DIVISION OF THE RATEPAYER ADVOCATE'S COMMENTS
FILED IN RESPONSE TO THE BOARD OF PUBLIC UTILITIES' REPORT
"PROPOSED FINDINGS AND RECOMMENDATIONS"
DATED JANUARY 16, 1997

Docket No. EX94120585Y

 February 28, 1997

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TABLE OF CONTENTS

PREFACE
HISTORY OF THE PROCEEDING
EXECUTIVE SUMMARY
DIVISION OF THE RATEPAYER ADVOCATE'S COMMENTS
I. Current Rates must Decrease by 10% for All Customers Effective with the Introduction of Retail Competition on October 1, 1998.

A. The 10% Rate Reduction Should Be Calculated From Current Rate Levels
B. Revenue Neutral Rate Unbundling Is Necessary To Ensure The Rate Reduction
C. The Methodology For Unbundled Rates is Simple and Straightforward

II. Functional Unbundling of Generation Services Must Include The Transfer of Assets To A Legally Distinct Corporate Entity
III. The Board Should Further Clarify Guidelines Regarding Calculations Of Stranded Costs

A. Defining Stranded Costs
B. Calculating Stranded Costs
C. Sources and Eligibility of Stranded Costs
D. Mitigation of Stranded Costs
E. Recovery, Rate Relief and True-Ups
F. Recovery Mechanisms
G. Securitization

IV. Stranded Cost Filings Must Address The Tax Effects of the Transfer of Assets or Divestiture
V. Additional Board Action Can Ensure That Each Phase-in Period Includes A Cross Section of Customers
VI. The Board Should Require That Basic Generation Service Be Available To All Customers At The Outset of Competition

A. Establishing a Standard Offer Price
B. Market-Based Indicators for Standard Price Offers
C. Relationship of Benchmark to Stranded Cost
D. Other Aspects of the Standard Offer

1. Utility Incentive to Price Competition
2. All Utility Power Purchases Must be Negotiated at Arms' Length
3. Pricing Power from Utility Owned Generation

VII. Metering Requirements and Settlements Between Distribution Utilities and Suppliers
VIII. The Board Should Require Utilities To Use A "Simulation Model" Approach For Their Market Power Studies

A. Vertical Market Power Issues
B. Horizontal Market Power Issues
C. The Benefits of Simulation Modeling
D. The Importance of Defining the Available Electricity Products and Services
E. Suggested Options to Eliminate or Mitigate Vertical and Horizontal Market Power

IX. Demand Side Management

A. Overview
B. The "Utility" Will No Longer be an Appropriate Vehicle for Broad-Based Regulated DSM Delivery
C. The Impact of a Phase-Out of DSM on Utility DSM Departments and on ESCOs
D. Terminating Integrated Resource Planning

X. Nuclear Decommissioning Costs

A. The Board Must Establish Procedures to Insure that Consumers' Financial and Safety Interests are Adequately Protected in a Restructured Electric Power Industry.
B. The Board's Proposed Recommendations' Discussion of Decommissioning Costs is Incomplete
C. The Board Should Consider Alternatives To 100% Recovery of Decommissioning Costs through the Societal Benefits Charge in a Competitive Marketplace.
D. Additional Nuclear Decommissioning Cost Issues that Require More Specific Direction in the Board's Final Order.

XI. Municipal Aggregation of Utility Services
XII. Consumer Protection

A. The Consumer Protection Advisory Task Force
B. Task Force Structure
C. Consumer Protection And Education Categories

1. Universal Service
2. Basic Generation Service
3. Non-Discriminatory Pricing
4. Privacy and Electricity Provider Access to Customer Usage Information
5. Certification/Registration Requirements, and Code of Conduct for Suppliers
6. Consumer Education
7. Monitoring Consumer Education
8. Institutional Framework

XIII. Expansion of Low-income Assistance Programs

A. Competition Cannot Result in Affordable Rates for Low-Income Customers in the Absence of New Assistance Programs Developed As Part of this Proceeding
B. The Board Should Require Establishment of a Nonbypassable Wires Charge and a Universal Service Fund to Insure that Rates Are Affordable And Energy Supply Options Available For All New Jersey Residents

1. The Board Should Adopt A Nonbypassable Wires Charge to Fund Low-income Assistance Programs Sponsored by Distribution Companies
2. The Board Should Adopt A Universal Service Fund To Encourage Entry of Third Party Suppliers into Low-income Markets

XIV. CONCLUSION, Footnotes Citation

APPENDIX Available upon request

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