NJ Rate Counsel Opposes PSE&G’s $2.78 Billion Energy-Efficiency Filing

Ratepayer watchdog contends utility overestimated how cost effective six-year program would be, recouping costs contrary to Clean Energy Act

The New Jersey Division of Rate Counsel is urging the state to reject a $2.78 billion proposal by Public Service Electric & Gas to invest in new energy-efficiency projects across its territory.

In filings with the state Board of Public Utilities, Rate Counsel’s experts argued the utility overstated how cost effective the proposed six-year program would be. They also contended a provision to recoup revenues PSE&G would lose due to its energy-saving actions is contrary to the Clean Energy Act (CEA) signed by Gov. Phil Murphy last May.

PSE&G submitted the petition last September, part of a $4 billion filing, seeking to align its spending with the clean-energy bill signed only a few months earlier. The utility argued the money spent on 22 energy-efficiency programs would save customers more than $5.7 billion over the 20-year life of the program.

NJ’s national energy-efficiency ranking

New Jersey currently ranks 29th nationwide in energy savings, according to the American Council for an Energy Efficient Economy. PSE&G contends its energy-efficiency filing is the right thing to do for its customers and the state, according to Karen Johnson, a spokeswoman for the utility.

“The programs we have proposed will save customers billions of dollars in energy costs, create thousands of green jobs in New Jersey, improve air quality, and drastically reduce the state’s carbon footprint,’’ she said.

“PSE&G does not have the authority to impose its own interpretation of the CEA in order to direct billions of dollars of ratepayers’ dollars to its proposed programs,’’ Erza Hausman, a consultant for Rate Counsel argued in a filing.

No exclusive for PSE&G

The Rate Counsel’s consultants also urged the BPU to reject the utility’s bid to become the exclusive agent for regulated energy-efficiency projects within its territory, a controversial proposal given that a competitive private market exists that could offer customers more varied choices in how to reduce energy use.

“I wouldn’t want to see it monopolized,’’ said Rate Counsel director Stefanie Brand. “That’s not good for consumers. There’s a role for utilities, but it’s not necessarily the only game in town.’’

Under the utility’s proposal, Rate Counsel’s consultants also feared the utility’s energy-efficiency proposals would displace some of the state Office of Clean Energy’s own successful and cost-effective energy-savings programs in both the residential and commercial/industrial sectors.

“Why dismantle the programs OCE already has and are working well?’’ asked Brand. “Why take over the work that OCE already is doing and doing well?”

Rate Counsel blocks decoupling

The utility’s proposal to recoup any lost revenue from its energy-efficiency programs through a new mechanism also was declared unnecessary by Rate Counsel. PSE&G has repeatedly said it would only invest significantly in energy efficiency if the state adopted a so-called decoupling provision.

But Brand argued the clean-energy law requires the board to adopt incentives for utilities to meet, mandating a 2 percent annual reduction in electric use, 0.75 percent a year for gas. If they fail to achieve the required reductions, utilities would face penalties (which have not yet been set by the BPU).

PSE&G’s original $4 billion filing was broken into separate elements by the BPU late last year. Besides the energy-efficiency component, the utility sought to spend $800 million on smart meters, a technology widely used nationwide, but not yet in New Jersey; $364 million on infrastructure for charging electric vehicles; and $180 million on energy storage.

In addition, PSE&G has a $2.5 billion filing pending before state regulators to modernize both its electric and its gas distribution systems. Its sister company, PSEG Power, should learn next month if its bid to win up to $300 million in annual ratepayer subsidies to keep three nuclear plants open in South Jersey has been successful.

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