PSE&G files for electric distribution increase

May 24, 2002 — Public Service Electric and Gas Company (PSE&G) recently filed a petition with the New Jersey Board of Public Utilities (BPU) for a $250 million increase in electric distribution revenues to be effective August 1, 2003.

If approved, it would be the first increase in more than a decade for New Jersey’s largest utility. “It’s noteworthy that, when all is said and done, these proposed rates will result in customer bills below 1999 levels,” said Al Koeppe, PSE&G President and COO.

The rate filing was mandated by an April 1999 order, issued by the BPU, which implemented parts of New Jersey’s Electric Discount and Energy Competition Act (EDECA). This same order restructured PSE&G and gave customers the opportunity to shop for alternative suppliers for their electric energy. In its order, the BPU also directed PSE&G to phase in electric customer discounts, which will reach an average of 13.7% for the year ending July 31, 2003, and to have its base rates reviewed and reset for August 1, 2003, when the discounts expire.

The requested increase in distribution revenues, to be effective August 1, 2003, coincides with the expiration of the 13.7% customer discounts. From a customer perspective, the combination of the expiring discounts and PSE&G’s proposed rate changes would mean bill increases averaging 12.8% when compared to bills for the year ending July 31, 2003. However, PSE&G’s request would place its rates, including the current charges for basic generation service (BGS), at approximately 2.6% below levels in effect when the BPU issued its April 1999 Order.

The request for higher distribution revenues includes the following proposed increases: $187 million related to an increase in rate base primarily attributable to its investment of $1.7 billion in distribution facilities since the last rate case, $18 million in depreciation rates and $45 million in various other expenses and adjustments, such as wages, fringe benefits, and the need to enhance the security and reliability of the electric distribution system. In addition, the request calls for an allowed return on equity of 11.75%.

Electric Filing

“The company’s decade-old electric base rates do not reasonably reflect its capital investment and other costs required to maintain its electric utility infrastructure so as to provide quality, long-term electric distribution services,”PSE&G Rate Counsel Frank Delany stated in a letter to accompany the petition to the BPU.

“We are confident that our filing will show clearly that the requested rate relief is essential to maintaining the necessary electric distribution infrastructure and needed services to serve our customers in a safe, reliable and adequate manner,” Delany said.

PSE&G is New Jersey’s oldest and largest regulated gas and electric delivery utility, serving nearly three-quarters of the state’s population. PSE&G is a subsidiary of PSEG, a diversified energy and energy services company. (website address —

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