Public Service Enterprise Group’s (NYSE:PEG) Public Service Electric and Gas (PSE&G) on Oct. 4 said that it has filed an agreement with an administrative law judge (ALJ) that provides for a net $13m reduction in annual revenues after factoring in benefits from federal tax reform and other tax effects.
The company said that specifically, it would receive an additional $212m in annual revenues, including recovery of storm costs that had been deferred until now, but return $225m in tax savings due largely to tax reform.
PSE&G also said that it reached the settlement with New Jersey Board of Public Utilities (BPU) staff, the New Jersey Division of Rate Counsel and other parties in its base rate review filed in January. The settlement will be reviewed by the ALJ before being submitted for BPU consideration on Oct. 29, the company said, adding that if approved by the BPU, new rates would become effective on Nov. 1.
The typical combined residential electric and gas customer can expect a reduction of 0.1%, or almost $2 less per year, the company said, adding that commercial and industrial electric customers on average would see no bill change, while gas customers on average would see a reduction of 1-2%.
The settlement agreement provides for a distribution rate base of $9.5bn, a return on equity of 9.6% and a 54% equity ratio, the company said.
According to the company’s Oct. 10 “errata to the stipulation of settlement” filed with the BPU, the parties agree that the company would return the 1Q18 excess taxes related to the Tax Act benefits to customers over a two-month period during November and December via the Tax Adjustment Credit (TAC), in addition to certain other amounts. That refund is $5.7m for electric customers and $22.1m for gas customers – including interest, the filing added.
A typical residential electric customer who uses 990 kWh over that two-month period – 495 kWh each month – would see a decrease of $2.33 over that two-month period. A typical residential gas heating customer who uses 261 therms over that two-month period – 89 therms in November and 172 therms in December – would see a decrease of $11.16 over that two-month period, the filing added.
According to the Oct. 4 settlement, PSE&G on Jan. 12 filed with the BPU a petition requesting an increase in its annual operating revenues of about $95m, or about $27m and $68m for its electric and gas operations, respectively – an increase in total revenues of about 1.2%.
PSE&G said that on Aug. 8, it updated its rate request based upon 12 months of actual data and no estimated data for its test year – referred to as the 12+0 update. The company said that its 12+0 update reflects a proposed increase in operating revenues of about $272m annually on an ongoing basis for PSE&G’s electric and gas operations – about $147m in annual electric revenues and $125m in annual gas revenues – or an approximate 3.6% increase in overall revenues, less a $39m refund provided in the first three months assuming rates effective Oct. 1.
The company also said in its settlement that the undersigned parties agree that 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 settlement.
The company added that the electric increase is based on a base rate increase of $88.9m and a rate reduction to customers through the 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 settlement, the company added, the annual bill for the typical residential electric customer using 740 kWh per summer month and 6,920 kWh annually would 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 would decrease from $903.56 to $896.54, a decrease of $7.02, or 0.78%. The company added that on a combined basis, the typical combined electric and gas residential customer would see a decrease from $2,090.40 to $2,088.74, a decrease of $1.66, or about 0.08%.