The New Jersey and indeed the US Electric Power Market Industry is in the midst of rapid change. The Energy Deregulation and Competition Act ("EDECA") signed by Governor Whitman in February 1999 completely restructured the 90 year old electric monopoly industry. Except for PSE&G, all the New Jersey utilities have divested their generation plants, and have become involved in various mergers and acquisitions leading, to among other things, spin offs of newly created affiliates to the energy marketplace for services to electric consumers.

The turmoil and change within the industry has been accompanied with significant problems related to load growth and reliability, resulting in increasing demand for electric energy and heightened concerns about reliability. The increasing outages and signs of improperly maintained infrastructure have brought new concerns about the ability of the new marketplace to meet expanding capacity needs of all consumers - the residential, commercial and industrial customers. Witness the class action in Monmouth County as the result of the July 1999 outage.

There is a need for development of new resources to meet the growing demand for electricity at reasonable rates for consumers, with assurances of quality and reliability. This is, of course, a legislative concern, a part of EDECA, which brings me to the current Comprehensive Resource Analysis proceeding.

Since the issues have been debated and extensively briefed, I will limit my remarks to very specific concerns:

My priority concern is that we facilitate an environment that will vigorously encourage and provide a fertile breeding ground for new ideas and new technologies with maximum end user energy choices and design choices and a high level of reliability, particularly during peak load demand time and during times of high market energy price swings. All of this can be done while respecting the environment through proper efficiency programs and use of our renewable resources. That is the pledge of EDECA to New Jersey ratepayers.

Let’s quickly talk about the changing nature of demand. The "e" in e-commerce stands for electronic. All computer devices that move electronic bits and bytes are driven by electricity and the uninterrupted flow of electricity is critical to this new economy. The backbone of our new economy is the electric power grid. All major outages impact the entire economy. And electricity is only as clean and efficient as the fuel that is used to produce it. We must liberate New Jersey from dependence on the constraints of the current grid if we are to maintain our role as a state that fosters its current business customers and attracts new businesses to New Jersey.

The benefits of the energy efficiency and renewables provisions of the EDECA legislation are apparent. Here is my concern: we must place this development in the hands of a independent state wide administrator who will act on behalf of all the interests of the citizens of the state of New Jersey. The Board took a big step yesterday in that direction by imposing Board administration of the interim $10 million energy efficiency and renewable energy programs it approved. This is especially important, since our electric utility companies mostly are no longer based in New Jersey.

GPU - with the recent merger and consolidation of the GPU companies - the GPU corporate headquarters place has moved to Pennsylvania. More importantly with the pending takeover of GPU by First Energy of Ohio, GPU headquarters will be in Ohio and New Jersey GPU will be part of a new conglomerate based in Ohio. Let’s look at what we used to call Atlantic Electric. With the Delmarva merger it is now Conectiv with corporate headquarters in Wilmington, Delaware. Rockland Electric, formerly part of Orange and Rockland, has now been subsumed by the giant Con Edison, with a new pending merger with Northeast Utilities. My point is that our electric utilities except for PSE&G, who is buying energy plants in New York and building energy plants in Arizona and South America, have left the state of New Jersey. Do we want decisions of New Jersey energy efficiency and energy renewables being made in Pensylvania, Ohio, Delaware or New York? Let’s keep New Jersey priorities up front - let’s delegate management of New Jersey energy efficiency strategies to an independent New Jersey administrator or this Board - let’s not make our customers have to compete with the interests of other states or in the case of PSE&G, with interests of non-regulated energy projects throughout the country and the world.

The need for reliable electricity influencing the design of an important new technology is not unprecedented. When Alexander Graham Bell was contemplating deploying the telephone as a commercial technology, he chose not to depend on the new electricity industry to power his invention. He built an independent capacity into his system. How can e-commerce companies respond today if there are continual supply interruptions, devastating them economically so that they could not rely on electricity? Reliability for New Jersey residential customers, businesses, our schools, hospitals and libraries has never been more important.

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