Agenda Date: 09/12/08Agenda Item: 2A-2

~)T A TE OF NEW JERSEYBoard of Public Utilities

Two Gateway CenterNewark, NJ 07102www.ni.qov/blJu

ENERGY

IN THE MATTER OF THE PRO'I/ISION OF BASICGENERATION SERVI(~E FOR '(EAR TWO OF THEPOST TRANSITION PI=RIOD

DECISION AND ORDERAPPROVING THE PASS-THROUGH OF FERCAUTHORIZED CHANGES INFIRM TRANSMISSIONSERVICE RELATEDCHARGES- JUNE 16,2008 FILING

IN THE MATTER OF THE PROVISION OF BASICGENERATION SERVI(~E FOR THE PERIOD BEGINNlflJGJUNE 1, 2006

DOCKET NOS. EOO3050394,EOO5040317, EOO6020119, ANDERO7060379

IN THE MATTER OF THE PROVISION OF BASIC )GENERATION SERVI(~E FOR THE PERIOD BEGINNING)JUNE 1, 2007 )

IN THE MATTER OF THE PROVISION OF BASIC)GENERATION SERVIC;E FOR THE PERIOD BEGINNING)JUNE 1, 2008 )

(SERVICE LIST ATTACHED)

BY THE BOARD:

On June 16, 2008, Atlantic City Electric Company ("ACE"), Jersey Central Power and LightCompany ("JCP&L"), Public SE~rvice Electric and Gas Company ("PSE&G"), and RocklandElectric Company ("RECO") (collectively, the "EDCs") filed a joint petition with the New JerseyBoard of Public Utilities ("Board") requesting recovery of Federal Energy RegulatoryCommission ("FERC") approved changes in firm transmission service related charges.

The EDCs' proposed tariff changes reflect increases to the Basic Generation Service ("BGS")Fixed Price ("BGS-FP") and Commercial and Industrial Energy Pricing ("BGS-CIEP") rates tocustomers resulting from changE~s in the PJM Open Access Transmission Tariff ("GATT") madein response to a filing by Trans-)\llegheny Interstate Line Company ("TrAILCo") In FERC DocketNo. ER07562-000, and a filing by Virginia Electric and Power Company ("VEPCo") in FERCDocket Nos. ER08-92..000 through ER-08-92-003. The EDCs requested that the changesbecome effective on September 1,2008.

The EDCs are also requesting that the BGS suppliers be compensated for this increase, subjectto terms and conditions of the applicable Supplier Master Agreements ("SMAs"). Any differencebetween the payments to BGS suppliers and charges to customers would flow through eachEDC's BGS Reconciliation Char!~e.

The EDCs further re(~uested that the Board approve subsequent changes to Schedule 12charges which reflect projects 'for which FERC authorizes incentive ratemaking, and which areallocated by PJM to the respective state's EDCs. Since it is expected that the FERC-approvedTransmission Enhancement Charges ("TECs") for the VEPCo project will change in January ofeach year and may also changle from time to time, the EDCs also requested approvar to submitcompliance tariff sheets to im~)lement any subsequent FERC-approved changes to the TECsresulting from the VEPCo project, In addition, the EDCs request approval to submit compliancetariff sheets for future TEC changes effective each June 1 related to the annual revenuerequirements updates filed with FERC for the TrAILCo project.

The EDCs stated that this filing satisfies the requirements of paragraph 15.9(a) (i) and (ii) of theBGS-FP and BGS-CIEP SMAs, which mandate that BGS-FP and BGS-CIEP suppliers benotified of rate increases for firm transmission service, and that the EDCs file for and obtainBoard approval of an increase in retail rates commensurate with the FERC-implemented rateincrease.

The specific Schedule 12 charges, referred to as Transmission Enhancement Charges("TECs") , were implemented to compensate transmission owners for the annual transmissionrevenue requirements for "Required Transmission Enhancements" (as defined in the PJMDAn) that are requested by PJM for reliability or economic purposes. The costs of TECs arerecovered by PJM accordingl to an assigned cost responsibility through an additionaltransmission charge assessed in the affected transmission zones.

On July 2, 2007, TrAILCo made its compliance filing with FERC, which was the final actnecessary for PJM to begin billing wholesale customers for these TECs effective June 1, 2007.On August 7,2007, the EDCs fiiled a joint petition, requesting recovery of the allocated TrAILCofirm transmission service related charges. By Board Order dated January 18, 2008, the EDCsreceived approval from the Board to begin allocating TECs related to the TrAILCo project.1

On April 29, 2008, FERC approved the VEPCo Filings and accepted for filing, effective January1,2008, VEPCo's revised tariff sheets to the PJM OATT. Pursuant to FERC's Order, on May15,2008, TrAILCo submitted its formula rate update compliance filing with FERC.

