Storm rate hikes could be on the horizon in NJ

| 15 Feb 2012 | 10:08

    Utility companies looking to recoup expenses Utilities have already taken steps to make their customers foot the bill for restoring power from two recent storms. As the companies said they were doing everything possible to fix downed power lines, they were also laying the groundwork to gain permission from state regulators to pass along restoration costs — which could be in the tens of millions — to ratepayers. That's not welcome news for customers — many of whom endured days without power and heat, forcing them to toss spoiled food, spend on hotel rooms and buy generators. "They're going to work it into what they're charging us in the future? Doesn't sit well with me," said Lisa Rosenfeld, 53, of Teaneck, who was without electricity for four days and complains of what she called poor communication from Public Service Electric and Gas Co. Three utilities providing electricity to North Jersey could not give estimates for restoration costs following last weekend's unseasonably early nor'easter, whose wet, heavy snow snapped tree limbs and downed power lines across the region — knocking out power to about 175,000 customers in Bergen and Passaic counties. Last week, the public companies that own the utilities revealed in third-quarter financial reports how much it cost them to restore power after Irene — and how much they planned to possibly recover from customers in future electric rates. PSE&G, the state's largest utility, pegged Irene's cost at $42 million. The utility said it may ask the Board of Public Utilities to let it recover $29 million of that through possible rate increases. PSE&G declined to estimate restoration costs from October's snowstorm, but has said it caused more damage to its electric infrastructure than Hurricane Irene. Before Irene struck, PSE&G filed a request to the BPU to recover future storm restoration costs not covered by already-approved base rates. The expected costs included overtime, hiring outside contractors, mutual aid from other agencies and other direct expenses. The BPU has yet to rule on the request. Rockland Electric Co., which serves the upper reaches of north Jersey, estimates restoring power after the hurricane cost $20 million, with roughly 25 percent of that in New Jersey, said Jim Tarpey, vice president of operations at Orange and Rockland Utilities Inc., the utility's parent. The October storm was the worst ever to hit Orange and Rockland in its 112-year history, Tarpey said. The storm knocked out power to 134,000 customers, nearly half of its base, and restoration costs "will be more" than Irene, with a greater share of them in New Jersey. Jersey Central Power & Light refused to estimate how much post-Irene restoration cost. But JCP&L's parent company, FirstEnergy Corp., reported in filings with the U.S. Securities and Exchange Commission that Irene cost it about $78 million. In the filings, the company indicated it would cover $75 million of that via "future recovery from customers." JCP&L refused to say when the utility might seek to raise rates to pay for this season's power restoration. "There are no plans now to pass any costs along from these storms to ratepayers, and that's all I'm going to tell you," spokesman Ron Morano said. "That's all I have to say." JCP&L customer Carolyn Mahon, whose Dutch colonial in West Milford was without power until about 4 p.m. Saturday, said she would be "pretty pissed off" if she had to pay more to help recoup costs incurred by the utility. Mahon, a 62-year-old retired sales executive, said she and her husband, Paul, who is also retired, said they have spent hundreds of dollars on firewood and restaurant meals as a result of the weeklong outage. They also lost a lot of food. "I know they have additional costs when things like this happen, but I don't think it's fair to put it on the customers because we've had to endure extra costs," she said. Attempts by utilities to recover costs for the two recent storms through rate hikes — so-called rate cases — may not come for months or years. BPU President Lee Solomon, who declined to speak specifically about the most recent storm costs, said he's certain no current electric rates assume anything "remotely" like costs incurred from this season's storms. "They don't have anything like this incorporated in their plan," Solomon said. Stefanie Brand, director of the state Division of Rate Counsel — the state's advocate for utility ratepayers — said she would examine utilities' finances and expenses when they seek rate increases. The BPU is investigating the utilities' response to the storm, and will examine whether the suppliers had properly pruned trees whose limbs wound up knocking out so much power. Solomon declined to say what the agency's inquiries have so far revealed. Solomon said he hoped the storm would highlight long-term challenges to the state electricity distribution system — and relative costs. Some have called for exploring burying power lines to prevent widespread outages caused by felled trees or limbs. "It's clear to me that these last two events require that we investigate what can be done, what kind of upgrades can be made, that will lessen the problem and the recovery time later, and to make sure that the ratepayers understand what the cost is and that they're willing to bear that cost," Solomon said.