Congressman Pallone Sends Letter Raising Serious Concerns over JCP&L’s Monmouth County Reliability Project

FOR IMMEDIATE RELEASE
October 31, 2016


Long Branch, NJ - Today, Congressman Frank Pallone, Jr. (NJ-06) sent a letter to the New Jersey Board of Public Utilities voicing his concerns over Jersey Central Power and Light’s (JCP&L) proposal for the Monmouth County Reliability Project (MCRP). The plan for JCP&L’s new transmission line would impact Aberdeen, Hazlet and Middletown in Pallone’s district and run along New Jersey Transit’s North Jersey Coast line. Many residents have argued that the project is unnecessary and potentially harmful to the public health, environment, and economy of their communities.

The text of the letter can be found below:


New Jersey Board of Public Utilities
44 South Clinton Avenue
Trenton, NJ 08625


Dear Commissioners:

I write regarding serious concerns I have with the Jersey Central Power and Light’s (JCP&L) recently submitted application to construct the Monmouth County Reliability Project (MCRP). As the Congressman representing 3 of the towns the project impacts, and thousands of the residents, it is incumbent on me to raise a number of issues.

The MCRP is reminiscent of a similar project proposed some 25 years ago that residents of Hazlet Township strongly opposed before it was withdrawn. Since JCP&L announced this project, I have been contacted by residents of Hazlet and other affected communities in my district who believe the project to be unnecessary, as well as potentially harmful to the public health, environment, and economy of their communities.

JCP&L has stated that the reason for the MCRP is “to enhance service and modernize the electric system.” However, project skeptics rightly question whether blowing the dust off these old plans is the best way to accomplish these goals. While the regulatory standards for what constitutes reliability may not have changed since 1898, the technology by which we can achieve reliability has transformed dramatically. In the 1980’s, redundant transmission lines may have been the only way to guarantee reliability, but that is hardly the case in the 21st century.

It is time to start looking at reliability and resiliency in different ways than we did in the last century. We must modernize our electricity system to make it more resilient. We can now do that by incorporating technologies to manage demand and by generating and storing power closer to where it is consumed, through use of batteries and distributed generation resources including renewables like rooftop solar. These can be connected by microgrids and isolated-lower voltage lines that move electricity locally to neighborhoods and homes – that is the most vulnerable part of the grid, and not the larger transmission system. If the distribution lines are down, it doesn’t matter how many transmission lines we have because the power cannot get to the consumer. Hurricane Sandy showed us that centralized power carried by lines over great distances does not guarantee reliability or a resilient grid.

In addition, we must also reexamine the way we calculate rates and how utilities make money. Utilities should be able to make money, but the old rate-making model rewards utilities for building too many of yesterday’s capital facilities that do not maximize reliability and resiliency when better options are available today. Those new lines could also have the effect of locking in a market for older fossil fuel generation while crowding out cleaner and less expensive options for generating power and ensuring reliability.

My constituents are requesting more details regarding the potential dangers posed to their families by electric and magnetic fields. They also question the planned route for the MCRP, along New Jersey Transit’s North Jersey Coast Line, using existing NJ Transit rights-of-way. This route would go from Aberdeen to Red Bank, cutting through the towns of Hazlet, Holmdel, and Middletown. In order for JCP&L to construct on this planned route, it must obtain permission from NJ Transit which has not yet been granted. JCP&L claims to have considered several alternative routes in favor of the preferred route, but it is not clear why the alternatives were rejected, or why these lines cannot be buried on all or part of the route. In fact, according to statements by JCP&L Transmission Planning Manager Lawrence A. Hozempa as part of the company’s August 9, 2016 filing with the BPU, it appears that the company rejected a number of other alternatives mainly because they involved routing the new line through existing transmission rights-of-way. This seems to fly in the face of economic prudence and efficiency and JCP&L fails to provide sufficient justification for the significant added costs and marginal benefits involved with the proposed route as opposed to some of the other alternatives considered. Further, the company explicitly admits that it failed to consider any non-transmission alternatives to the proposed project; this strikes me as particularly imprudent given the continued significant decline in electricity demand that has occurred since 2011 when the issues that gave rise to this proposal were first identified.