Each EDC is allocated a different amount of TECs from PJM based on the cost for RequiredTransmission Enhancements in each EDC's transmission zone. Based on the allocation of theadditional VEPCo and TrAILCo transmission costs among the service classes in accordancewith each EDC's tariff, a residerltial customer will see the following BGS rate increase per monthper utility [including Sales and Use Tax ("SUT")]: ACE $0.000113 per kWh; JCP&L $0.0001 perkWh; PSE&G $0.000121 per kVvh, and RECO $0.00012 per kWh.

DISCUSSION AND FINDINGS

In the Board's Order dated Delcember 2, 2003, in Docket No. EO03050394, the Board foundthat the pass through of any ch;anges in the network integration transmission charge, and othercharges associated with the FE:RC-approved Open Access Transmission Tariff is appropriate.

11n the Matter of the Provision of Basic Generation Service for Year Two of the Post-Transition Period

2007 BPU Docket Nos. EO030503!34, EO04040288, EO05040317, and EO06020119, Order dated-'January 18, 2008.

BPU Docket Nos. EOO305094, EOO5040318,EOO6020119, andERO7060378

2

Furthermore, by subsequent Orders, the Board approved Section 15.9 of the SMAs as filed bythe EDCs which requires that the EDCs file for Board approval of any increases or decreases intheir transmission charges thaI: have been approved by the FERC. The SMAs also authorizethe EDCs to increase the rates paid to suppliers for FERC-approved rates and increases to FirmTransmission Services once approved by the Board. The Board Orders further required that theEDCs review and verify the reqluested FERC authorized increases.

After review of the! verifications and supporting documentation, the Board HEREBYAPPROVES the increase to the BGS-FP and BGS-CIEP rates requested by each EDC for itsincreased transmission chargE~s resulting from the FERC-approved changes to the TECseffective for service on or after October 1, 2008. The Board FURTHER APPROVES the EDCs'request to compress the rates to reflect the implementation date of these changes. Approval ofthese adjustments will result irl approximately a 0.09% increase in BGS rates for residentialcustomers in each utility's servil:e territory. The EDCs are HEREBY ORDERED to compensatethe BGS suppliers for this transmission rate increase subject to the terms and conditions of theSMAs.

In addition, the Board ~~ DENIES the EDCs' request that any subsequent FERCapproved changes to Schedule 12, including those related to VEPCo and TrAILCo, beimplemented solely through thle submission of compliance tariff sheets. The EDCs mustcontinue to file for approval by the Board of the amount of any proposed pass through to BGScustomers of FERC-approved changes to Schedule 12, after review and verification by theEDCs.

BOARD OF PUBLIC UTiliTIES

711 ~y:f EANNE M. FOX

R~ESIDENT //L -

J l ../-<-:.F. B/)TLER

COMMISSIONERL. FIORDALISO

COMMISSIONER

,~

/)

NICHOLAS ASSEH'ACOMMISSIONER 11 HEREBY CERilFY that the WittGOM ~ S~ .jocument is a true copy of the original

in the files of tI.e Board of PublicIJtilities /) :.': .

ilONER

ATTEST: I r;;)(

KRISTIIZZ~SECRETARY

/)

3 BPU Docket Nos. EOO305094, EOO5040318,EOO6020119, and ERO7060378

Further, the Board HEREBY Q!f~ the EDCs to file tariffs and rates consistent with theBoard's findings within five (5) business days of this Board Order.

In the Matter of Basic Generation Service for Year Two of the Post Transition Period and In theMatter of the Provision of Basic; Generation Service for the Period Beginning June 1, 2006 and

In the Matter of the Provision of Basic Generation Service for the Period Beginning June 1, 1007and In the Matter of the Provision of Basic Generation Service for the Period Beginning June 1,

2008 -BPU Docket Nos. E:O03050394. EO05040317, EO06020119 and ER07060379

SERVICE LIST

Ike I. Givvs, VP &Compliance OfficerJP Morgan Ventures Corp.270 Park AvenueFloor 40New York, NY 10017

Michael J. FilipponeJersey Central Power & Light

Company300 Madison AvenueMorristown, NJ 07962

Gregory MarquisBulk Power Supply

ManagementPepco Holdings, Inc.701 9th Street NWWashington, DC 20068-0001

Timothy DanielsConstellation NewEnergy810 Seventh AvenueSuite 400New York, NY 10019-5818

John JensonPublic Energy Solutions41 Honeck StreetEnglewood, NJ 07631

Joseph E.JanochaPHI Rates & TechnicalServices5100 Harding HighwayMays Landing, NJ 08330

Michael DragoFirstEnergy Solutions24 Fisher PlaceTrenton, NJ 08618

Steven GabelGabel Associates417 Denison StreetHighland Park, NJ 08904

John StutzTellus Institute11 Arlington StreetBoston, MA 02116-3411

SueAnne I. HarrelPepco Energy Services39 Crestview DriveAsset Management GroupClinton, NJ 08809

Jay KooperAmerada HessOne Hess PlazaWoodbridge, NJ 07095

Phillip J. Passanante, Esq.Assistant General CounselPepco Holdings, Inc./ACE800 King Street, 5th FloorPO Box 231Wilmington, DE 19899-0231 Kevin Laguardia

Amerada HessOne Hess PlazaWoodbridge, NJ 07095

Dana SwiesonEPEX102 Pickering WaySuite 102Exton, PA 19341-1330

Kevin ConnellyFirst Energy150 West State StreetTrenton, NJ 08618 John L. Carley, Esq.

