ASSEMBLY, No. 2148

STATE OF NEW JERSEY

INTRODUCED JUNE 17, 1996

By Assemblyman GUSCIORA

An Act concerning procedures for the review of public utility rate increase petitions and amending R.S.48:2-21.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. R.S.48:2-21 is amended to read as follows:

    48:2-21. Schedule of rates. (a) The board may require every public utility to file with it complete schedules of every classification employed and of every individual or joint rate, toll, fare or charge made, charged or exacted by it for any product supplied or service rendered within this State, as specified in the requirement.

    Fix rates. (b) The board may after hearing, upon notice, by order in writing:

    1. Fix just and reasonable individual rates, joint rates, tolls, charges or schedules thereof, as well as commutation, mileage and other special rates which shall be imposed, observed and followed thereafter by any public utility, whenever the board shall determine any existing rate, toll, charge or schedule thereof, commutation, mileage or other special rate to be unjust, unreasonable, insufficient or unjustly discriminatory or preferential. In every such proceeding the board shall complete and close the hearing within 6 months and enter its final order within 8 months after the filing of the order of the board initiating such proceeding, when such proceeding is on the board's own motion; or after issue is joined through the filing of an answer to a complaint, when such proceeding is initiated by complaint.

    2. Fix just and reasonable joint rates, which shall be charged, enforced, collected and observed by railroads and street railroads in the carrying of freight. Whenever the railroads or street railroads involved fail to agree upon the apportionment or division of a joint rate so established, the board may issue a supplemental order declaring the apportionment or division of the joint rate.

    Demurrage rates. (c) The board may fix the rates or charges to be made by any corporation subject to the provisions of this chapter for the detention of a railroad car containing property transported by railroad to any point in this State or for the use of railroad tracks occupied by such car, commonly called demurrage or car service, or for both such detention and use. Such rates and charges shall conform as nearly as possible to the rates and charges for demurrage or car service prescribed and fixed by the Interstate Commerce Commission for similar service.

    Increase in rates; hearings. (d) When any public utility shall increase any existing individual rates, joint rates, tolls, charges or schedules thereof, as well as commutation, mileage and other special rates, or change or alter any existing classification, the board, either upon written complaint or upon its own initiative, shall have power after hearing, upon notice, by order in writing to determine whether the increase, change or alteration is just and reasonable. The burden of proof to show that the increase, change or alteration is just and reasonable shall be upon the public utility making the same. The board, pending such hearing and determination, may order the suspension of the increase, change or alteration until the board shall have approved the same, not exceeding 4 months. If the hearing and determination shall not have been concluded within such 4 months the board may during such hearing and determination order a further suspension for an additional period not exceeding, 4 months. The board shall approve the increase, change or alteration upon being satisfied that the same is just and reasonable.

    e. The burden of proof to show that an increase in base rates is just and reasonable shall be upon the public utility, which shall be required to demonstrate to the satisfaction of the board that any facility, project or capital investment petitioned by the utility for inclusion in its rate base is used and useful, and that the public utility, after considering all reasonably available alternatives to the facility, project or capital investment and other relevant factors, has chosen the least costly means of providing safe, adequate and proper service as required pursuant to R.S.48:2-23. For the purposes of this subsection, the term "used and useful" means presently used to serve the consumers of a public utility, and reasonably necessary for the provision of safe, adequate, and proper service as required pursuant to R.S.48:2-23.

    f. The board, in determining whether to include the reasonable value of any facility, project or capital investment in the utility's rate base, shall base its decision solely on the facts of record as determined in a proceeding conducted as a "constested case," as defined pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). A stipulation of parties, whether in the pending petition or in any other case or proceeding, including a petition for interim rate relief, shall not preclude the board from making a determination of the necessary components of the public utility's rate base or alter the

board's fact finding duties otherwise required by law.

(cf: P.L.1962, c.198, s.13)

    2. This act shall take effect immediately.

STATEMENT

    This bill would require a public utility seeking an increase in rates to demonstrate to the Board of Public Utilities (BPU) that any facility, project or capital investment which the utility petitions for inclusion in its rate base is "used and useful." Under the bill, the term "used and useful" means that the facility, project or capital investment is presently used to serve the utility's customers, and is reasonably necessary for the provision of safe, adequate, and proper service, as required by law. The public utility would also be required to demonstrate that, after considering all reasonably available alternatives to the facility, project or capital investment, it has chosen the least costly means of providing safe, adequate and proper service.

    The bill would also require the board, in determining whether to include the reasonable value of any facility, project or capital investment in the utility's rate base, to base its decision solely on facts of record as determined in a proceeding conducted as a "constested case," as defined pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). The bill further requires the BPU, when reviewing a public utility's petition to increase rates, to render findings of fact based solely on the evidence of record as to whether the public utility has met its burden of proof to demonstrate the justness and reasonableness of the proposed rate increase. In doing this, the bill codifies judicial precedent, and specifically provides that a stipulation of parties, whether in the pending petition or in any other case or proceeding, including a petition for interim rate relief, could not preclude the board from making a determination of the necessary components of the public utility's rate base or alter the board's fact finding duties otherwise required by law.

Requires public utility to demonstrate that inclusions in rate base are used and useful when seeking rate increase.