The preceding points are all the more disconcerting given that JCP&L recently proposed transferring all of JCP&L’s transmission assets, potentially to include the MCRP if constructed, to another company - Mid-Atlantic Interstate Transmission (MAIT) - which is a subsidiary of FirstEnergy. I offered a statement at the August 20, 2016 hearing about this proposal. I stated that I shared the concerns raised by the Board and the Rate Counsel about this proposed transfer, including whether MAIT would even be subject to New Jersey authority, the impact of the transfer on ratepayers and how the transfer could change the company’s priorities going forward. While I was heartened by JCP&L’s withdrawal of the transfer application in September, there is no guarantee that the company will not refile in the future.

When making its decision on the MCRP, I respectfully request that the Board seriously consider whether the project would actually increase reliability in Monmouth County, the impact the project would have on the communities along the route, and how this proposal would be impacted by system wide efforts of FirstEnergy.

Thank you for your attention to this matter.

Sincerely,

FRANK PALLONE, JR.
Member of Congress

Congressman Pallone’s Statement on Withdrawal of Petition to Transfer JCP&L’s Transmission Assets

FOR IMMEDIATE RELEASE
September 8, 2016



Long Branch, NJ- Today, Congressman Frank Pallone, Jr. (NJ-06) released the following statement on Jersey Central Power and Light’s (JCP&L) withdrawal of a proposal to transfer its high-voltage transmission lines to a sister company, Mid-Atlantic Interstate Transmission (MAIT). Both companies are owned by FirstEnergy.

“I am encouraged by the decision to withdraw the transfer application between JCP&L and MAIT,” said Pallone. “There were numerous unresolved questions about the consequences of this transfer, including how ratepayers would be affected, and whether BPU would have authority over MAIT. Given that FirstEnergy has filed an application to construct a 10-mile transmission line in my district known as the Monmouth County Reliability Project (MCRP), approving this transfer could have had unforeseen impacts on my constituents in Monmouth County. I appreciate the work of so many of my constituents and the state Rate Counsel who stood against this transfer and its potential to hurt the quality of life in our communities.”

Congressman Pallone has consistently raised concerns over the proposal, including at a meeting before the New Jersey Board of Public Utilities (BPU) in Freehold, NJ last week.
Pallone’s statement can be found below:

Statement of Rep. Frank Pallone, Jr.

Before the New Jersey Board of Public Utilities

Freehold Township Municipal Building

August 30, 2016

Thank you, Chairman Mroz and Members of the Board of Public Utilities (BPU) for holding this second public hearing on Ohio-based FirstEnergy Corporation’s proposal to transfer all the transmission assets of its Jersey Central Power and Light (JCP&L) subsidiary to a multi-state transmission-only company called Mid-Atlantic Interstate Transmission (MAIT). While, as you know, at the previous meeting in Morristown, I was able to submit and have read into the record a letter expressing some of my thoughts, I am pleased to be here in person to more fully present my views on this proposal.

To be clear, I share the concerns that the Board voiced in its objections to the Federal Energy Regulatory Commission (FERC) regarding FERC’s approval of this proposal earlier this year. The BPU’s stated concerns over this effort in part center on whether the newly formed entity would even be subject to New Jersey’s authority. As I have stated previously, this is particularly prescient in the face of a recent U.S. Supreme court ruling – Federal Energy Regulatory Commission v. Electric Power Supply Association — which called into question many previous assumptions about what aspects of our electricity grid were under the jurisdiction of the federal versus state government.

More importantly, perhaps, for the purpose of this hearing, I also strongly agree with the concerns raised by the state’s rate counsel regarding the potential impact to customers and the impact this restructuring would have on the company's priorities and performance. I commend the compelling argument that Director Brand and her office have put forward in opposition to this transaction generally, as well as in specific regard to the effort to have MAIT recognized as a public utility under New Jersey’s laws. Conferring upon MAIT the legal status of public utility would allow it to use eminent domain and circumvent local zoning laws and boards in building new assets.

