Atlantic City Electric seeks approval for rate increase in New Jersey

Exelon‘s (NYSE:EXC) Atlantic City Electric on June 15 said that it is seeking approval from the New Jersey Board of Public Utilities to recover about $99.7m in costs related to system modernization efforts, as well as infrastructure repair efforts.

As noted in the June 15 petition filed with the board, the company is requesting an annual increase in current retail base rates for electric service of about $99.7m – about $106.3m, including sales and use tax – to cover its cost of service.

Based on the request, the typical residential customer using 679 kWh per month would see a monthly bill increase of 8.25%, or about $10.66, the company said.

According to the petition, the filing includes several components, such as:

  • A requested return on equity (ROE) of 10.10% to reflect current financial market conditions, utilizing a capital structure consisting of 50.26% common equity and 49.74% long-term debt
  • Certain modifications to the company’s tariff for electric service, including a $2 increase in the monthly customer charge
  • A request to implement a revenue decoupling mechanism
  • A proposal to eliminate the accelerated spending of the Reliability Improvement Plan by 2024

The company said that it requests that the rate relief be approved for service rendered on and after July 15, but in no event later than March 15, 2019, which is the end of the anticipated board-ordered suspension period(s).

The company said that while its ongoing transformation is positive, it is also facing challenges that must be addressed. Customer use has declined in recent years, with sales falling a total of 7.6% over the 2012-2018 period, with an additional sales decline of 1.3% forecast over the 2019-2022 period, the company said. Atlantic City Electric said that in its last base rate case – filed in March 2017 – the average residential customer used 716 kWh per month. In this filing, the average monthly use has fallen to 679 kWh per month, the company noted, adding that while there are numerous reasons for declining use, two factors are particular contributors: persistent weakness in the economy of southern New Jersey, as well as the impact of solar deployment, energy efficiency initiatives, and demand-side management measures.

The company said that it has been an active participant in efforts to bolster the economy of southern New Jersey and to facilitate deployment of solar and energy efficiency facilities. However, it is vital that the board recognize that those efforts also have challenging consequences for the company that must be remedied, Atlantic City Electric said, noting that to address that issue, it has proposed a revenue decoupling mechanism, which is designed as an annual rate adjustment for customers under Rate Schedules Residential Service (RS), Monthly General Service (MGS)-Secondary, MGS Primary, Annual General Service (AGS)-Secondary, AGS Primary, Transmission General Service (TGS) Subtransmission, and TGS Transmission.

The company noted in its statement that it spent $312m last year to modernize and fortify the local energy grid, including more than $171m in the local distribution grid. That work included inspecting and upgrading such equipment as switches, poles and other devices; installing stronger, tree-resistant aerial cable; and trimming trees, which cause about 40% of power outages for customers each year, the company said.

Atlantic City Electric said that in 2017, it:

  • Upgraded 39 distribution feeders
  • Replaced or installed 5.3 miles of new underground cable
  • Replaced more than seven miles of aerial cable
  • Installed 302 reclosers
  • Installed new transformers at the company’s Mantua and Silver Lake substations
  • Completed the new High Street substation in Woolwich Township, N.J. That project also included upgrading 18 miles of transmission line and the use of steel utility poles, capable of withstanding winds up to 120 mph

The company said that this year, it plans to continue the efforts to enhance the local energy grid, spending more than $194m to install new equipment that will help to further reduce the frequency and duration of power outages and fortify the local distribution grid.

The infrastructure investments also help drive economic development and job creation in the local economy, the company said, adding that it will help create future jobs through a $6.5m workforce development initiative to expand training programs for energy related jobs.

About Corina Rivera-Linares 3058 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.