WHEREAS, the Legislature
passed and Governor Whitman signed into law the Electric Discount and
Energy Competition Act ("EDECA") in February of 1999; and
WHEREAS, EDECA required
the State's electric utilities to divest themselves of their electric
generation assets and mandated a reduction in electricity rates for a
period of four years which was to be justified by anticipated competition
in the electricity marketplace; and
WHEREAS, EDECA authorizes
utilities to recover from ratepayers the difference between the market
cost of the electricity and the mandated rates, also known as "deferred
balances," such recovery to occur after the mandated rate cuts expire;
and
WHEREAS, the competition
in the electricity marketplace anticipated under EDECA has, to a large
degree, not occurred and the market cost of electricity has not declined
below the mandated rates; and
WHEREAS, the Board
of Public Utilities ("BPU") now projects that accumulated deferred balances
in the State will total approximately $1 billion dollars; and
WHEREAS, according
to BPU projections the deferred balances will be unevenly distributed
among the State's electric utilities, including: Jersey Central Power
and Light with an estimated $687 million in deferred balances, averaging
approximately $675 per ratepayer; Rockland Electric with an estimated
$119 million in deferred balances, averaging approximately $1,700 per
ratepayer; Connectiv with an estimated $165 million in deferred balances,
averaging approximately $325 per ratepayer; and Public Service Electric
and Gas Company which is not projected to have any deferred balances;
and
WHEREAS, N.J.S.A.
48:2-23 requires utilities to provide New Jersey consumers with safe,
adequate and proper utility service at reasonable rates and there is a
compelling State interest in maintaining affordable utility prices for
New Jersey consumers; and
WHEREAS, EDECA mandates
that BPU permit the recoupment of deferred balances sought by utility
companies, which will likely result in rate increases for consumers in
the upcoming years; and
WHEREAS, the utilities
that incurred deferred balances will file for rate increases by August
30, 2002 to recover those balances beginning August 1, 2003, when the
statutory period for the rate caps expires; and
WHEREAS, Senate
Bill No. 869 would grant the BPU the express authority to allow utilities
to securitize deferred balances by issuing long-term bonds and has been
presented to me for signature into law; and
WHEREAS, such bonds
could extend the time period to up to 15 years for recovering deferred
balances, thereby reducing the short term rate increases but increasing
overall payments because of interest costs; and
WHEREAS, the BPU
will in its review of deferred balance filings determine how best to balance
and resolve the potential impact of increased rates on consumers with
the need to ensure the fiscal integrity of electric utilities; and
WHEREAS, a Task
Force will assist in examining the reasons why some of the State's electric
utilities have accumulated large deferred balances and how these deferred
balances should be addressed;
NOW, THEREFORE,
I, JAMES E. McGREEVEY, Governor of the State of New Jersey, by virtue
of the authority vested in me by the Constitution and by the Statutes
of this State, do hereby ORDER and DIRECT:
-
There is hereby
created the "Deferred Balances Task Force."
-
The Task Force
shall consist of eight (8) members including the Treasurer and the
Deputy Treasurer of the State of New Jersey and six (6) public members
appointed by the Governor. The public members shall include members
with training and expertise in a variety of areas, including the needs
and interests of consumers, senior citizens and those living on fixed
incomes, the generation of electrical power, the marketing of electrical
power, the deregulation of formerly regulated markets and the management
and operation of electric utilities.
-
The Task Force
shall convene immediately and shall report to the Governor before
the Legislature reconvenes in September. The report shall address
the reasons why the deferred balances were accumulated, what mitigation
steps utilities took to reduce deferred balances and how they ought
to be addressed to best protect the interests of ratepayers, including
an evaluation of the merits of securitizing deferred balances.
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The Task Force
may draw upon the services of State agencies as necessary to achieve
its goal, and may consult with consumer groups, utility companies
and energy suppliers, experts from the Board of Public Utilities and
members of the public.
-
This order shall
take effect immediately.
|
GIVEN, under
my hand and seal, this 12th
day of August in the Year of Our Lord,
Two Thousand Two, and of the Independence
of the United States, the Two Hundred and
Twenty-Seventh./s/
James E. McGreevey
Governor
[seal]
|
Attest:
/s/ Paul A. Levinsohn
Chief Counsel to the Governor