NJ Spotlight

Growing Clamor For Investigation Into PSEG Power

Coalition asks Governor's office and BPU to determine how NJ power supplier managed to sidestep millions of dollars in utility fees

NJ Spotlight — Thursday, May 27, 2010

By Tom Johnson

An unusual coalition of environmental and business interests today stepped up calls for an investigation into how PSEG Power avoided paying millions in dollars in utility fees other ratepayers have been saddled with the past decade.

In a press conference in the statehouse, the groups asked the Governor's office and state Board of Public Utilities to determine why the Newark power supplier has not had to pay the so-called Societal Benefits Charge, a surcharge that raised $740 million last year from most other gas and electric utility customers.

NJ Spotlight first reported the failure of PSEG Power to pay the surcharge, a fee enacted when the state broke up the gas and electric monopolies in 1999, in a story earlier this month. Since then, Sen. Robert Smith (D-Middlesex), the chairman of the Senate Environment Committee, called on the New Jersey Attorney General to investigate the issue. The Attorney General's office has declined to comment.

The groups contend PSEG Power, one of the largest power producers in the region, should have paid the surcharge on gas it purchases from its affiliate, Public Service Electric & Gas, to run some of its power plants. By one attorney's estimate the company should have paid $48 million in surcharges last year alone.
PSE&G Welcomes Review

In a statement PSE&G said it welcomes any review of the matter by the BPU. The gas delivery arrangements that apply to PSEG Power, and other large customers, are beneficial to the utility's gas customers. Keeping large customers on the utility's gas delivery system helps keep rates lower for all other gas customers. The rate charged to PSEG Power's facilities by the utility was approved by the BPU in numerous, open and on the record proceedings.

But Ev Liebman, director of organizing and advocacy for New Jersey Citizen Action, argued the deregulation law establishing the fee specifically states it is "non-bypassable," and called for a freeze in PSE&G's rates until the issue is investigated.

"In essence, it is providing a wrongful, huge subsidy to this large company on the backs of ratepayers," Liebman said. The surcharge accounts for about 3 percent of a residential customer's bill.

Greg Reinert, a spokesman for the BPU, said the issue is part of a pending rate case involving PSE&G, which is before an administrative law court judge. He said the agency will address the issue when it takes up the case.

PSE&G is seeking to increase its rates by $230 million in the pending case. It was during hearings before the administrative law court judge that PSEG Power's non-payment of the surcharge came to light. People familiar with the case say as many as seven other large gas customers also do not pay the fee.

"Public Service needs to pay up and the appropriate authorities need to ensure that Public Service does," said Dave Pringle, campaign director for the NJ Environmental Federation, "as well as investigate to ensure there aren't others doing the same thing and that this doesn't happen again."

Asked if any of his clients also do not pay the fee, Hal Bozarth, executive director of the Chemistry Council of New Jersey, replied, "not to my knowledge." He added some companies in dire financial straits may have petitioned the board for relief from some utility rates.

But Bozarth said it was particularly disturbing PSEG Power is avoiding paying the surcharge because among other things, it helps pay for the decommissioning of nuclear power plants and clean up of contaminated coal gasification plants once run by the company. "This tax goes to pay to clean up their messes of the past," he said.

Assemblyman David Wolfe (R-Ocean), a member of the Assembly Budget Committee, said members of the panel also have been made aware of the issue. "They're interested in having the state pursue it and see that this gets rectified,'' he said.

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