My name is Susan McClure. I am an attorney representing the New Jersey Division of the Ratepayer Advocate. Our office was created by Governor Whitman to represent and protect the interests of all utility customers in New Jersey in cases such as this, where a utility seeks an increase in rates. The Ratepayer Advocate represents residential customers, small retail customers, small and large industrial customers, schools and libraries, and other institutions in the community. The Ratepayer Advocate’s goal is to advance the interests of all consumers and to promote the economic vitality of the state, in part by seeking just and reasonable water rates for all consumers. Our office represents the public in utility rate cases.

The last rate case for Trenton Water Works (hereinafter "Trenton Water Works" or "the Company") was in 1990. Since that time, the Company has been faced with rising expenses, and increased capital expenses due to state and federal clean water laws. For example, the Company constructed the Mechanical Dewatering Facility between 1995-1997 at a cost of about $19 million in order to comply with the National Pollution Discharge Elimination System requirements, as well as other requirements established by the Delaware River Basin Commission. Over the last ten years, the Company has sought and received rate relief from another arm of the state government, the Local Finance Board, which is part of the Department of Community Affairs and has jurisdiction over municipal finance issues. However, the Board of Public Utilities ("BPU") is the state agency that has jurisdiction over the rates that a utility may charge customers, including those municipal utilities that serve more that 1,000 customers outside the boundaries of the municipality. Trenton Water Works is a municipal utility that serves the residents of Trenton as well as certain residents of Ewing, Hamilton, Lawrenceville and Hopewell, and therefore must seek BPU approval for any permanent change to its rates..

The Local Finance Board, in response to requests by Trenton Water Works, has approved two prior "interim" rate increases: 13.98% in 1991 and 37% in 1998. These interim rate increases are included in the rates that customers of Trenton Water Works currently pay. In this proceeding, the Company is seeking to have these interim rate increases incorporated into the permanent tariff for Trenton Water Works. The Company is also seeking an additional increase of approximately 5.65% over the existing rates. Under the Trenton Water Works proposal the average bill would rise from $59.30 per quarter to $61.61 per quarter for an average residential customer using 18,000 gallons per quarter.

Overall, Trenton Water Works is seeking to increase its BPU-approved rates by approximately 45%, an amount that includes both of the interim rate increases previously approved by the Local Finance Board as well as the Trenton Water Works request for an additional 5.65%.

We are conducting a complete and thorough investigation of the Company’s request to evaluate whether and to what extent a change in rates is proper at this time. We have requested and received detailed information from the Company about the purported need for the rate increase.

We currently have a team of attorneys and expert witnesses analyzing data from the Company. These expert witnesses include financial experts, such as accountants and economists, and an engineer. These expert witnesses will offer testimony in opposition to various portions of this proposal to increase your rates. Upon completion of the discovery stage of the case, we will prepare testimony so that we may file it by September 22, 2000. This testimony will be presented at the evidentiary hearings and will set forth the Ratepayer Advocate’s positions regarding the requested rate increase and the other tariff modifications. Evidentiary Hearings are scheduled for October 10, 11, 12 and 23, 24 & 25, 2000 before the Honorable Louis G. McAfoos at the Office of Administrative Law in Hamilton, New Jersey.

At evidentiary hearings, we will cross-examine the utility’s witnesses and submit evidence. However, it is important that you be aware that the ultimate decision regarding all rate modifications in New Jersey is made by the Board of Public Utilities.

I can tell you that at this time we are focusing especially on these critical areas:

• Verifying the actual capital expenditures made since the Company’s last rate case, and determining the reasonableness and prudency of those expenses;
  
• Reviewing all of the accounting positions presented by the Company in support of its petition, including revenue and expense projections, and verifying whether the data supporting the proposed rate increase is complete, consistent and accurate;
  
• Performing a detailed, comprehensive review of all the cost projections made by the Company;
  
• Determining the reasonableness of the allocation of the proposed rate increase among the various customer classes and between the Township customers and the City customers.

Ultimately, our inquiry seeks to determine whether or to what extent the Company’s proposal allows ratepayers to pay the lowest rates possible, consistent with receiving safe, reliable and proper service from Trenton Water Works. We expect to question Company witnesses about these concerns in cross-examination and to raise them in any settlement meetings.

The purpose of this open public hearing is for you, the customer, to voice your opinion, relate your experiences and offer comments about your Company’s service. It is important that you express your views, because they will become part of the record on which the Board of Public Utilities makes its decisions. The Ratepayer Advocate also needs to hears your views. We strongly encourage your participation, which will help us evaluate the Company’s proposal and prepare for the evidentiary hearings.

This public hearing is being transcribed and your comments will become part of the record. Judge McAfoos of the Office of Administrative Law will instruct you to give your name and address before you speak. I would like to reiterate the importance of your input 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 this public hearing.

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