Public Advocate: PSE&G Owes Ratepayers $130 Million in Overpayments

Newark, N.J.—New Jersey Public Advocate Ronald K. Chen today filed a brief with the Office of Administrative Law (OAL) that PSE&G should immediately return more than $130 million -- including interest -- in overpayments owed to ratepayers to reconcile a special ratemaking charge used between 1999 and 2003.

The brief, by the Division of Rate Counsel, counters PSE&G’s contention that ratepayers are not owed anything and that the case does not need an evidentiary hearing before a judge at the OAL.

“With electric rates going up every year, every penny counts. Yet PSE&G is refusing to return $130 million they owe to ratepayers. This is totally unacceptable and we are doing everything we can to get this money back into ratepayers’ pocketbooks where it belongs,” said Ronald K. Chen, Public Advocate.

The over-collection resulted from extra charges, including the Market Transition Charge (MTC), which were added to customers’ bills beginning in 1999. PSE&G used MTC funds to repay a $540 million loan it received from its affiliate company, PSEG Power. The loan was advanced in relation to the sale and transfer of  PSE&G’s electric generating plants due to the deregulation of New Jersey’s energy market under the Electric Discount and Energy Competition Act of 1999.  

The MTC charge stayed on customers’ bills after PSE&G’s loan had been fully repaid. In 2003, PSE&G acknowledged that customers had overpaid and returned $205 million. However, the Public Advocate’s Division of Rate Counsel’s analysis shows that PSE&G still owes ratepayers approximately $130 million.

            Rate Counsel’s brief makes two main points:

• PSE&G customers paid off the $540 million loan on a monthly basis; PSE&G calculated the interest on the loan as if the customers made only one payment per year.
• PSE&G does not want to pay interest on the overcharges that it failed to refund to customers, but Rate Counsel’s position is that interest is owed to ratepayers.

Chen said Rate Counsel has done a thorough review of the case and is frustrated by the time that it has taken to resolve the matter. The Department of the Public Advocate’s Division of Rate Counsel had asked the BPU to keep the matter in its purview and for a decision to be made on the existing record. BPU, however, had decided to transmit the case to the OAL for a hearing.

PSE&G filed a motion for a summary judgment with the OAL on May 25, 2007. If a summary judgment were issued and approved by the BPU, PSE&G would not have to repay ratepayers.

Rate Counsel is asking that a hearing be scheduled before the Administrative Law Judge since the BPU has already decided it wants the OAL to hold a hearing.

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The Division of Rate Counsel is a division within the Department of the Public Advocate and represents the interests of consumers of electric, natural gas, water/sewer and telecommunications and cable TV service. Additional information on this and other utility matters can be found at the Division’s website at http://www.rpa.state.nj.us. The Department of the Public Advocate website is http://www.state.nj.us/publicadvocate.