New
Jersey Public Interest Research Group and New Jersey Citizen Action’s
Executive Directors stood together in front of the State House today to
call on Senatorial Candidates Robert Menendez and Tom Kean Jr. to
oppose Exelon’s takeover of PSEG unless the companies agree to a plan
that would create a more competitive electricity market that protects
New Jersey consumers.
“This
buy-out poses the biggest threat to the state’s energy consumers since
deregulation of the energy market in 1999. As one of the biggest
pocketbook issues facing state residents today, the candidates for US
Senate can not remain silent on the issue. They must insist that this
buy-out be rejected unless it is crafted to ensure consumers are
protected from sharply rising utility rates,” said Dena Mottola,
Executive Director of NJPIRG.
Exelon’s
bid to buy-out PSEG would create the largest energy company in the
nation, with enough market power to give the new company a stranglehold
on rates in the region. Testimony by the New Jersey Board of Public
Utilities (BPU) staff expert Judah Rose estimates that market power
could cost all New Jersey ratepayers $2.3 billion annually, an average
annual increase of $540.
Mottola
continued, “Exelon Corp and PSE&G’s offer, now on the table, throws
a pittance of rate relief at energy consumers, while failing to solve
the bigger market power problems.” Their terms include a pay out of $32
per ratepayer annually, or $2.66 a month, if shared over two years
($16/yr and $1.33/month if shared over four years), an amount that does
not come close to the possible $540 a year annual increase that would
result from market power control over rates.
Despite
the concerns of NJPIRG, NJCA, Public Advocate Ron Chen, and the staff
of the BPU about the potential effect of this buy-out on rates in the
region, Exelon and PSEG have thus far failed to offer meaningful
solutions that would mitigate their control of market power. Instead,
they continue to focus their negotiations on ancillary issues.
“Market
power concerns can not be ignored or brushed aside. We need our
Senatorial candidates to stand up for consumers and oppose this merger
as currently proposed, and continue to oppose it until the company
offers terms that meet the BPU’s positive benefit standard for jobs,
safety, reliability, and most importantly, competition in the energy
marketplace,” said Phyllis Salow-Kaye, Executive Director of New Jersey
Citizen Action.
The
proposed Exelon buy-out of PSEG, like other energy mergers, is both a
federal and state level issue. Unfortunately, the federal government
has offered no critical analysis of the deal, and has done little to
protect ratepayers from the probable harmful effects of this bid. In
sharp contrast, the New Jersey Public Advocate and New Jersey Board of
Public Utilities have worked to carefully review the proposed buy-out
bid. On August 4th, the BPU rejected the companies’ offer on the table,
resuming negotiations last week.
In
June 2005, only six months after the merger was announced and without a
single day of evidentiary or public hearings, the Federal Energy
Regulatory Commission (FERC) approved the deal. Further, when the
agency issued its approval, it wholly adopted the companies’ terms and
offered no substantive analysis of the terms and their possible effects
on consumers and rates in the region.
FERC’s
rubber stamp approval came as no surprise to consumer advocates. FERC
has not rejected a single merger in the past 11 years. FERC’s market
power guidelines have a variety of flaws, including the fact that there
was no examination of the effect of market power on New Jersey’s unique
auction system that sets electricity rates across the state. And Betsy
Moler, former FERC Chairwoman, is now Exelon’s Executive Vice President
of Government Affairs and Policy.
“This
energy merger is unprecedented, with the potential to establish the
largest energy utility in the nation. A buy-out of this proportion has
national, precedent-setting implications, as the number of energy
utilities across the nation increases,” said Salow-Kaye. “Unless the
deal brings positive benefits to NJ and alleviates market power
concerns, Senatorial candidates Tom Kean, Jr. and Robert Menendez must
oppose this deal,” concluded Mottola.
