In the Matter of Public Service Elec. and Gas
| Decision Date | 08 March 2000 |
| Docket Number | A-772-99T3,A-1108-99T3,A-1050-99T3,A-643-99T3 |
| Parties | (N.J.Super.A.D. 2000) NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION IN THE MATTER OF PUBLIC SERVICE ELECTRIC AND GAS COMPANY'S RATE UNBUNDLING, STRANDED COSTS AND RESTRUCTURING FILINGS IN THE MATTER OF THE PETITION OF PUBLIC SERVICE ELECTRIC AND GAS COMPANY FOR A BONDABLE STRANDED COST RATE ORDER IN ACCORDANCE WITH CHAPTER 23 OF THE LAWS OF 1999, ETC. DOCKET NO. Argued: |
| Court | New Jersey Superior Court — Appellate Division |
On appeal from the New Jersey Board of Public Utilities.
Phyllis J. Kessler argued the cause for appellant New Jersey Business Users in A-643 99T3 and A-1050-99T3 (Kudman, Trachten, Kessler, Tacopina & Newman, attorneys; Ms. Kessler, on the brief).
Philip L. Chabot, Jr. (Wilkinson Barker Knauer) of the Washington, D.C. bar, admitted pro hac vice, argued the cause for appellant Co-Steel Raritan in A-772-99T3 and A-1108-99T3 (Windels, Marx, Davies & Ives, and Mr. Chabot, Foster DeReitzes and Sandra E. Rizzo, attorneys; Anthony R. Coscia and Amanda F. Shechter, of counsel and on the brief).
John A. Hoffman argued the cause for respondent PSE&G (Wilentz, Goldman & Spitzer, and Francis E. Delany, Jr., and Roger L. Camacho, Corporate Rate Counsel, attorneys; James T. Foran, Anne S. Babineau and Matthew M. Weissman, of counsel and on the brief).
Gregory Eisenstark argued the cause for respondent Division of the Ratepayer Advocate (Blossom A. Peretz, Ratepayer Advocate, attorney; Ms. Peretz, Mr. Eisenstark and Nusha Wyner, Deputy Ratepayer Advocate, and Kurt Lewandowski, Assistant Deputy Ratepayer Advocate, on the brief).
Helene S. Wallenstein, Senior Deputy Attorney General, argued the cause for respondent New Jersey Board of Public Utilities (John J. Farmer, Jr., Attorney General of New Jersey, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel; Ms. Wallenstein and James Eric Andrews, Deputy Attorney General, on the brief).
James E. McGuire argued the cause for respondent New Jersey Commercial Users in A 643-99T3 (Reed, Smith, Shaw & McClay, attorneys; Mr. McGuire, on the brief).
Gerald W. Conway argued the cause for respondent Jersey Central Power & Light in A 643-99T3 (Berlack, Israels & Liberman, attorneys; Mr. Conway and Marc B. Lasky, of counsel; Pauline Foley and Amy P.K. Motzenbecker, on the brief).
William Harla argued the cause for respondent Independent Energy Producers of N.J. in A-643 99T3 (DeCotiis, Fitzpatrick & Gluck, attorneys; Mr. Harla, on the brief).
Michael J. Mehr argued the cause for respondent Tosco Refining in A-643-99T3 (Waters, McPherson & McNeill, attorneys; Mr. Mehr, on the brief).
LeBoeuf, Lamb, Greene and MacRae, attorneys for respondent Atlantic City Electric Company in A-643-99T3 (Stephen B. Genzer and Mark L. Mucci, of counsel).
Courter, Kobert, Laufer & Cohen, attorneys for respondent Enron Energy Services, Inc. in A 643-99T3 (Murray E. Bevan, of counsel; Richard P. DeAngelis, Jr., on the brief).
Riker, Danzig, Scherer, Hyland & Perretti, attorneys for respondent Rockland Electric in A-643-99T3 (Vincent Sharkey and James C. Meyer, of counsel and on the brief).
McManimon & Scotland, attorneys for respondent Cogen Technologies in A-643-99T3 (John B. Hall, on the brief).
Hagley, Aronchick, Segal & Pudlin, attorneys for respondent New Energy Ventures in A-643 99T3 (John P. Lavelli, Jr., on the brief).
Potter & Dickson, attorneys for respondent General Motors in A-643-99T3 (R. William Potter and Peter D. Dickson, of counsel).
Cozen & O'Connor, attorneys for respondent South Jersey Gas Co. in A-643-99T3.
Kudman, Trachten, Kessler, Tacopina & Newman, attorneys for respondent New Jersey Business Users in A-1108-99T3 (Phyllis J. Kessler, on the brief).
Before Judges King, Carchman and Lefelt.
The opinion of the court was delivered by
KING, P.J.A.D.
TABLE OF CONTENTS
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IV B THE BPU DID NOT ERR IN REFUSING TO REOPEN THE RECORD AFTER NEW ISSUES ALLEGEDLY WERE RAISED IN STIPULATION I.
