Press Release

CHEMISTRY COUNCIL OF NEW JERSEY FILES MOTION WITH THE NEW JERSEY BOARD OF PUBLIC UTILITIES

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CHEMISTRY COUNCIL OF NEW JERSEY FILES MOTION WITH THE NEW JERSEY BOARD OF PUBLIC UTILITIES IN SUPPORT OF MANDATORY RELIEF FOR PSEG’S OVER COLLECTION OF STRANDED COST SURCHARGES

The amount of surcharges PSE&G has reaped, for losses it has not incurred, and to the detriment of New Jersey’s citizens, including CCNJ members and their customers, is staggering and an outrage.

Feb. 19, 2008 -- (Trenton, NJ) – The Chemistry Council of New Jersey today filed a motion with the NJ BPU for Leave to Intervene in support of The Petition of Richard G. Murphy II for Mandatory Relief for Public Service Electric and Gas Company’s Over Collection of "Stranded Cost" Surcharges, pursuant to NJSA 48:3-61, Docket No: ER-07-070516.

CCNJ adopts, supports, and joins in the arguments of Plaintiff Richard Murphy against the "stranded costs" surcharges, in the neighborhood of $6 to $9 billion thus far, being collected by PSE&G. Industrial rates for electricity in New Jersey are the eighth highest in the country; and approximately seventy percent (70%) above the national average.

CCNJ joins Mr. Murphy in his petition to the BPU which seeks to address whether PSEG can charge its customers for "stranded cost" losses pursuant to the New Jersey Electric Discount and Energy Competition Act (Electric Act), when PSEG assets were never "stranded" nor "lost," and is in fact reaping a huge windfall from its surcharges.

These surcharges were imposed by the Electric Act solely to protect PSEG from competition from other lower-priced suppliers of electricity, and to deprive New Jersey residents of the benefit of that competition.

PSEG convinced the NJ Legislature and Board of Public Utilities that they would suffer billions of dollars of losses in a deregulated environment ; therefore, as part of the deregulation legislation, the NJ Legislature empowered PSEG to asses a surcharge on ratepayers in order to be compensated for assets that would be "stranded" and deemed "uneconomical" by deregulation.

Just prior to the time of legislative passage in 1998, PSEG holding company’s total public stock price was valued at about $6 billion. Since then the stock price has skyrocketed and recently split and is now $46.68 per share as of Feb. 19, 2008, giving PSEG a total market value of more than $23 billion, a $16 billion increase. This is in addition to the billions of dollars in cash dividends PSEG has paid to its shareholders, and the more than $100 million in salary and bonuses it has paid to its senior management in the last nine years. All of this "great fortune", during a time when PSEG testified it expected to suffer billions of dollars in losses.

It is now clear, that not one of PSEG’s assets were ever rendered "uneconomical" or "stranded" because of deregulation, but PSEG has continued to collect "stranded cost" charges in the total amount of $6 to $9 billion.

"The amount of the stranded cost surcharges PSEG has reaped, for losses it has not incurred, and to the detriment of New Jersey’s citizens, including CCNJ members and their customers, is staggering and an outrage," said Hal Bozarth, executive director of the CCNJ.

While PSEG continues to collect these surcharges and experience record profits, the NJ industrial community continues to bear the brunt of these surcharges.

"The cost of electricity has significant impact on our members’ operating costs," said Bozarth, "the high cost of electricity in our state impacts their product costs, their continued viability as New Jersey companies, and endangers more than 70,000 jobs at their facilities."

Industrial rates for electricity in New Jersey are already the eighth highest in the country, clearly seventy percent above the national average (Electric Power Annual, November 2007). Electricity is vital to the manufacturing operations of our members; and because industrial rates are significantly higher than commercial or residential rates, and by paying its electricity supplier surcharges for losses the supplier is not suffering, CCNJ members are greatly impacted by unnecessary and unfair increases in their operating costs. These increased costs result in increased product prices for consumers, and make products manufactured in New Jersey uncompetitive with products made in other states.

Ultimately, all rate payers, not just the industrial sector, will benefit should the BPU uphold CCNJ’s and the Plaintiff’s arguments. Ratepayers will receive much needed relief from New Jersey’s extraordinarily high electricity rates if awarded compensation for the billions of dollars wrongfully collected by PSEG.

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The Chemistry Council of New Jersey (CCNJ), founded in 1955, is the premier trade and advocacy organization representing the interests of about 100 New Jersey manufacturers in the business of chemistry. Our membership consists of large and small companies that are part of New Jersey’s chemical, pharmaceutical, consumer packaged goods, petroleum, flavor & fragrances and precious metals industries. The CCNJ is committed to a better quality of life through science.

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