REMARKS OF SEEMA M. SINGH, ESQ.
DIRECTOR AND RATEPAYER ADVOCATE
PRESENTED BY AMI MORITA
DEPUTY RATEPAYER ADVOCATE
DIVISION OF THE RATEPAYER ADVOCATE

I/M/O THE PETITION OF JERSEY CENTRAL POWER & LIGHT CO. FOR
APPROVAL OF AN INCREASE IN BASE TARIFF RATES, PHASE II

BPU Docket No. ER02080506

PUBLIC HEARING
Freeholder’s Meeting Room
Ocean County Administration Building, Room 119
2123 Court Street, 101 Hooper Avenue
Toms River, New Jersey 08754
September 30, 2004

Good afternoon. My name is Ami Morita, 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.

On July 16, 2004, Jersey Central Power and Light (“JCP&L,” or the “Company”) filed a supplemental petition with the Board of Public Utilities proposing to increase its overall rates for electric service and to institute other revisions to charges and services. The Company made this filing in compliance with the directives set forth in the Board’s Final Decision and Order dated May 17, 2004, in the base rate proceeding.

The Company’s Phase II filing seeks an increase of approximately $55.8 million or about 2.6% of overall annual revenues. This amount reflects approximately $36.1 million of increased distribution charges and an increase of about $19.7 million in the Market Transition Charge (“MTC”). According to JCP&L, a typical residential customer using 500 kWh a month who currently pays $54.12 per month will see an increase in their monthly bill of approximately $1.35, or 2.5%.

Pursuant to the Board’s Final Order, in this Phase II proceeding:
(1) JCP&L must provide evidence of its compliance with current Board regulations regarding service quality and reliability. In addition, the Board will make a determination regarding the imposition of additional service quality and reliability and quality standards for JCP&L.
(2) JCP&L must demonstrate that expenditures for projects undertaken to increase system reliability were prudently incurred and are reasonable for rate recovery.
(3) JCP&L must demonstrate that system reliability and service have sufficiently improved to justify an increase in the Company’s return on equity from 9.5% to 9.75%.
(4) JCP&L must provide an economic study of its Forked River and Yards Creek stations to determine the best use of these facilities for the Company’s ratepayers.

Our office is conducting a complete and thorough investigation and evaluation of the Company’s Petition based upon the information that is being supplied and updated by the Company. We have retained the services of experts, including a utility accounting expert and a professional engineer, to assist us in our review of this case.

The Ratepayer Advocate will cross-examine the utility’s witnesses and submit evidence at upcoming evidentiary hearings. Our experts will offer testimony in opposition to various portions of JCP&L’s proposal to increase your rates. However, the New Jersey Board of Public Utilities, with legal submissions from the parties, including the Ratepayer Advocate, will make the final decision regarding the utility’s request for rate modifications.

The Ratepayer Advocate has significant concerns about the extent of the requested increase. Our inquiry is focused on the following critical issues:

The Ratepayer Advocate will review all the elements of the Company’s filing to ensure that expenditures for which rate recovery is requested were prudently incurred and reasonable for rate recovery.

The Ratepayer Advocate will review the Company’s books to ensure that the expenditures for which rate recovery is requested are incremental to the Company’s normal, prudent budgets for operating and maintenance costs and for capital costs.

The Ratepayer Advocate will review the Company’s financial information to ensure that the requested increase is necessary to maintain the Company’s financial integrity.

The Ratepayer Advocate will review the Company’s filing to determine whether the Company’s service quality and reliability have improved sufficiently to justify an increase in the Company’s allowed return on equity or whether, in fact, the Company’s reliability has deteriorated to warrant a further reduction in the allowed return on equity.

The Ratepayer Advocate will also propose any necessary adjustments to ensure that the Company has properly matched its projected rate base with revenues and expenses.

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 Administrative Law Judge and the Board of Public Utilities will base their decisions. The Ratepayer Advocate also needs to hear your views. Your active participation is strongly encouraged to help in our evaluation of the Company’s proposal and our preparations for the evidentiary hearings.

This hearing is being transcribed and your comments will become part of the record. The hearing officer will instruct you to announce your name and address before you speak. 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 today’s hearing.

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The Division of the Ratepayer Advocate is an independent state agency that 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