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Pallone Opposes JCP&L's New Transmission Rate Proposal

December 14, 2016
Press Release

Washington, DC - Today, Congressman Frank Pallone, Jr. (NJ06) sent a letter to Chairman Norman C. Bay of the Federal Energy Regulatory Commission opposing a new transmission formula rate proposed by Jersey Central Power and Light (JCP&L). It is likely that this new formula will result in higher costs to New Jersey ratepayers. In the letter, Pallone supports the protest filed by the New Jersey Division of Rate Counsel, the New Jersey Board of Public Utilities, the Public Power Association of New Jersey, the U.S. Department of Defense, and other federal agencies.  He also urged the Commission to suspend the effective date of any potential JCP&L rate increase until all of the relevant issues had been considered. The transmission rate formula rate is not related to the distribution rate that was finalized by JCP&L earlier this week.Earlier this month, Pallone requested a public hearing on the proposal which would increase rates by 150% and argued that “any increase of this magnitude should be carefully scrutinized.”

Pallone has voiced concerns with other JCP&L proposals which could have negative impacts on New Jersey communities. In October, Pallone sent a letter to the New Jersey Board of Public Utilities (BPU) voicing his concerns over Jersey Central Power and Light’s (JCP&L) proposal for the Monmouth County Reliability Project (MCRP). The plan for JCP&L’s new transmission line would impact Aberdeen, Hazlet and Middletown in Pallone’s district and run along New Jersey Transit’s North Jersey Coast line. Many residents have argued that the project is unnecessary and potentially harmful to the public health, environment, and economy of their communities. In August, he shared his concerns with BPU regarding JCP&L’s proposal to transfer all of its transmission assets to Mid-Atlantic Interstate Transmission. JCP&L withdrew its transfer proposal in September, a week after Pallone’s statement.

 

December 14, 2016

The Honorable Norman C. Bay
Chairman
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426

Re: Docket No. ER17-217-000

Dear Chairman Bay:

I write in support of the intervention by the New Jersey Division of Rate Counsel, the New Jersey Board of Public Utilities, the Public Power Association of New Jersey, the U.S. Department of Defense and all other Federal Executive Agencies opposing the transmission formula rate proposed by Jersey Central Power and Light (JCP&L) in its October 28, 2016 filing.

The protest filed by these parties identifies a number of components of JCP&L’s proposed rate formula that will result in substantially higher transmission charges for current and future projects undertaken by JCP&L.  These higher wholesale transmission rates will undoubtedly result in higher retail electricity rates for New Jersey ratepayers.  As I indicated in my earlier correspondence to the Commission, I am greatly concerned about the impact of increased rates on customers served by this utility. 

In addition, the abbreviated timeline proposed by JCP&L between the publication of the annual update of its projected formula rate and the time the rate would take effect leaves insufficient time for parties to evaluate and respond to a filing.  The public is not well-served if the state agencies charged with protecting its interests are given insufficient time to act on its behalf.  Once the formula rate and the protocols for annual reporting and review are established, they will govern the rate-setting process for the foreseeable future.  Therefore, I urge the Commission to review carefully the specific issues raised by the intervening parties in their protest. 

While proposals for rate increases are never popular with ratepayers, the public’s confidence in JCP&L is particularly low.  As I indicated in my earlier correspondence, the  recently abandoned plan by JCP&L’s parent company, First Energy, to transfer JCP&L’s transmission assets to Mid-Atlantic Interstate Transmission and JCP&L’s proposal to build an additional transmission line in Monmouth County have been very controversial and unpopular with residents in the area.  I recognize these specific decisions are not within the Commission’s purview, but the formula rates approved by the Commission are a significant factor in decisions about the construction of additional grid infrastructure. 

I recognize the value of providing sufficient financial incentive to utilities to ensure that investments will be made in the grid to modernize it and improve its reliability.  However, it is equally important to ensure that we incent only the most cost-effective and appropriate investments, and that proposed infrastructure projects will deliver benefits to all grid customers at rates that are just and reasonable and not unduly preferential or discriminatory.   

Until the issues in this case have been fully aired, I urge the Commission to suspend the effective date of JCP&L’s proposed formula rate and direct the parties to enter into settlement negotiations before a Commission Administrative Law Judge.  Thank you for your consideration and attention to this important matter.