News Release

Ratepayer Advocate Seema M. Singh Calls for Permanent Standards and
Automatic Penalties for All Utilities at Assembly Committee Hearing

Trenton, NJ – Ratepayer Advocate Seema M. Singh called for permanent reliability standards and automatic penalties for all utilities serving New Jersey to ensure that the state’s ratepayers receive safe, reliable and affordable service.

Testifying before the Assembly Telecommunications & Utilities Committee today, Ms. Singh discussed the need for performance standards for all of the state’s regulated utilities – electric, natural gas, telephone, cable television, water and wastewater. She focused on the double blackouts that occurred this past summer – the power outage over the July 4th weekend at the Jersey shore, and major blackout on August 14th in the United States and Canada.

“The Ratepayer Advocate has consistently called for permanent performance standards and automatic penalties,” said Ms. Singh. “If a company fails to live up to these standards, then it should be assessed automatic penalties out of corporate profits. That means shareholders will pay for management’s failure to deliver reliable service.”

Ms. Singh continued, “Rates are set to enable a utility to provide safe, proper and reliable service. If a company does not adequately maintain and upgrade its system, ratepayers are not getting the service they are paying for. Making shareholders shoulder responsibility for poor performance is the best way to ensure that utility service improves.”

“Power failures come in many forms, through weather-related events such as hurricanes and ice storms; failures from poor maintenance of poles and wires; and failures from human error,” Ms. Singh said. “No matter how the blackout occurred, one thing is clear, the 21st century customer demands nothing less than almost instantaneous power restoration.”

The Ratepayer Advocate said, “While demanding quick restoration, customers do not want to hear the phrase ‘rate increase’ to pay for these system upgrades and aggressive maintenance levels. Ratepayers believe they have been paying the utility companies over the years so that the transmission and distribution system would be properly maintained. It is difficult for them to accept yet another rate hike to pay for these improvements that the utility should have been doing in their normal course of business.”

Ms. Singh told the Assembly Committee members that Governor James E. McGreevey took the lead after the New Jersey blackout and ordered the New Jersey Board of Public Utilities to conduct an investigation. “I am hopeful that the BPU’s investigation will determine not only the cause of the blackout, but also whether ratepayer money has been properly spent to maintain the distribution system”

Ms. Singh also told the Committee members that on the federal level, while the Energy Bill is currently stalled in Congress, the Chairman of the Federal Energy Regulatory Commission (FERC), Pat Wood, has publicly stated that FERC will be creating a new reliability division along with new mandatory reliability standards.

Chairman Wood has been quoted to be “more than frustrated” to learn that many of the causes of the 2003 blackout were the same as earlier major blackouts in 1965, 1996 and 1997, Ms. Singh said.

“While I am hopeful that FERC will adopt mandatory reliability standards with penalties, New Jersey should not sit idly by and wait for the federal government to address this crucial area,” the Ratepayer Advocate said. “I also hope the U.S. Department of Energy’s federal investigation will report on whether utilities across America are wisely spending ratepayers’ money to maintain their systems – or giving it to stockholders.”

Ms. Singh also told the Committee members that the Ratepayer Advocate has launched a statewide energy conservation campaign to help ratepayers reduce their energy utility bills. She said she will visit each county and town where invited to advocate energy conservation, as well as energy aggregation programs, to help consumers deal with rising energy costs.

“Conservation provides a critical buffer between uninterrupted service and power outages during peak demand time - in the sweltering heat of July and August. Conservation does not mean you have to sacrifice one’s lifestyle or personal comfort. You don’t have to sit in the dark, shivering in winter or sweating in the summer.”

The Ratepayer Advocate produced an Consumer Conservation Handbook, a simple to read, easy to use guide to help the average person conserve energy. “We specifically included many money-saving conservation tips that are easy and inexpensive to implement,” Ms. Singh said. “In fact, many cost nothing at all. The more suggestions people adopt, the more they can save.” The free Handbook is available on the Ratepayer Advocate’s website, www.rpa.state.nj.us, or by contacting the Ratepayer Advocate’s office.

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The Division of the Ratepayer Advocate is an independent state agency that represents the interests of utility consumers and serves as an active participant in every case where New Jersey utilities seek changes in their rates or services. The Ratepayer Advocate also gives consumers a voice in setting long-range energy, water, and telecommunications policy that will affect the delivery of utility services well into the future.

Additional information on this and other matters can be found at the Division of Ratepayer Advocate’s website at http://www.rpa.state.nj.us

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