OPENING STATEMENT OF BLOSSOM A

OPENING STATEMENT OF BLOSSOM A. PERETZ, ESQ.

IN THE MATTER OF PETITION OF NEW JERSEY AMERICAN
WATER COMPANY, INC.,
FOR AN INCREASE IN RATES FOR WATER AND SEWER
SERVICE AND OTHER TARIFF MODIFICATIONS

SUPREME COURT OF NEW JERSEY
DOCKET NO. 50,166
MARCH 13, 2001

Good afternoon, Chief Justice Poritz and Justices of the Supreme Court. My name is Blossom Peretz and I am the Ratepayer Advocate for the State of New Jersey.

This Court's decision will determine whether the Commissioners of the Board of Public Utilities may make financial decisions on behalf of ratepayers beyond the scope of their statutory mandate and decide important First Amendment priorities on ratepayers' behalf. The principles at the heart of the case remain the same, whether the Board is allocating eight cents, eight dollars or eighty dollars. Charitable decisions by investor-owned utilities should be funded by investors, not ratepayers.

Here, the utility's executives - not the ratepayers - chose to donate revenues collected from ratepayers to various groups, including three Presbyterian churches. Was the decision based on the number of Presbyterian ratepayers? Why not donate to a Jewish temple, a Mormon church or a Catholic church? Should United Water Company in Bergen County be required to use ratepayer dollars to fund a Korean church in Fort Lee? I respectfully ask, how many of the members of this Court are aware of a portion of your utility payments being applied to individual charities - and to which charities are they being applied?

In allowing ratepayer-funded charitable contributions, the Board of Public Utilities improperly enlarged the scope of its primary function - to set just and reasonable rates for utility services. By statute the Board can set rates only after determining what costs were legitimately incurred by a utility in providing service. I repeat, in providing service. The core of this Court's fact-based standard established in New Jersey Bell states that a utility must demonstrate the relationship of the donation to the functional operation of the company and the effect upon the creation of the service or product provided by the utility.

We maintain that the Board ignored, and the Appellate Division misapplied, the New Jersey Bell standard. Under the Board's decision, fifty percent of a charitable contribution will be included in a utility's rates, without any regard to a relationship to the provision of safe, adequate and proper water service. Remember, we are talking about a monopoly water utility where ratepayers have no ability to choose an alternative supplier for this lifeline service.

There is a constitutional issue as well. This Court and the United States Supreme Court have repeatedly recognized that compelled fees infringe upon an individual's First Amendment rights and that such fees may not be used to support causes that are not germane to the objectives of the organization. A decision to make a charitable contribution is clearly a reflection of an individual's - or a company's - values and beliefs. The First Amendment precludes the Board from forcing an individual to express an opinion in any manner - financially or through speech - about any charity, whether or not the individual agrees with the organization's goals. Neither you nor I can be compelled to give eight cents to anyone's favorite charity. Yet the Board - a state agency - wants to force ratepayers to make contributions to the favored charities selected by the executives of an investor-owned utility.

We maintain that in reviewing the Board's decision, the Appellate Division failed to properly apply prior precedent. Specifically, the Appellate Division failed to consider whether the ratepayer subsidized donations were germane to the utility's operations and failed to apply the safeguard of content neutrality.

The United States Supreme Court in Southworth did not, as the Appellate Division concluded, overturn the germaneness standard. The germaneness test cannot be ignored, yet neither the Board nor the Appellate Division determined that the charitable donations were germane to the provision of utility service. Indeed, such a finding could never be made, as the elimination of donations would not affect the provision of safe, adequate and proper service by the utility. In fact, the elimination of the charitable donations would leave more dollars for insuring safe, adequate and proper service.

The Board will argue that ratepayers will be protected since the Board will ensure that donations to charities having ideological missions that are likely to be offensive to a majority of the ratepayer community will be excluded. The idea of commissioners of a state agency deciding what is "offensive to a majority of the ratepayer community" is offensive to the First Amendment. The constitutional concept of content neutrality becomes one of content acceptability, with the Board as the arbiter. Neither the Board nor any other state agency may determine whether ratepayers will be offended by a charitable contribution.

Today's case is not a matter of the size of the donations involved. Although the Board will maintain that the amount of money involved for each ratepayer is minuscule, there is no such thing as a minuscule violation of the First Amendment. An act is either a violation or it is not. James Madison, in denouncing state support of churches, declared that even "three pence" was too great an appropriation.

Simply put, a utility cannot force ratepayers to fund its benevolence without a showing that the extra charges are legitimately incurred by the utility in providing safe, adequate and proper service, and no Commissioner can constitutionally determine whether those contributions are acceptable to the majority of ratepayers. We therefore respectfully ask this Court to reverse the decision of the Appellate Division in this case.

I would now like to introduce Ratepayer Advocate co-counsel, Andrew Dembia.

Thank you.

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