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NJ BPU Moves Forward On Energy Deregulation

NJ BPU Moves Forward On Energy Deregulation

New Jersey Governor Christine Todd Whitman signed an energy deregulation bill last week, clearing the way for statewide electric unbundling to occur by Aug. 1 and statewide, residential gas unbundling to be in place by Dec. 31. The bill was passed by the state's legislature late last month (See NGI, Feb. 1).

Demonstrating the need for quick decisions in the short time frame allowed by the bill, the New Jersey Board of Public Utilities (BPU) set deadlines last Friday for each of New Jersey's four major electric utilities to settle deregulation issues. If the utilities do not settle the issues before the dates set by the BPU, the BPU will settle the issues itself. Gas utilities have not been set to a schedule yet because, as one New Jersey Natural Resources spokesman said, the commercial and industrial gas markets deregulated in 1994 and many of the key issues are not as wide open as the electric side. "Right now, the bill has more of an effect on the electric industry," he said.

"The fact is consumer choice equals customer savings," said Whitman. "Lower energy costs will help make life in New Jersey more affordable. Hospitals, for example will save millions in lower operating costs. At the same time, lower energy rates will also encourage companies to relocate to our state and create new jobs."

Friday's BPU order is the first step in formulating an exact plan of attack. Although the bill sets a rigorous timeline for deregulation, it also leaves many undecided issues open for the BPU, including measures to protect and educate customers, air emission guidelines, codes of conduct for utility affiliates, and metering and billing matters.

As a result, the BPU is allowing PSE&ampG, GPU, Connectiv, and Rockland Electric a limited time to submit their own solutions to problems such as stranded cost levels, rate discount amounts, and restructuring filings. Friday's order requires the electric utilities to submit their plans as follows: PSE&ampG on March 31, GPU on April 14, Connectiv on April 28, and Rockland Electric on May 12.

"Basically, the BPU is saying to the utilities 'you have a certain amount of time to settle these issues yourselves. If you don't do it by the date we've given you, we'll settle them ourselves.' Now, I think there is a good and a bad way to look at it," said Enron's Steve Montovano, who has been heavily involved with the situation. "The bad way is obviously that the schedule does not give the utilities enough time. I tend to think of it the other way. If the utilities can't settle the issues, then we'll know sooner rather than later. Either way, a decision will be made, and maybe the tight time schedule will make everyone cut to the chase. There is no room for posturing."

One issue that could cause problems is the requirement of a shopping credit. Like the other issues, the BPU is in charge of defining its value. This credit, which will appear as a reduction on switching customers' bills, is the first to be included in deregulation legislation, and is intended to jump-start the process. "Moving forward, we feel very strongly that establishing a reasonable shopping credit will be the foundation for achieving a competitive environment and maximum savings for residents and businesses," said Myles Meehan, an Exelon Energy spokesman. Exelon is a PECO subsidiary and provides electricity to both Pennsylvania and New Jersey customers.

John Norris

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