AR197

An Assembly Resolution urging the Federal Energy Regulation Commission to oppose Jersey Central Power & Light’s formula rate request that would increase electric transmission rates.

Whereas, On October 28, 2016, Jersey Central Power & Light (JCP&L) filed a request with the Federal Energy Regulation Committee (FERC) to establish a formula rate, which proposes to increase electric transmission rates to customers in 2017 by approximately 150 percent of the rates to customers in 2016; and

Whereas, In opposition to this request, the New Jersey Board of Public Utilities, the New Jersey Division of Rate Counsel, the Public Power Association of New Jersey, and the United States Army Legal Services Agency (intervenors) have filed a protest with FERC to intervene in this proceeding; and

Whereas, The intervenors claim that JCP&L’s proposed formula rate for electric transmission, which includes a disproportionate rate of return on equity, is excessive and unjust, insufficiently transparent, and its calculation does not conform to FERC standards; and

Whereas, The 10.5 percent rate of return on equity sought by JCP&L should be no higher than 8.7 percent and is inconsistent with market conditions; and

Whereas, JCP&L also seeks to recover restoration costs incurred as a result of Superstorm Sandy, which occurred four years ago, and has deprived customers of the opportunity to a timely review of JCP&L’s transmission-related storm expenses; and

Whereas, JCP&L has not substantiated its claim for vegetation management costs because it has failed to show that the vegetation management costs incurred in recent years are extraordinary; and

Whereas, In the event that a proposed rate increase request filed with FERC is found to be more that 10 percent excessive, FERC is to suspend the formula rate for five months, and the intervenors assert JCP&L’s request meets that threshold; and

Whereas, The intervenors have had limited time to review JCP&L’s requested formula rate and should have an opportunity to seek discovery and asses all information related to the transmission rate increase; and

Whereas, Consistent with past practice in other formula transmission rate proceedings, the intervenors suggest FERC should hold a hearing concerning these proceedings, and establish settlement before a FERC Administrative Law Judge; and

Whereas, If FERC approves JCP&L’s formula rate request, it would apply to $170 million in new transmission projects planned by JCP&L, including a 10-mile-long, 230-kilovolt transmission line project in Monmouth County that is opposed by many area residents because they deem it superfluous; and

Whereas, It is altogether fitting and proper for this House, and in the public interest, to support the intervenors in opposition to the JCP&L filing with FERC to establish a formula rate that would increase electric transmission rates for certain residents of this State; now, therefore

Be It Resolved by the General Assembly of the State of New Jersey:

1. This House urges the Federal Energy Regulation Committee to oppose Jersey Central Power & Light’s formula rate request that would increase electric transmission rates for certain residents of this State.

2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly to each member of the Federal Energy Regulatory Commission, the President of the New Jersey Board of Public Utilities, the Director of the Division of Rate Counsel, the Executive Director of the Public Power Association of New Jersey, the United States Army Legal Services Agency, and the President and Chief Executive Officer of the FirstEnergy Corporation.

STATEMENT

This Assembly resolution urges the Federal Energy Regulation Committee (FERC) to oppose Jersey Central Power & Light’s (JCP&L) request to establish a formula rate that would increase electric transmission rates for certain residents of this State.

On October 28, 2016, JCP&L filed a request with the FERC to establish a formula rate, which proposes to increase electric transmission rates in 2017 by approximately 150 percent of those 2016 rates. In opposition to this request, New Jersey Board of Public Utilities, the New Jersey Division of Rate Counsel, Public Power Association of New Jersey, and the United States Army Legal Services Agency (intervenors) have moved to intervene in this proceeding.

JCP&L’s proposed formula transmission rate, which includes a disproportionate rate of return on equity, is excessive and unjust, insufficiently transparent, and its calculation does not conform to FERC standards. The 10.5 percent rate of return on equity sought by JCP&L should be no higher than 8.7 percent and is inconsistent with market conditions.

JCP&L also seeks to recover restoration costs incurred as a result of Superstorm Sandy, which happened four years ago, and has deprived customers of the opportunity to a timely review of JCP&L’s transmission-related storm expenses. Further, JCP&L has not substantiated its claim for vegetation management costs because it has failed to show that the vegetation management costs incurred in recent years are extraordinary.

In the event that a proposed rate increase request filed with FERC is found to be more that 10 percent excessive, FERC is to suspend the formula rate for five months, and the intervenors assert JCP&L’s request meets that threshold.

The intervenors have had limited time to review JCP&L’s requested formula rate and should have an opportunity to seek discovery and asses all information related to the transmission rate increase. Consistent with past practice in other formula transmission rate proceedings, the intervenors suggest FERC should hold a hearing concerning these proceedings, and establish settlement before a FERC Administrative Law Judge.

If FERC approves JCP&L’s formula rate request, it would apply to $170 million in new transmission projects planned by JCP&L, including a 10-mile-long 230-kilovolt transmission line project in Monmouth County that is opposed by many area residents because they deem it superfluous.