On appeal from the New Jersey Board of Public Utilities, Docket No. EO 07050516.
The opinion of the court was delivered by: Yannotti, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano, Yannotti and Espinosa.
The opinion of the court was delivered by YANNOTTI, J.A.D.
Richard G. Murphy II (Murphy) appeals from a final determination of the Board of Public Utilities (Board), which denied his petition for relief from certain charges imposed upon ratepayers by Public Service Electric and Gas Company (PSE&G) pursuant to the Electric Discount and Energy Competition Act (EDECA), N.J.S.A. 48:3-49 to -98.4. We affirm.
EDECA was enacted in February 1999, and it established a framework for deregulating and restructuring the electric utilities industry in New Jersey. L. 1999, c. 23, § 9. Deregulation was intended to "[l]ower the current high cost of energy" for ratepayers, and "[p]rovide diversity in the supply of electric power" by opening New Jersey to competitive markets. N.J.S.A. 48:3-50(l), (2), and (7).
To facilitate the creation of this competitive market, EDECA authorized electric utilities to "[f]unctionally separate" their competitive electricity generation assets from their non-competitive assets, and transfer the competitive assets to either an unaffiliated or affiliated third party. N.J.S.A. 48:3-59(a). EDECA also authorizes the utility to recover from ratepayers certain costs that it was at risk of losing when the market opened to competition. These costs, which are called "stranded costs," are defined in EDECA as the amount by which the net cost of an electric public utility's electric generating assets or electric power purchase commitments, as determined by the [B]oard consistent with the provisions of [EDECA], exceeds the market value of those assets or contractual commitments in a competitive supply marketplace and the costs of buydowns or buyouts of power purchase contracts[.] [N.J.S.A. 48:3-51.]
The amount of stranded costs a utility company could recover from ratepayers was therefore directly related to the market value of the generating assets that the utility transferred to an affiliated or unaffiliated third party. N.J.S.A. 48:3-61(e). EDECA required the Board to determine the market value of the transferred assets and, when doing so, "impute all reasonably available measures for the electric public utility to mitigate the quantity of stranded costs, by . . . [m]aximizing the market value of the [transferred] generating asset[.]" N.J.S.A. 48:3-61(e) and (f).
EDECA also authorizes the Board to permit an electric utility to collect its eligible stranded costs through various charges on ratepayers. Stranded costs may be recovered through a "non-bypassable [market transition] charge" (MTC) imposed on ratepayers for a period of up to eight years or, in certain circumstances, a longer period of time. N.J.S.A. 48:3-61(a) and
(i). Stranded costs may also be recovered by financing or securitizing those costs through the issuance of transition bonds. N.J.S.A. 48:3-62(a). The bonds are "secured through an irrevocable bondable stranded cost rate order imposing a nonbypassable transition bond charge" (TBC) upon the utility's ratepayers for a period of up to fifteen years. N.J.S.A. 48:3-62(a) and (d).
On August 24, 1999, the Board issued a Final Order approving PSE&G's transfer of its electric generating assets to Genco, an affiliated company that is wholly owned by Public Service Enterprise Group, Inc. The Board authorized PSE&G to collect $2.94 billion in stranded costs.
The Board allowed PSE&G to collect up to $540 million of that amount by imposing a MTC on ratepayers, and to collect $2.4 billion by issuing transition bonds. The Board also authorized a tax "gross-up" of the securitized stranded costs to reflect PSE&G's anticipated tax liabilities associated with those costs. The Board allowed PSE&G to impose a charge called the "MTC-Tax" upon its ratepayers to recover those payments.
The Board's August 24, 1999 Final Order required PSE&G to petition the Board for a bondable stranded costs rate order before it issued transition bonds and imposed the TBC. PSE&G filed the petition. The Board entered an order dated September 17, 1999, granting the petition. That order permitted PSE&G to issue transition bonds and impose a TBC on ratepayers to collect $2.4 billion. The order stated that the TBC charges "authorized herein will become irrevocable upon the issuance of this . . .
[o]rder" pursuant to N.J.S.A. 48:3-65.
Appeals were taken from the Board's August 24, 1999 and
September 17, 1999 orders. We affirmed the Board's orders. In re Pub. Serv. Elec. & Gas Co.'s Rate Unbundling, 330 N.J. Super. 65 (App. Div. 2000). The Supreme Court affirmed our decision. In re Public Serv. Elect. & Gas Co.'s Rate Unbundling, 167 N.J. 377, 382, ...