REMARKS OF SEEMA M. SINGH, ESQ.
RATEPAYER ADVOCATE
NEW JERSEY DIVISION OF THE RATEPAYER ADVOCATE

I/M/O REGULATIONS OF EXTENSIONS OF SERVICE
PROPOSED AMENDMENTS: N.J.A.C. 14:3-1.1 and 6.2, and 14:18-3.2, 6.2 and 11.2
PROPOSED NEW RULES: N.J.A.C. 14:3-10
PROPOSED REPEALS and NEW RULES: N.J.A.C. 14:3-8, 14:5-4 and 14:10-3
PROPOSED REPEALS: N.J.A.C. 14:10-1.1 and 4

BPU Docket No. AX03120973

PUBLIC HEARING
Board of Public Utilities
Newark, New Jersey
March 2, 2004
9:30 a.m.

Good Morning. My name is Badrhn M. Ubushin, Deputy Ratepayer Advocate for the State of New Jersey. I am pleased to be here today to voice the Ratepayer Advocate’s support for many of the proposed changes to New Jersey Administrative Code, Title Fourteen, and to submit additional recommendations to the Board that will promote sound and coordinated planning throughout New Jersey. These proposed rules are in furtherance of Governor McGreevey’s Smart Growth initiatives. As you know, the Ratepayer Advocate has the statutory duty to represent and protect the interests of all classes of consumers in the state of New Jersey, including residential, small business and industrial customers, in an effort to advance the interests of all New Jersey ratepayers.

First and foremost, the Ratepayer Advocate commends the New Jersey Board of Public Utilities (“Board”) for its commitment to protect New Jersey’s vital natural resources by modifying existing utility infrastructure line extension regulations as well as proposing new ones. This steadfast commitment is evident in the proposed regulations concerning parties wishing to build in areas that are environmentally sensitive. Furthermore, the proposed regulations will ensure that safe, adequate and proper utility service is furnished in an environmentally responsible manner. One of the most significant threats to New Jersey’s environment is sprawl development. Unfortunately, the existing rules have enabled such development.

These proposed regulations will change the regulatory landscape so as to cut back incentives to develop in non-Smart Growth areas and to encourage development in designated growth areas.
From this point forward, the Ratepayer Advocate’s comments will focus on selected proposed regulations that we support.
The proposed regulations do not allow recovery from ratepayers for “Off-Site” investments made by the utility. The type of investments to be included in the Targeted Revitalization Infrastructure Program, commonly referred to as “TRIP”, will be limited to infrastructure investment that is physically located within the targeted area. The Ratepayer Advocate supports this regulation so as not to give the utility the ability to recover costs of investments outside of a TRIP area which are more appropriate for a base rate case.

The Ratepayer Advocate supports the position set forth in the proposed regulations that any TRIP investment not include the replacement of infrastructure that is fully depreciated even if such investment is within the TRIP area.

The proposed regulations provide for a “Sunset” provision. The Ratepayer Advocate believes that a Sunset provision is appropriate as the TRIP mechanism is envisioned as a “pilot program”. The pilot program should not automatically continue or revert to a permanent rate recovery mechanism. The Board, the Ratepayer Advocate and other interested parties should be given the opportunity to review the TRIP mechanism to determine if it is fulfilling the goals and objectives of the Governor’s Smart Growth policies. A determination can be made after a careful evaluation has been conducted of whether or not to continue the TRIP mechanism.

The Ratepayer Advocate supports the proposed rule which requires that the TRIP mechanism must be reviewed and approved by the Board on an annual basis after careful review of all relevant underlying information, including the prudence of the investments.

The Ratepayer Advocate is in complete agreement that the TRIP rate not include TRIP-related promotional expenses or any other Operations & Maintenance expenses. The Ratepayer Advocate believes that such expenses should be the responsibility of the utility’s shareholders in exchange for the utility receiving additional rate recovery in the form of TRIP rate base additions through a risk-free, guaranteed, reconcilable, dollar-for-dollar rate recovery mechanism.
The Ratepayer Advocate concurs that there should be a cap on the TRIP rate as proposed by the regulations.
There are other provisions that we support as well, but will address them in our March 20, 2004 detailed written comments. Likewise, there are some provisions we believe require further clarification that we will also address in our March 20, written comments.

In conclusion, the Ratepayer Advocate thanks the Board for the opportunity to comment on the proposed amendments to the New Jersey Administrative Code. The Ratepayer Advocate is confident that all New Jersey ratepayers will greatly benefit from the Board’s proposed regulations that seek to enhance the quality of life of all our residents. Thank you.

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New Jersey Division Of The Ratepayer Advocate
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