Philadelphia Inquirer

N.J. BPU's Move To Cut Fee Is Hailed As A 'Big Victory'

The Philadelphia Inquirer — Tuesday, October 12, 2010

By Chelsea Conaboy
Inquirer Staff Writer

New Jersey business leaders have long complained that the state's electricity prices, among the highest in the country, stunt growth and hinder its ability to attract new companies.

Under a directive from Gov. Christie to revise energy policy with economic development in mind, the Board of Public Utilities seems to be hearing them.

It voted last week to eliminate a fee on 848 large industrial and commercial customers, starting in June.

The charge is expected to bring in about $13 million this year.

The change has been hailed as a "big victory" by industry representatives such as Sara Bluhm, assistant vice president of the New Jersey Business and Industry Association.

"That is now money that can go back into a business and back into our economy," Bluhm said. "That's obviously a huge impact and a step in the right direction."

But Ev Liebman, of New Jersey Citizen Action, an advocate for residential ratepayers, said she worries that the state is addressing the concerns of powerful business groups but doing little for homeowners.

The retail margin fee, a half-cent added to each kilowatt-hour purchased by the largest users, was created in 2002 following deregulation, which was aimed at creating competition among power generators. It deliberately increased the price of the default service to give a leg up to third-party providers who were just entering the market and to encourage large customers to shop around.

Between 2002 and 2009, the fee raised $128 million that was never spent until the state used it to balance the budget.

Board members decided the fee had "outlived its purpose," said spokesman Greg Reinert, because about 85 percent of the large commercial and industrial users now buy power from a third party.

In the first half of 2010, New Jersey's retail rates for commercial and industrial users ranked seventh in the country, according to the U.S. Energy Information Administration.

Bluhm, whose organization has been pushing for five years for the elimination of the fee, said she wanted the board to continue to "chip away" at policies that inflate prices as it worked to revise the state's energy master plan.

Her group, along with the New Jersey Large Energy Users Coalition and some individual businesses, have called for a review of another fee that pays for energy efficiency programs and of the societal-benefits charge. That charge pays for programs that, among other things, assist low-income customers and support nuclear decommissioning.

Gerdau Ameristeel, which operates steel mills in Sayreville, N.J., and in 10 other states, submitted testimony to the board in August calling the two charges "onerous." High operating costs have forced the company to transfer 20 percent of the New Jersey plant's production to other facilities, the filing said. Without relief, the company could move more business out of state.

But homeowners face high costs, too. New Jersey's residential rates in the first half of 2010 were the fifth-highest in the country.

Liebman, director of organizing and advocacy at Citizen Action, said cutting costs for businesses could result in increased costs for residential payers.

"What we really want the [Board of Public Utilities] to do is to take steps to lower the overall rates for everyone," she said, "not simply shift the burden of these fees from one class of customers to others."

Competition in the residential market is almost nonexistent, Liebman said. She would like to see the board temporarily freeze rates and return to regulating the residential market to give the state more say in what generators are allowed to charge homeowners.

After holding several public meetings, the board is reviewing the 2008 energy master plan and could complete a revision in January, Reinert said.

Top Top | NJCA in the News | NJCA Homepage