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IV B 1 THE IMMEDIATE TRANSFER OF GENERATING FACILITIES TO AN UNREGULATED AFFILIATE, GENCO.......... 46
IV B 2 A FOUR-YEAR TRANSITION AND RATE REDUCTION PERIOD......................... 48
IV D THE BPU NEED NOT HAVE CONDUCTED HEARINGS ON SECURITIZATION.
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IV E THE BPU PROPERLY DENIED NJBUS INTERVENTION IN THE SECURITIZATION PROCEEDINGS.
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V A THE VALUATION OF GENERATION-RELATED ASSETS FOR THE GENCO TRANSFER REFLECTS FULL MARKET VALUE OF THE ASSETS.
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V B THE SHOPPING CREDITS
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V C PSE&G's USE OF EXCESS DEPRECIATION RESERVE FUNDS
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V D PSE&G's USE OF DEFERRED ACCOUNTING
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V E THE BPU DID NOT ALLOW PSE&G TO SECURITIZE MORE THAN THE 75" OF STRANDED COSTS ALLOWED UNDER THE ACT.
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BGS Basic Generation Service
BSCRO Bondable Stranded Cost Rate Order
EHEP Experimental Hourly Energy Pricing tariff
HTS High Tension Service
LEAC Levelized Energy Adjustment Clause
MTC Market Transition Charge
NTC Nonutility Generator Transition Charge
NUG Nonutility generator
PJM Pennsylvania-New Jersey-Maryland power pool
SBC Societal Benefits Charge
TBC Transition Bond Charge
This is a consolidated appeal from two decisions of respondent the Board of Public Utilities (BPU): (1) its Final Decision and Order on the rate unbundling, stranded costs, and restructuring filings of respondent Public Service Electric and Gas Company (PSE&G), and (2) its bondable stranded cost rate order (BSCRO) on PSE&G's petition to finance, or securitize, its recovery-eligible stranded costs.
Co-Steel Raritan (Co-Steel), one of PSE&G's largest commercial customers, appeals from that portion of the Final Decision which ordered payment of stranded cost charges mandated by the Electric Discount and Energy Competition Act of 1999, N.J.S.A. 48:3-49 to 98, L. 1999, c. 23, effective February 9, 1999 , despite Co-Steel's special contract with PSE&G. The Division of the Ratepayer Advocate (RA) and New Jersey Business Users (NJBUS), a group of large industrial and commercial customers, appeal from specific findings in the Final Decision and on procedural due process grounds, contending that they were denied due process when the BPU refused to reopen the record after passage of the Act and BPU decided the securitization issue without holding hearings, among other procedural irregularities. The RA is also a respondent on the issues raised by Co-Steel. Briefs have been filed on behalf of six intervenors in the proceedings before the agency: Jersey Central Power & Light Company (GPU), Rockland Electric Company (RECO), New Jersey Commercial Users (NJCU), Enron Energy Services (Enron), Independent Energy Producers of New Jersey (IEPNJ), and Tosco Refinery Company (Tosco).
The administrative proceedings leading up to these decisions were unusual in many ways: hearings on the unbundling, stranded costs, and restructuring issues were held before an administrative law judge before the Act was passed; the securitization issue invited comments from interested parties but no hearings. Quasi legislative public hearings were held on deregulation three years before the Act actually was introduced in the Legislature. The BPU's Final Decision relied heavily on a negotiated agreement between PSE&G and seven intervenors which had an opportunity to comment on the agreement. Despite the unusual procedural irregularities, however, we conclude that all parties had ample opportunity to be heard on all aspects of both decisions. We find no denial of due process and no fundamental unfairness. We affirm.
To assist the reader in understanding the terms and acronyms we use we provide a Table of Acronyms.
From the early 1900s until the Act was passed in 1999, the electric power industry had been composed of vertically-integrated public utility companies. Each company owned power generation plants, plus transmission, distribution, and customer service facilities. The companies had virtual monopolies over their geographically-defined service territories. The charges for all services .. power supply, electric transmission and distribution, and such customer services as connects and disconnects, metering, billing, and account administration .. were "bundled" and billed at a single price.
In the late 1970s, electricity rates increased dramatically; by 1985 New Jersey consumers were paying about 50" above the national average for electricity. This situation persisted into the late 1990s. Although such factors as a higher cost of living, higher energy taxes, tighter environmental standards, and a lack of indigenous energy supplies played a part in this rise in rates, a major factor was the high average power production costs in New Jersey. Power production costs were high due to expensive utility owned nuclear power plants and expensive power purchase agreements with nonutility generators (NUGs).
Competition began in the production aspect of the electric power industry after Congress enacted the Public Utility Regulatory Policies Act of 1978, 16 U.S.C.A. 2601-2645 (PURPA), which provided incentives to develop nonutility electricity generation. Because of various federal initiatives, by 1997 there were a growing number of power producers and suppliers offering power for sale...
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