January 17, 2001

Frances Smith, Esq.
Secretary
Board of Public Utilities
Two Gateway Center
Newark, New Jersey 07102

RE: In the Matter of Evidentiary Hearings on the Board of Public Utilities’ Review of the New Jersey Gas Utilities’ Proposed Provisional Rates and Flexible Pricing Mechanisms. BPU Docket Nos. GR00070491, GR00070470, GR99100778 & GR00050293

Dear Secretary Smith:

Please accept this letter, an original and ten copies, as a motion on behalf of the Ratepayer Advocate to modify the procedural schedule in the above matters as follows:

1. To schedule an additional hearing date for the Ratepayer Advocate to submit additional surrebuttal testimony; and

2. To allow three weeks following the conclusion of hearings for the submission of initial briefs, and two week thereafter for the submission of replies.

This schedule is the minimum necessary to allow the Ratepayer Advocate to fully address the very important issues that are under consideration in these proceedings for each of the four New Jersey gas utilities. Further, this schedule can be accommodated without adversely affecting the utilities, as no party has objected to the implementation of provisional rate increases on February 1, March 1 and April 1.

These proceedings involve issues of the utmost importance to the utilities, energy consumers, and the State. First, the Board is to determine the utilities’ requests to collect unprecedented increases in natural gas costs from their ratepayers. These determinations will involve consideration of the prudency of the gas procurement activities of all four of the State’s natural gas utilities, as well as the fairness and equity of the recovery mechanisms advanced by the utilities and the Ratepayer Advocate. As noted in the hearings in this matter, nearly $1 billion is at stake. The outcome of these proceedings will substantially affect the pocketbooks of all residential and business consumers of natural gas throughout the State. Second, this proceeding involves the determination of fundamental State policies with regard to the manner in which the utilities procure and charge their customers for natural gas. The Board’s determinations of these issues will have a considerable impact on the development of the State’s natural gas marketplace, and thus will have broad impact on the future of reliable and affordable service for all energy consumers as well as the economic well-being of the State as a whole.

These issues require full and thoughtful consideration by the parties and the Board. However, the present schedule does not permit this. The Ratepayer Advocate was permitted grossly insufficient time to prepare surrebuttal testimony, and now has been provided grossly insufficient time to brief the issues in a manner befitting their importance.

With regard to surrebuttal testimony, the Ratepayer Advocate was provided only 20 minutes to prepare responses to oral rebuttal testimony that was presented by all four utilities on the afternoon of Tuesday, January 16. The utilities, which received the Ratepayer Advocate’s testimony on December 15, 2000, were given over one month to review the testimony, including the opportunity for discovery, before they were required to respond. At the January 16 hearing, utilities’ rebuttal testimony concluded at approximately 5:00 p.m. The Ratepayer Advocate’s attorney requested that she be given the opportunity to prepare surrebuttal testimony that evening and present it the following day, when a "spillover" hearing day was scheduled. However, Commissioner Butler stated in no uncertain terms that he would have a "problem" with re-convening the hearing on January 17. As noted, surrebuttal was presented after only a 20-minute break, to the detriment of the Ratepayer Advocate’s ability to properly represent the interest of the consumers of the State of New Jersey.

Compounding the inadequate time allowed for surrebuttal is the extremely truncated briefing schedule. Hearings were concluded late in the day on Tuesday, January 16, and the transcript for the last day of hearings was not available until today, January 17. In addition, to date the Ratepayer Advocate had received partial responses to transcript requests from one company, and complete responses are not expected from all companies until Thursday at the earliest. Under the current schedule, briefs must be provided to all parties by e-mail by noon on Tuesday, January 23, meaning they must be completed by Monday, January 22. The utilities, which must address only their own individual cases, may be able to comply with this schedule. The Ratepayer Advocate, however, must address all four utilities. A briefing schedule of not quite one week, with essential record items still outstanding, is clearly inadequate. The timetable for replies, which allows only three business days for the Ratepayer Advocate to reply to initial briefs from four utilities, is equally inadequate.

In light of the complex and technical testimony at the hearings this highly compressed schedule is prejudicial to ratepayers. The current schedule was established to allow a Board Order on all issues in before February, so that additional two-percent rate increases could be implemented by February 1, 2001 as contemplated in the Board’s Orders Authorizing Provisional Rates for each of the four utilities. However, based on the continuing high prices in the wholesale natural gas markets, the Ratepayer Advocate has not opposed the implementation of the February 1, March 1, or April 1 increases contemplated in the Board Orders. Thus, the February increase, as well as the March and April increases, could be implemented on a provisional basis, and the hearing and briefing schedule could be extended to allow for additional surrebuttal and more time for proper briefing, on behalf of the ratepayers who have been saddled with enormous rate increases.

The Ratepayer Advocate notes further that, in a number of proceedings before the Board, the Ratepayer Advocate has adhered to very short deadlines only to experience extended delays in receiving a decision from the Board. The following are just a few examples:

• In these proceedings, the Ratepayer Advocate was given only three days to file responses to the utilities’ emergent rate requests, filed on October 3, 2000, so that the requests could be addressed at the Board’s October 10, 2000 agenda meeting. Nonetheless, provisional rate orders were not issued for three of the companies until November 1, 2000, and the fourth was not even considered until November 9, 2000.
  
• The parties met many short deadlines in the natural gas unbundling proceedings, and then engaged in intensive negotiations to settle these matters at the end of 1999. Now, over a year later, the Board has issued only one order for one of the four gas utilities.
  
• In the proceedings to consider opening Customer Account Services to competition, the parties filed testimony and completed hearings under a very compressed schedule, then worked many long hours to settle with four utilities in July, 2000. These matters were not even considered by the Board until November, 2000 and orders were not forthcoming until December.
  
• The Ratepayer Advocate complied with very short deadlines to meet the Board’s hearing and briefing schedule in the Energy Universal Service proceedings over the summer of 2000, and again in early November, 2000. This matter has not as yet been considered by the Board, notwithstanding a cold winter with unprecedented high energy costs.
  
• One and one-half years after the issuance of summary orders in the electric restructuring proceedings, final orders have not been issued for three of the utilities.
  
• The Board’s decision on telecommunications universal service has been pending for more than two years.

In light of the Board’s own record of delays in considering matters and issuing Orders, there is no justification for restricting the rights of utility consumers to be heard on the important issues involved in these natural gas rate proceedings. This is especially true when no party is opposing the issuance of provisional rate orders which would obviate the need for the current impossible breakneck schedule.

For the above reasons, the Ratepayer Advocate respectfully requests that an additional hearing day be scheduled for additional surrebuttal, that initial briefs addressing the four utilities’ cases be due three weeks thereafter, and that two weeks be permitted for replies to the four utilities’ initial briefs. These modest schedule changes will allow the Ratepayer Advocate to prepare briefs which will more fully and fairly represent the interests utility consumers throughout the State. At a time of high energy costs, the ratepayers of this State deserve the opportunity for a complete and thorough review and recommendations by this office, which represents their economic and social interest.

c: Herbert H. Tate, President
Frederick Butler, Commissioner
Fred Grygiel, Chief Economist
John Valeri, Chief of Staff
Alyssa Weinberger, Executive Director
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