I/M/O THE 2004/2005 ANNUAL COMPLIANCE FILING FOR AN INCREASE IN THE STATEWIDE ELECTRIC AND GAS PERMANENT UNIVERSAL SERVICE FUND PROGRAM FACTORS WITHIN THE ELECTRIC AND GAS SOCIETAL BENEFITS CHARGE (SBC) RATES PURSUANT TO
N.J.S.A. 48:2-21 AND N.J.S.A. 48:2-21.1

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

ROCKLAND ELECTRIC COMPANY

BPU Docket No. EX00020091

PUBLIC HEARING
Holiday Inn
100 Chestnut Ridge Road
Montvale, NJ 07645
May 12, 2004

Good evening. My name is Kurt S. Lewandowski and I am an attorney representing the New Jersey Division of the Ratepayer Advocate. Our office was created by the New Jersey Legislature to represent ratepayers in cases such as this where a utility seeks an increase in rates or a change in services.

In compliance with the New Jersey Board of Public Utilities (“BPU” or “Board”) Orders dated April 30, 2003 and July 16, 2003, Public Service Electric and Gas Company (“Public Service”) and Rockland Electric Company (“Rockland Electric”) individually filed proposals on April 1, 2004 with the Board requesting an increase in their electric and/or gas rates to recover the costs of the Permanent Universal Service Fund (“USF”) program. The USF Program was established by the Board pursuant to the New Jersey Electric Discount and Energy Competition Act to assist qualifying low-income customers in paying their energy bills.

On June 18, 2003, the Board established a statewide program through which funds are collected from all energy customers through a uniform rate system. The New Jersey Department of Human Services (“DHS”) serves as administrator of the funds and authorizes the disbursements to benefit eligible energy customers. Based on the information that is known to date, the 2004-2005 USF rate is proposed to collect $105.5 million on a statewide basis.

In its April 2004 filing, Public Service proposed an increase for its residential gas customers ranging from $1.34 to $11.50 per year, depending on usage. The annual cost for a typical residential gas heating customer, reflecting 200 therms of usage during a winter month, would increase by $7.64 per year under the Company’s proposal.

In the Rockland Electric USF Program filing, the Company proposed an increase to its electric customers ranging from $.34 to $.78 per month depending on usage. If approved by the Board, the impact on a residential electric bill reflecting 650Kw – 1,500Kw, would be an increase between .46 and .47 percent, or less than one-half of a percent.

If the DHS or the Board modifies the USF Program so that the benefits to participants or the cost of the USF Program will increase further, the utilities request to pass through that increase in the July 1, 2004 rate change.

The electric and gas utilities have also requested that, if the DHS or the Board increases the costs or benefits of the USF Program after the July 1, 2004 rate change by at least $5 million annually on a statewide basis, that the utilities be given the authority to increase the above-referenced electric and gas USF Program charges upon 30 days prior written notice to the Board and the Division of the Ratepayer Advocate. Any such increases would be reconciled in the utilities’ next scheduled annual USF filing, to be made no later than April 1, 2005.

Public Service states that for every $5 million over the currently estimated $105.5 million in 2004-2005 USF Program costs, the Company’s bills would increase by approximately 0.04% above the increase mentioned earlier for a residential gas customer using 200 therms per month and 1,252 therms annually.

Rockland Electric states that for every $5 million over the currently estimated $105.5 million in 2004-2005 USF Program costs, the Company’s bills would increase by approximately 0.04%, or an additional 4 cents per month above the increase mentioned earlier for a residential electric customer using 925 kilowatt-hours per month.

Our office is engaged in a complete review of the filings by Public Service and Rockland Electric based on the information that is being supplied and updated by the Companies. We have retained the services of expert consultants to assist us in our review. The Ratepayer Advocate's inquiry is focused on the critical issues of whether the proposals allow ratepayers to pay the lowest rates possible consistent with the Board’s Order. The Board will make the final decision regarding the proposals.

The purpose of today’s hearing is for you, the customer, to voice your opinion, relate your experiences and offer comments about your Company’s rates and any service problems you may be experiencing. It is important that you express your views so they may become part of the record on which the Board of Public Utilities will base its decisions. The Ratepayer Advocate also needs to hear your views. Your active participation is strongly encouraged to help in our evaluation of the Companies’ proposals and our preparations.

This hearing is being transcribed and your comments will become part of the record. I would like to reiterate the importance of your participation so that the Ratepayer Advocate can have a clear record of your concerns and interests.

On behalf of the Ratepayer Advocate, I would like to thank you for attending tonight’s hearing.