requests in New Jersey history and if approved would become one of the largest utility rate hikes.

AARP New Jersey State Director Jim Dieterle says that Energy Strong needs to go back to the drawing board.