In New Jersey, public utilities must have local customers that receive electricity over a distribution network and submit to the BPU. A transmission-only company could not meet this test, so FirstEnergy appears to be trying to gain for MAIT all the benefits of a utility by transferring five distribution customers from JCP&L to MAIT in a convoluted effort to meet the most minimal definition required for a public utility. The Division of Rate Counsel has correctly raised bright red flags around this effort. One of the Division’s expert witnesses, Gregory Booth, went so far as to label the effort a “sham transaction” because it serves no business purpose and doesn’t provide any economic benefit, stating further that “reliability and safety can only worsen, while it will cost more to provide the distribution service.” Another of the Division’s expert witnesses, Scott Hempling, noted that the customers would be transferred without their consent in service of the asset transfer signaling “that public utilities can be shells, customers can be commodities, and the…government-granted privilege of providing life-enabling service to loyal customers, free from competition— can be obtained for reasons other than merit.”

There are numerous other significant issues raised by allowing JCP&L to transfer all its transmission and some of its distribution assets and customers to MAIT. Rate Counsel expert witness David Peterson succinctly sums up one of the concerns I previously raised regarding a potential future sale by MAIT of these JCP&L asset. Mr. Peterson notes that in such a sale, the benefits would accrue to FirstEnergy stockholders, “JCP&L’s customers, who have been paying for those assets all along, would not share in the profits” despite the fact that it’s the JCP&L customers who have been paying for those assets. Similarly, another Rate Counsel witness, Matthew Kahal, is troubled by the potential that

The asset transfer to MAIT and its planned capital expansion may be a prelude to a future MAIT transaction – a sale of MAIT to a third party, a spinoff to shareholders or even the sale of hard assets. It is unclear how such a transaction (if it were to occur) would affect JCP&L customers.
Mr. Hempling echoes these concerns in his submission and goes further to raise questions about BPU’s ability in this scenario to protect New Jersey customers from unjust and unreasonable transmission costs and even BPU’s jurisdiction over the quality of transmission planning, construction and operation.

These are all matters with which I’m particularly concerned given that FirstEnergy has filed an application to construct a new 10-mile transmission line in my district known as the Monmouth County Reliability Project (MCRP) as part of the company’s multi-state “Energizing Our Future” effort. JCP&L has stated that the reason for the MCRP is “to enhance service and modernize the electric system.” The fact that FirstEnergy is using “Energizing Our Future” in comments as part of its justification for the MAIT transaction raises warnings in my mind about its true purpose. Certainly, JCP&L has had major issues with reliability and service for more than a decade. However, the addition of a new transmission line isn’t the only way to achieve resilience: technological advances have spurred new ways to guarantee reliability in the electric system including using cleaner, less expensive distributed technologies. Yet, a transmission-only company would have no real incentive to look at such an option since building a new line would make money for MAIT, while substituting alternatives would not appear to provide such benefit to MAIT shareholders.

Moreover, a number of the Division of Rate Counsel’s experts who filed testimony in opposition to the transfer of the transmission assets to MAIT assert that JCP&L’s reliability issues have more to do with management issues that won’t be solved by building more infrastructure. Mr. Booth, who I cited earlier, is very pointed in his criticism regarding the poor reliability of the JCP&L system and notes that “[t]echnology alone will not solve the reliability deficiencies.” He specifically points to the role that non-infrastructure issues play in the excessive duration of outages on JCP&L’s system, stating that the company is “deficient” in areas such as the quantity of personnel available to respond to an outage and the adequacy of the personnel dispatched for outage restoration, travel time to the affected location, and the communication processes to establish the location of the outage. He notes further that “JCP&L has downsized staff and closed and consolidated operating centers in hopes that technology can overcome some of these deficiencies.”

In closing, I hope BPU will give serious attention to the concerns that I, the Division of Rate Counsel, and many others have raised about FirstEnergy’s efforts to transfer JCP&L’s transmission assets to MAIT and to have MAIT recognized as a public utility. Furthermore, I believe that the final disposition of this matter is a critical factor for consideration in any decision regarding the approval or disapproval of FirstEnergy’s proposed Monmouth County Reliability Project. At a minimum, I urge the Board to refrain from taking any further action to consider the MCRP until all the issues surrounding MAIT and JCP&L’s assets have been completely resolved. Setting aside the numerous concerns I cited in my statement, the questions over jurisdiction alone raised, not only by the Rate Counsel, but also the BPU itself in its FERC filings, should be reason enough to justify that linkage.

Thank you again for holding this hearing and for your attention to this matter.