PSE&G Executive Calls for Utility Ratemaking Reform as a Means to Stimulate Job Creation in New Jersey and Promote Investment in
December 11 2008 - 1:00PM
PR Newswire (US)
COO Ralph LaRossa testifies at Senate hearing that ratemaking needs
to be modernized to augment the state's efforts to address economic
downturn and fight global warming TRENTON, N.J., Dec. 11
/PRNewswire-FirstCall/ -- Declaring that businesses must find
innovative ways to address the effects of global warming and
today's depressed economy, Ralph LaRossa, president and COO of
Public Service Electric and Gas (PSE&G) today called on state
legislators to modernize the state's ratemaking framework to allow
utilities to create jobs by making key investments in
infrastructure, renewable energy and improved energy efficiency.
"Utilities can make investments that society desperately needs us
to make -- improving efficiency which will lower bills, developing
renewable generation which will help fight global warming, and
modernizing our grid which will help maintain system reliability,"
LaRossa testified at a hearing held before the state's Senate
Economic Growth and Environment Committees. "These investments can
put people to work, help jump start the economy and improve New
Jersey's competitiveness, but we need a new ratemaking framework to
do it." He asserted that a new ratemaking framework is needed to
overcome two major hurdles: the short-term problem of accessing
affordable capital in turbulent economic times and the long-term
challenge of establishing a regulatory structure that assists
utilities in making major investments to help fight global warming
and modernize the energy infrastructure. LaRossa said that in tough
economic times, the current ratemaking system pushes utilities to
reduce investment. He explained that unless circumstances change,
PSE&G will be reducing capital investments -- resulting in a
reduction of more than 1,000 contractor jobs. "PSE&G cannot
borrow money at a high cost, make an investment, and then wait
years to be reimbursed at a rate that will have us losing money,"
said LaRossa. He added that, under the current system, utilities
have a financial disincentive to invest in energy efficiency,
because utility revenues will decrease (as customer's bill go down)
and rates won't be adjusted in the near term to make them whole.
"We need a system that does not penalize utilities for making a
green investment choice. We need to modernize our ratemaking system
to one that is better for utilities, their customers, and the state
of New Jersey," said LaRossa. He indicated that a preferred way to
overcome these problems would be with formula rates, the focus of
today's hearings. Formula rates are used in setting some
transmission rates and in some other states for setting electric
rates. LaRossa also indicated that PSE&G is open to other ideas
that will accomplish the same goals. He emphasized, however, that
without changes, the additional investments would not be made.
LaRossa added that PSE&G supports legislative language that
reiterates that the prudency of all of its investments will still
be scrutinized by regulators and that establishes customer
protections, such as performance standards and a reasonable cap on
rate increases. "We need a framework that allows timely and
predictable reimbursement for investments. This will allow
utilities to access cheaper capital with the savings passed along
to ratepayers," said LaRossa. "We need to be honest with the
public. If New Jersey wants utilities to make major investments in
energy efficiency, renewable energy and job-creating
infrastructure, these investments will be reflected in rates under
any system. But with effective investments in energy efficiency,
bills can go down even if rates go up." Visit http://www.pseg.com/
for LaRossa's complete testimony. Public Service Electric and Gas
Company (PSE&G) is New Jersey's oldest and largest regulated
gas and electric delivery utility, serving nearly three-quarters of
the state's population. PSE&G is the winner of the
ReliabilityOne Award for superior electric system reliability.
PSE&G is a subsidiary of Public Service Enterprise Group
Incorporated (PSEG) (NYSE:PEG), a diversified energy company
(http://www.pseg.com/). DATASOURCE: Public Service Enterprise Group
(PSEG) CONTACT: Paul Lief Rosengren, +1-201-417-8825 (cell), or
Jenn Kramer, +1-973-430-6027, both for Public Service Electric and
Gas (PSE&G) Web Site: http://www.pseg.com/
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