February 2, 2000

Via Hand Delivery and E-Mail
Mr. Peter Yochum, Bureau Chief
Board of Public Utilities
Two Gateway Center
Newark, New Jersey 07102

Dear Mr. Yochum:

This letter is in response to the Utility Consensus Position (Utility Position) distributed to the parties in the Customer Account Services Working Group on Friday, January 28, 2000. The utilities would have us believe that we are here to debate whether or not there should be energy and hence, metering and billing competition for New Jersey consumers - forgetting that we are here to implement the Competition Act. The legislature has already spoken. Section 2 of the Act states that, among other policies, it is the Act’s objective to "[p]lace greater reliance on competitive markets, where such markets exist, to deliver energy services to consumers in greater variety and at a lower cost than traditional, bundled public utility service... ." The "business as usual" approach reflected in the Utility Position will not result in real competition and real choices for this State’s energy consumers. The Ratepayer Advocate is simply urging the Board to initiate a proceeding that will result in an Order that complies with both the mandates of the Act and with previous Board Orders issued in the gas and electric restructuring cases. The Utility Position, on the other hand, consistently requests that the Board either languish in inaction or close off competition, in direct contravention of the mandates of the Act.

The Utility Position, like the original consensus document submitted by the utilities, is replete with words and phrases that reflect exactly the type of anti-competitive stance that is prohibited by the Electric Discount and Energy Competition Act (the Act). See N.J.S.A. 48:3-53(a) and (b). The Introduction section of the Utility Position inaccurately paraphrases language contained in the Act as a directive to the Board to conduct a formal investigation of "potentially competitive customer account services." The utilities then blatantly disregard the goals and mandate of the Electric Discount and Energy Competition Act and erroneously claim that the purpose of this proceeding is to determine "whether and to what extent utility customers should be permitted to choose a supplier for any customer account service." Utility Position , p 1-2. As the Ratepayer Advocate pointed out in the summary position document previously submitted, the utilities’ references to "potentially competitive" and "whether and to what extent" fly in the face the Act and the competitive market for customer account services required in its language.

The Utility Position then actually contains a verbatim recitation of the section of the Act that requires this proceeding to result in a Board Order "providing customers the opportunity to choose a supplier not later than one year from the start of retail competition", yet the utilities persist in proposing a course of action that would have the Board limit its initial consideration to billing competition and delay actual choice for billing services until at least two years past the start date for retail competition. Some utilities assert that with respect to supplier consolidated billing, only the utility may give "consent" to another entity to provide the function and that "some of these issues may be insurmountable." This type of approach hardly evinces a readiness to negotiate in good faith.

If consolidated supplier billing is not allowed as an option, many suppliers may decide not to enter the New Jersey market. Under the present billing options, a marketer can not establish the type of communication with a customer that the billing service includes with those customers who wish to receive a consolidated bill, since only the utilities may presently offer such a service. California, Delaware, Illinois, Maryland, Oregon, Texas, Pennsylvania and Nevada have allowed customers the option of supplier consolidated billing. New Jersey is lagging behind and can not attract the type of vibrant market that the other states can.

The Utility Position further attempts to thwart competition by requesting that all metering competition be delayed until the end of the transition period and that gas metering be delayed indefinitely. Utility Position, p. 5-6. The gas metering proposal contained in the Utility Position requires an applicant or the Ratepayer Advocate to submit a proposal that addresses at least twenty five complex issues. Only an applicant with incredibly extensive resources and the knowledge necessary to navigate New Jersey’s regulatory labyrinth could attempt to submit such a proposal. This reflects a "Sleepy Hollow" approach which will not achieve the goals of the Act. The proper signals must be sent that New Jersey is "Open for Business".

The utilities, after essentially proposing a completely closed door to competition for customer account services, then request cost recovery for the "substantial costs" for this proceeding. The utilities fail to identify these "substantial costs", but do request an order allowing them to "defer these costs upon their books for recovery in a future proceeding." Utility Position, p. 3-4 The Ratepayer Advocate opposes the issuance of such a cost recovery Order. The Ratepayer Advocate assumes that the type of costs that the utilities are proposing to recover are transition costs, such as, computer upgrades, data protocol implementation costs, potential stranded costs, or the costs for litigating the proceeding. However, these costs are either already being recovered by the utilities or are inappropriately requested here.

With respect to the gas utilities, the Board recently voted to approve stipulations in the four gas unbundling cases that do not provide for such cost recovery. In the context of the gas unbundling cases, the gas utilities proposed a variety of automatic adjustment mechanisms that would recover asserted "lost revenues" and various incremental costs that the gas utilities claimed would be incurred as a result of the implementation of competition. However, as a result of negotiations, the parties to the gas unbundling stipulations agreed that proposals for cost recovery would be limited to those costs associated with implementing new or additional customer choice protocols or other transportation processes. It is the Ratepayer Advocate’s understanding that there is currently an EDI cost recovery proposal before the Natural Gas Working Group.

