Storm Rate Hikes On The Horizon In NJ

The Record ( — Sunday, November 6, 2011

The Record

Utilities have already taken steps to make their customers foot the bill for restoring power from two recent storms — even as crews continued to work to bring the lights back on across North Jersey.

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 have 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.

"Ratepayers have incurred incredible losses," added Phyllis Salowe-Kaye, executive director of the consumer advocacy group New Jersey Citizen Action.

"I have incurred substantial costs due to the storm, and I didn't even lose my power," said Salowe-Kaye, who lives in West Orange. "There's nobody reimbursing me."

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.

Worse than Irene

PSE&G, the state's largest utility and which serves much of Bergen County, 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 last weekend'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.

Tammy Linde, vice president of regulatory issues for PSE&G, said the utility seeks to recoup costs only following major storms, which she said current electric rates don't cover. She noted other utilities already have similar authority.

"There can be no double counting" of costs, Linde said.

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.

Last weekend's 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.

Restoration costs, Tarpey said, "will be more" than Irene, with a greater share of them in New Jersey.

Base rates assume only normal storm-related repairs, Tarpey said. Last weekend's storm prompted the utility to ramp up staffing tenfold and pay crews to work double shifts.

"If I put in extraordinary storm [costs] in my base rates, my rates would be high and the customers basically would be overpaying," Tarpey said.

Jersey Central Power & Light, which serves parts of Passaic and Morris counties, 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.

Long-term prevention

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.

"They are entitled to recover those costs to the extent that we haven't already paid for it," Brand said.

The BPU is investigating the utilities' response to last weekend's 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.

Outrage, resignation

As utilities worked to fix remaining outages Friday afternoon, some customers remained without electricity, and frustrations lingered.

State Sen. Kip Bateman, R-Somerset, who has criticized what he called JCP&L's "inadequate storm response," said it would be "outrageous" for utilities to pass on restoration costs to ratepayers.

"They can't just leisurely take their time, put the power back in place and then expect the consumers pick up the cost," Bateman said. "It's wrong."

Brian Ashton of Closter, who had electrical service restored Friday afternoon, had been without power for six days. He said he was frustrated with Rockland Electric's response.

While Ashton, 53, didn't necessarily think it was fair for customers to pay for restoration costs, he was resigned to paying nonetheless.

"It's going to have to get paid [from] somewhere," he said. "I won't be happy about it."

Staff Writer Nick Clunn contributed to this article.

Customers without power

Outages in New Jersey following last weekend's snowstorm:

  Oct. 31 Nov. 1
Nov. 2
Nov. 3
Nov. 4
PSE&G 145,000 91,000 27,000 10,600 5,900
Bergen 67,000 43,000 9,000 2,500 800
Passaic 11,000 5,000 3,000 n/a n/a
Orange and Rockland 18,899 15,100 10,961 3,935 1,850
Bergen 15,812 11,900 10,224 3,815 1,750
Passaic 3,073 3,200 737 109 100
JCP&L 213,869 187,800 63,716 19,987 11,850
Passaic 6,490 6,900 1,711 316 200

Note: BPU provided outage data at varying times each day.
Source: Board of Public Utilities

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