Public Service Electric and Gas (PSE&G) on Oct. 29 said that it has received approval from the New Jersey Board of Public Utilities (BPU) of the settlement of the company’s distribution base rate review, with the agreement providing for a net $13m reduction in annual revenues after factoring in benefits from federal tax reform and other tax effects.
The new rates will become effective on Nov. 1, the company said, adding that it will receive an additional $212m in annual revenues, including recovery of storm costs that had been deferred until now, but return $225m in tax savings in large part due to tax reform.
The typical combined residential electric and gas customer can expect a reduction of 0.1%, or about $2 less per year, the company said, adding that commercial and industrial electric customers on average will see no bill change, while gas customers on average will see a reduction of 1-2%.
The settlement agreement provides for a distribution rate base of $9.5bn, a return on equity (ROE) of 9.6%, and a 54% equity ratio, PSE&G said.
As noted in the order, PSE&G in January filed a petition – referred to as the base rate case petition – for approval of an increase in its operating revenues of about $95m, or 1.2%, to be effective for electric and gas service provided on or after Feb. 23, 2018. The company requested an electric revenue increase of $27m, or about 0.49%, and a gas revenue increase of $68m, or about 2.97%. The BPU added in its order that the requested ROE in the filing was 10.10%.
After discovery and comprehensive settlement discussions, the company; BPU staff; the New Jersey Division of Rate Counsel; New Jersey Large Energy Users Coalition; AARP; Wal-Mart Stores East, L.P., and Sam’s East, Inc., collectively referred to as Walmart; and Direct Energy – collectively referred to as the signatory parties – on Oct. 3 reached a stipulation of settlement, agreeing, for instance, that:
- The company’s rate base is deemed to be about $5.5bn for electric and about $4bn for gas with the test year ending June 30, 2018
- The electric distribution revenues should be increased by $8.4m and gas distribution revenues should be decreased by $21.8m on an annual basis, effective for service rendered on and after the effective date of a written BPU order approving the stipulation. The electric increase is based on a base rate increase of $88.9m and a rate reduction to customers through a Tax Adjustment Credit (TAC) of $80.4m. The gas decrease is based on a base rate increase of $123.1m and a credit via the TAC of $144.9m. As a result of the stipulation, the annual bill for the typical residential electric customer using 740 kWh per summer month and 6,920 kWh annually will increase from $1,186.84 to $1,192.20, an increase of $5.36, or 0.45%. The annual bill for the typical residential gas heating customer using 172 therms per winter month and 1,040 therms annually will decrease from $903.56 to $896.54, a decrease of $7.02, or 0.78%. On a combined basis, the typical combined electric and gas residential customer will see a decrease from $2,090.40 to $2,088.74, a decrease of $1.66, or about 0.08%
- The company will return the 1Q18 excess taxes related to the Tax Cuts and Jobs Act of 2017 (TCJA) benefits to customers over a two-month period during November and December via the TAC, in addition to certain amounts. That refund is $5.7m for electric customers and $22.1m for gas customers – including interest. A typical residential electric customer who uses 990 kWh over that two-month period – 495 kWh each month – will see a decrease of $2.33 over that period. A typical residential gas heating customer who uses 261 therms over that period – 89 therms in November and 172 therms in December – will see a decrease of $11.16 over that period
Among other things, the BPU said that it finds that the stipulation is in the public interest and in accordance with the law.
The refund for typical residential electric customers of $2.33, which will be paid to customers over the two-month period, is in addition to the annual decrease of $17.60 under a March order by the BPU. The BPU also said that the refund for typical residential gas customers of $11.16, which will be paid to customers over the two-month period, is in addition to the annual decrease of $23.14 under a previous BPU order.