TRENTON, NJ — On July 14, the New Jersey Board of Public Utilities authorized board staff to sign a settlement agreement between NJBPU, Division of Rate Counsel and PSE&G to substantially lower PSE&G’s existing transmission services Return on Equity. PSE&G will file the request for the new rate with the Federal Emergency Regulatory Commission, which has the final approval. The ROE is a significant part of the formula used to determine the total amount of revenue the transmission owner is allowed to charge customers.
Approval of the settlement by FERC would save New Jersey consumers approximately $140 million in the first year, which would result in a decrease of approximately $36 per year for a typical residential consumer. The base transmission ROE would be reduced from the current rate of 11.18 percent down to 9.9 percent.
“Our priority is to deliver on NJBPU’s mission to ensure safe, adequate and proper utility services are provided at reasonable rates to New Jersey customers,” NJBPU President Joseph L. Fiordaliso said. “I am pleased that we were able to come to a settlement agreement with the Division of Rate Counsel and PSE&G that, if approved by FERC, will result in direct savings for ratepayers.”
The settlement agreement allows PSE&G to file the settlement on a “pre-packaged” basis, meaning that the utility would file to lower the rates it charges for transmission. In exchange, the Division of Rate Counsel and the NJBPU agree not to request further reductions for a period of three years. Another benefit of a pre-packaged approach is that the new, lower rates could take effect as early as September. Additionally, the NJBPU and Division of Rate Counsel avoid the expense, lengthy delay and risks of litigation.