The electric utilities are all recovering "transition costs" through the Market Transition Charge (MTC) included in their unbundled electric rates. For example, Atlantic Electric is recovering over $20 million dollars through the MTC to recover costs such as "customer care system enhancements, balancing and settlement system and regulatory proceedings." I/M/O the Matter of Atlantic City Electric Company’s Rate Unbundling, Stranded Costs and Restructuring Filings, BPU Docket Nos. EO97070455, EO97070456 AND EO97070457 (Summary Order dated May 7, 1999, ¶25 and Schedule C and D of Stipulation). Rockland Electric is similarly authorized to recover $1.3 million for costs related to "retail access billing system and data exchange systems upgrades and retail access operating costs." I/M/O Rockland Electric Company’s Rate Unbundling, Stranded Costs and Restructuring Filings, BPU Docket Nos. EO97070464, EO97070465 and E)97070466 (Summary Order dated July 28, 1999, p.3 and Appendix F of Rockland Plan). GPU Energy is recovering $1.33 million on an annual basis for computer related costs tied to the transition to a competitive market. I/M/O Jersey Central Power & Light Company D/b/a GPU Energy - Rate Unbundling, Stranded Cost and Restructuring Filings, BPU Docket Nos. EO97070458, EO97070459 AND EO97070460 (Summary Order dated May 24, 1999). The electric utilities are also recovering transition related costs through the fees included in the Third Party Supplier Agreements. In the Matter of the Energy Master Plan Phase II Proceeding to Investigate the Future Structure of the Electric Power Industry - Third Party Supplier Agreements, BPU Docket Nos. EX94120585UY, EO97070457, EO97070460, EO97070463, EO97070466 (Decision and Order, dated August 17, 1999). The recovery of stranded costs is similarly included in electric utilities’ rates.

Further, with respect to litigation costs, the utilities still recover "rate case expenses" on an annual basis through base rates, even though six of the seven utilities have not filed a rate cases since 1993¹. Moreover, it is simply ludicrous for the utilities to request cost recovery to litigate the position that is espoused in the Utility Position. As a matter of policy and statutory mandate, the Board should not allow utility cost recovery for litigating a position that, contrary to the goals of the legislature, "unreasonably impede[s] a transition to a competitive customer account service market." See N.J.S.A. 48:3-53(a) and (b).

It is important to note that the Utility Position discusses metering and billing competition as separate and distinct from retail energy competition, as if the metering and billing should be examined in a vacuum. The two are inexorably linked; competition in retail energy can not thrive without competitive metering and billing. Consumers must be afforded the option of receiving all energy service, not only their energy commodity but also the related billing and data management services from the supplier of their choice. Marketers must also be given the option of providing the billing and metering services that accompany the service of an energy supplier. Thus, as stated in previous filings, the cost of service studies must therefore include an unbundling and analysis of all elements and functions of metering and billing to enable the marketplace to decide which services will competitively thrive. Open the market and the market will come. The Board has already directed the parties "to work cooperatively to conclude the billing and metering proceeding in an expedited fashion". I/M/O Public Service Electric and Gas Company’s Rate Unbundling, Stranded Costs and Restructuring Filings, BPU Docket Nos. EO97070461, EO97070462 AND EO97070463 (Final Decision and Order dated August 24, 1999). The Ratepayer Advocate urges the Board to comply with the statutory mandate and its own goal to conclude the billing and metering proceeding "by May 1, 2000, but in any event [shall] conclude by August 1, 2000 pursuant to section 6 of the Act." I/M/O Public Service Electric and Gas Company’s Rate Unbundling, Stranded Costs and Restructuring Filings, BPU Docket Nos. EO97070461, EO97070462 AND EO97070463 (Final Decision and Order dated August 24, 1999).

In conclusion, the Board should initiate the proceeding to open all customer account services to a competitive marketplace and consequently should analyze all such services in the context of the embedded COSS. The Act requires that customer account services become competitive. Clearly, the intent of the Legislature was to let the competitive market determine the degree of competition. The Ratepayer Advocate’s position would accomplish just that -- via a proceeding to open all customer account services to competition. Thereafter, the market will decide which account services will thrive competitively. To accomplish this, the Board should adopt the procedural schedule set forth by the Ratepayer Advocate in order to achieve this statutory directive.

About RPA    |    Press Releases     |    Annual Report     |    E-mail Directory     |    NewsLetters     |    Search
New    |    Electric    |    Gas     |    Telecommunications     |   Water and Waste Water     |    Links    |     Archives 

Home

Footnote
1.   The only utility that has had a base rate case since 1993 is South Jersey Gas Company.