Ratepayer Advocate Seema M. Singh Calls for Permanent Performance Standards and Automatic Fines to Resolve JCP&L Power Outages

Newark, NJ –Ratepayer Advocate Seema M. Singh is proposing a regulatory solution to the power outages in Jersey Central Power & Light Co.’s territory by requiring the utility’s shareholders to pay automatic penalties if JCP&L fails to live up to permanent benchmark performance standards.

“JCP&L is operating under an interim performance benchmark standard that has failed to produce a permanent solution to the power outages that continue to plague the company’s customers,” said Ms. Singh.  “When the utility has failed to meet even the interim benchmark, there are no automatic repercussions for the utility while ratepayers suffer outages. Generally, these outages are reviewed on a case-by-case basis.”

The blackouts that plagued Jersey Shore businesses and residents during the July 4^th holiday were the second incident of serious power outages in less than a year for JCP&L customers.  As part of JCP&L’s base rate case that is now before the Board of Public Utilities, the Ratepayer Advocate is asking the BPU to set a permanent benchmark standard and hold the utility to it with automatic fines that the shareholders pay.

“Right now, the ratepayers are bearing the risk of JCP&L’s failure to provide reliable service,” said Ms. Singh. “We have to shift the risk of JCP&L’s failure to provide safe, proper and reliable service from the ratepayers to the shareholders.” 

Rates are set to enable a utility to provide safe, proper and reliable service.  “The utility must deliver on that guarantee,” Ms. Singh said. “As it stands, the ratepayers are not getting the service they are paying for. Making shareholders shoulder responsibility for poor performance is the best way to ensure that JCP&L’s service improves.” 

The proposed benchmark standard would be based on JCP&L's past performance record. This is to prompt the utility to continually improve its performance.

Under the Ratepayer Advocate’s proposal, the maximum penalty JCP&L could face in any one year would be $9.5 million, which is one half of 1 percent of $1.9 billion, the company’s total revenues in 2001. Ten areas, covering such customer service issues as the duration and frequency of outages, would be established to measure performance.  Failure to meet the criteria in any one area over the course a year would result in an automatic fine of $950,000 for each standard.

In addition to the automatic fines, the Ratepayer Advocate is also recommending that JCP&L institute a Customer Service Guarantee for certain service quality failures. Under the proposed performance standards, the company would give customers who experience certain kinds of service failures a credit on their utility bill.

Ms. Singh said that if the outage lasts for longer than 24 hours, individual customers should be provided credit on their bill of $50 paid for out of company profits that would otherwise be distributed to shareholders. “This is an additional incentive to improve performance,” Ms. Singh said. 

The Board has authority to hold JCP&L to these standards in the current base rate case due to be decided on July 24^th. “This is the perfect opportunity to approve this two-pronged regulatory solution to the problem of power outages by this utility,” Ms. Singh said.

The Division of the Ratepayer Advocate represents the interests of utility consumers and serves as an active participant in every case where New Jersey utilities seek changes in their rates or services.  The Ratepayer Advocate also gives consumers a voice in setting long-range energy, water, and telecommunications policy that will affect the delivery of utility services well into the future.

Additional information on this and other matters can be found at the Division of Ratepayer Advocate’s website at http://www.rpa.state.nj.us

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