Consumer Protection News

“New Jersey ratepayers struggling with high energy costs have a huge weight lifted off their shoulders today,” said Suzanne Leta, Energy Advocate for New Jersey Public Interest Research Group (NJPIRG). “This deal would have created an energy giant large and powerful enough to dictate electric rates with the potential to cost every ratepayer in the state hundreds of dollars more a year. The risk of skyrocketing electric bills far exceeds Exelon’s paltry rate credit offer that shakes out to less than three dollars a month for PSE&G customers.”

“Today’s victory demonstrates that New Jerseyans will not willingly open their pocketbooks and wallets to corporate CEO’s and energy executives who are more interested in cashing out stock options than providing quality electric and gas service at reasonable rates,” said Ev Liebman, Program Director for New Jersey Citizen Action.

“The promise of deregulation passed by the legislature seven years ago was more competition and lower rates. This merger would have given the citizens and businesses of the state neither one of those,” Hal Bozarth, Executive Director of the Chemistry Council of New Jersey.

In December 2004, Exelon filed its proposal to take over PSEG with the New Jersey Board of Public Utilities (BPU), the federal Department of Justice (DOJ), the Federal Energy Regulatory Commission (FERC) and other state and federal agencies. FERC and the DOJ approved the deal without a single day of hearings. The merger is part of a trend towards utility consolidation across the country and within New Jersey. PSEG is the state’s only remaining electric and gas utility that has not already been bought out by an out-of-state company.

“Time after time, New Jersey and other states have approved utility mergers that are not in the best interest of the public. This time around, state regulators didn’t accept the federal rubberstamp. The collapse of this deal is a beacon for change and will set the standard for future merger proposals across the country,” said Leta.

After the BPU referred Exelon’s proposal to Administrative Law Judge Richard McGill to conduct evidentiary hearings and make an initial decision, the BPU commissioners, led by BPU President Jeanne Fox, issued a standard of review protecting consumers by requiring the merger to provide positive benefits to the state in terms of rates, competition, employees and the provision of safe, proper and adequate service.

“Right from the start, BPU commissioners led by Jeanne Fox, set the stage to ensure that this merger would not go forward unless it was good for consumers. The decision to adopt the positive benefit standard was the shield that protected consumers from the hundred things that could have gone wrong in this merger,” said Leta.

During the fall and winter of 2005, the agency conducted a series of public hearings and joined the New Jersey Public Advocate, NJPIRG, the New Jersey Large Energy Users Coalition and many others in filing expert testimony before Judge McGill detailing the multitude of harms the merger would bring to the state. This spring, Public Advocate Ron Chen defended consumers by urging Judge McGill to reject the proposal.

“By tackling this issue head on, Public Advocate Ron Chen truly carried out the mission of his agency – to stand up for and protect the average New Jersey resident,” said Liebman.

An unprecedented coalition of residential, consumer and industrial utility ratepayers joined together to oppose the companies’ proposed marriage. New Jersey Citizen Action, NJPIRG, Public Citizen, the New Jersey Large Energy Users Coalition, the Chemistry Council of New Jersey, the New Jersey Tenants Organization, the Service Employees International Union New Jersey State Council, the Sierra Club of New Jersey and others worked to educate the public and decision makers about the damage to our state economy if such a giant super monopoly were to be created.

In May, members of the coalition worked to build support for a state legislative resolution calling on the BPU to reject the deal. Assemblyman Joseph Cryan led the effort, and by the end of June, a bi-partisan majority of the state assembly and ten state senators had signed on as co-sponsors.

“State policy leaders ensured that the state of New Jersey conducted a very thorough, independent review. Their decisions were guided by facts,” said Leta.

“We in New Jersey should be very proud that unlike any other state regulator or the federal agencies in Washington, who proved to be more interested in protecting corporate interests instead of consumer interests, we took a firm stand against the exercise of market power and anti-competitive prices,” said Liebman.