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May 3, 2013

RE: Action Needed on Major Public Utility Reforms

Dear Mayor:

Public utilities need to demonstrate better planning and preparation for and much better response to large scale power outages.  Even before Super Storm Sandy, Mayors expressed concerns with the performance of electric and gas power utilities before, during and after severe weather events. These concerns led to meetings by the League with utility company executives and BPU officials, as well as public hearings, organized and facilitated by the Board of Public Utilities (BPU). A BPU study and order has been released, and a number of bills introduced regarding utility operations. The high importance to Mayors led us to establish a special committee to review proposals and develop positions.

Please contact your legislators on the following public utility reform bills.

I.          Reliability Bills

A.        Senate Bill S-26 and Assembly Bill A-3671. The League supports these companion measures. Dubbed "The Reliability, Preparedness, and Storm Response Act,” this legislation would require the BPU to develop and enforce electric utility performance benchmarks. In addition, it would require electric public utilities to provide periodic reliability performance reporting, at least annually. Importantly, the plan must include the designation of public utility staff to communicate with local officials and relevant regulatory agencies.

The violation of any law, rule, regulation, or BPU order would subject an offending utility to a civil administrative penalty not to exceed $25,000 for each violation.   Each day during which the violation continues would constitute an additional violation, up to a $2,000,000 maximum for any related series of events.

The fine proceeds would be deposited in a special revenue fund, the “Board of Public Utilities Civil Penalty Fund”. The fund monies must be used for the improvement of public utility service quality and reliability. Any fines imposed by this act cannot be recoverable from ratepayers. We will ask for assurances that this funding will be diverted to other uses.

Aside from that concern, we support Senate Bill S-26, which has been referred to the Senate Economic Growth Committee, and A-3671, which awaits action in the Assembly Telecommunications and Utilities Committee.

B.         Assembly Bill A-2760. The League supports this legislation, which mirrors several of the provisions of S-26/A-3671. A-2760 requires the BPU to establish uniform State-wide reliability standards for electric and gas public utilities. Notable differences between the two initiatives relate to the specificity of plan requirements. Also, while Senate Bill S-26/Assembly Bill A-3671 would apply to both investor-owned public utilities and municipal utilities authorities, the standards proposed in A-2760 would apply to an investor-owned public utility, under the jurisdiction of BPU that is investor-owned and transmits and distributes either electricity or natural gas to end users within the State.

The increased penalty provisions are the same in both initiatives. So, again, we will ask for assurances that this funding will not be diverted to other uses. Aside from that concern, we support A-2760, which was reported out of Committee on October18, 2012, and awaits action on the Assembly Floor.

C.         Senate Bill S-2349 and Assembly Bill A-3532.  The League opposes these companion bills, which would direct the BPU to adopt best practices and standards for public utility disaster preparedness and response. We appreciate the sponsors’ intent and agree that many of the specific requirements in the bill need to be considered. We believe, however, that the BPU organization and process can better evaluate whether or when to order infrastructure design improvements, such as the repositioning of substations. Concerned with the costs of such requirements, we oppose these companion bills. A-3532 has been referred to the Assembly Telecommunications and Utilities Committee. Senate Bill S-2349 awaits consideration in the Senate Economic Growth Committee.

II.        Rate Increase Notification Bills
Assembly Bill A-3600 and Senate Bill S-2300. We support these companion measures, which would require public utilities to provide customers notice of request for increase in rates, and revise requirements related to hearings on proposed rate increases. Senate Bill S-2300 has been referred to the Senate Economic Growth Committee. A-3600 awaits action in the Assembly Telecommunications and Utilities Committee.

III.       Municipal Employee Downed Wire Response Training Bills
Assembly Bill A-3739 and Senate Bill S-2526. We oppose this legislation, which would require electric public utilities to provide training, equipment, indemnity, and reimbursement to certain municipal employees for moving and securing detached, above-ground distribution lines impeding vehicular traffic during lengthy power outages. The bills would, therefore, divert local resources and impose unfunded mandates on towns to meet the responsibilities of a utility. We, therefore, oppose Assembly Bill A-3739/Senate Bill S-2526, respectively awaiting action in the Assembly telecommunications and Utilities Committee and the Senate Economic Growth Committee.

IV.       Vegetation Management Bills

A.        Assembly Bill A-3654 and Senate Bill S-2509. We reaffirm our opposition to these companion bills, entitled the "Vegetation Management Response Act." This legislation concerns vegetation management around and adjacent to electric public utility infrastructure.

BPU President Bob Hanna, in partnership with the League, is working with a limited number of municipalities to develop a beneficial vegetation management pilot. The goal is to better protect our residents and municipalities by developing policies and practices to reduce and minimize to the greatest degree possible electric service disruptions. We support this cooperative approach and oppose the broad unbridled powers that would be ceded to all utilities under Assembly Bill A-3654/Senate Bill S-2509. A-3654 has been reported out the Assembly Telecommunications and Utilities Committee and referred to the Appropriations Committee for further review. S-2509 awaits consideration in the Senate Economic Growth Committee.

B.         Assembly Bill A-3736. We oppose the bill, which would require every electric public utility to employ a vegetation manager, who is a utility arborist, and to undertake vegetation management practices near power lines. This bill would give also all utilities broad unbridled powers to manage vegetation. A-3736 has been referred to the Assembly Telecommunications and Utilities Committee,

V.        Study Commission Bills
Assembly Bill A-3535 and Senate Bill S-2625. These companion bills, which we oppose, would establish an "Energy Infrastructure Study Commission."  While we appreciate the interest and purpose of the sponsor, we see no need for authorizing this group to expend public resources to conduct this study.  We need action now and believe legislative time would be more constructively spent evaluating the many proposals pending and working with the BPU. Assembly Bill A-3535 has been reported out of Committee and awaits action on the Assembly Floor. S-2625 has been referred to the Senate Economic Growth Committee.

We will keep you posted on the progress of these bills and on other initiatives regarding electric and gas power utility service improvements.


Janice S. Mironov, President
New Jersey State League of Municipalities,
Mayor, East Windsor Township
Timothy C. McDonough
Chairperson, NJLM
Emergency Preparedness Committee,
Mayor, Hope Township




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