Ratepayers May Eat $70 Million In 2011 Storm Costs

The Record ( — Saturday, March 10, 2012

The Record

Utility customers in Bergen and Passaic counties may one day pay some of the $70 million in costs related to restoring power following Hurricane Irene and the surprise October snowstorm.

Public Service Electric and Gas Co. and Rockland Electric Co. said they don't yet have plans to seek permission from the state Board of Public Utilities to factor those costs into rates they charge for electricity. But neither ruled out the possibility.

For PSE&G, that would come to about $27 in deferred storm costs for each its 2.2 million electricity customers in New Jersey. For Rockland Electric Co., the costs would come to about $155 for each of its nearly 71,000 customers in New Jersey.

Because utility rates take into account the costs of typical operating and maintenance expenses, utilities are able to defer costs related to major storms such as the two that struck the East Coast last year and left millions without power for days. Those deferred costs may later be passed on to ratepayers.

Phyllis Salowe-Kaye, executive director of the consumer advocacy group New Jersey Citizen Action, said any passing along of costs should be balanced against how well the utilities performed after the storm and costs borne by customers, including spoiled food, home repairs and tree removal.

"Consumers will be appalled to have to pay increases in rates when some of them are still trying to recoup what they spent for the damages from these storms," Salowe-Kaye said.

The BPU has been investigating utilities' responses to those storms. The board released a preliminary report late last year, and on Monday it is set to consider hiring a consultant to produce a final report.

Those two utilities provided their snowstorm-related costs — and how much they may seek to recover from ratepayers — in response to inquiries from The Record this week.

PSE&G racked up $53 million in costs related to the snowstorm and $58 million for Hurricane Irene. The Newark-based utility, the state's largest, said it had deferred $30 million worth of the snowstorm costs.

Rockland Electric, whose service territory in New Jersey includes Bergen, Passaic and Sussex counties, said the October snowstorm cost it $9 million in New Jersey, with $8 million of those costs postponed.

"It remains to be seen when we would recover the storm repair cost deferrals,'' said Mike Donovan, a spokesman for Rockland Electric. "That decision is made by the regulators as a result of a proceeding and typically those deferred storm-repair costs are recovered over a period of time to mitigate the impact on customers.''

Jersey Central Power & Light, whose service territory includes Morris County, refused to say how much of its storm-related costs it might ask to be passed along to ratepayers.

JCP&L's parent company, Akron, Ohio-based FirstEnergy Corp., said in regulatory filings with the Securities and Exchange Commission that the snowstorm cost it $125 million, with $119 million of that being set aside "for future recovery from customers."

Lingering costs

Utilities serving North Jersey have tallied how much it cost them to restore power after Hurricane Irene and the late-October snowstorm, as well as how much they may seek to pass along to ratepayers down the road (in millions).


Storms PSE&G FirstEnergy* Electric Co.

Hurricane Irene, total $58 $89 $3.5

Hurricane Irene, deferred $29 $85 $3

October snowstorm, total $53 $125 $9

October snowstorm, deferred $30 $119 $8

*Parent of JCP&L
Sources: Utilities, U.S. Securities and Exchange Commission filings

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