Consolidated EdisonCompany of NYLaw DepartmentRoom 1815-84 Irving PlaceNew York, NY 10003

Steven S. Goldenberg, Esq.Fox Rothschild, LLPPrinceton Corporate Center997 Lenox Drive, Bldg. 3Lawrenceville, NJ 08648-2311

Peter SchaubGeneral ManagerBulk Power Supply

ManagementPepco Holdings, Inc.701 9th Street NWWashington, DC 20068-0001

James C. Meyer, Esq.Riker, Danzig, Scherer,Hyland & PerrettiHeadquarters PlazaOne Speedwell AvenueMorristown, NJ 07962

Mark Baird, DirectorRegulatory AffairsReliant Energy, Inc.7642 West 450 NorthSharpsville, IN 46068

Sylvia BrodusPublic Energy Solutions41 Honeck StreetEnglewood, NJ 07631

Angelo ChambroneSelect Energy NY, Inc.507 Plum StreetSyracuse, NY 13204

Randal Griffin, Esq.Assistant General CounselPepco Holdings, Inc.Legal Department800 King StreetPO Box 231Wilmington, DE 19899-0231

Ken GfroererReliant EnergyRR 1 Box 242Stahlstown, PA 15687

Roger M. Schwartz c/o ResaIssue Management, LLC101 Poor Farm RoadPrinceton, NJ 08540

Kuljinder ChaseManaging Director

Energy TradingMerrill Lynch Capital Services4 World Financial Centerth FloorNew York, NY 10080

James Laskey -BGS, Esq.Norris McLaughlin & Marcus721 Route 202-206Bridgewater, NJ 08807

Deborah HartVice President

Morgan Stanley CapitalGroup2000 Westchester AvenueTrading FloorPurchase, NY 10577

Ira G. Megdal- BGS, Esq.Cozen O'Connor457 Haddonfield RoadSuite 300Cherry Hill, NJ 08002

Igor Gonta

Barclays CapitalCommodities Group200 Park Avenue5th FloorNew York, NY 10166

Gregory K. Lawrence, Esq.McDermott, Will & Emery600 13th Street, NWWashington, DC 20002

Maria RobinsonCon Edison Energy701 Westchester AvenueSuite 201 WestWhite Plains, NY 10604

Shawn P. Leyden (BGS),

Esq.PSE&G Energy Resources &Trade80 Park Plaza, T -19PO Box 570Newark, NJ 07101

Lisa FergusonDuke Energy North America5400 Westheimer AmericaHouston, TX 77056

Steve SheppardDTE Energy Trading414 S. Main StreetSuite 200Ann Arbor, MI48104

Marilena Marrelli

Sempra Energy TradingCorp.58 Commerce RoadStamford, CT 06902Dale Kanterman, VP

Eastern Energy Services4 Ridge RoadSouthampton, NJ 08088-3505

Glen RieplAEP Energy Services1 Riverside Plaza14th FloorColumbus, OH 43215-2373

Stephen WempleCon Edison Energy701 Westchester AvenueSuite 201 WestWhite Plains, NY 10604

Trent SmithVice PresidentFirst Energy Solutions395 Ghent RoadSuite 407Akron, OH 44333

Gordon SandersonSuez Energy Marketing NA1990 Post Oak BoulevardSuite 1900Houston, TX 77056-3831

David GilespieNew Jersey TransitOne Penn Plaza EastNewark, NJ 07105-2246

Sharon WeberPPL Ener~y Plus2 North 91 Street TW 20Allentown, PA 18101

Kerry StroupPJM InterconnectionVFCC955 Jefferson AvenueNorristown, PA 19403

Frank MagnottiComverge, Inc.120 Eagle Rock AvenueSuite 190East Hanover, NJ 07936

Stephen Dilts, DirectorChemical Industry Council ofNJ150 West State StreetTrenton, NJ 08608

Melani WilloughbySenior Vice PresidentNJBIA102 West State StreetTrenton, NJ 08608-1199

Geoffrey AllenAEP Service Corp.155 W. Nationwide Blvd.Suite 500Columbus, OH 43215

Jack JohnsonGeophic, Inc.PO Box 580Summit, NJ 07901

Rose BurkeConectiv Energy Supply, Inc.Christiana Bldg.252 Chapman RoadPO Box 60663Newark, DE 19714-6066

Marc B. Lasky, Esq.Thelen Reid Brown Raysman& Steiner, LLP200 Campus DriveSuite 201Florham Park, NJ 07932

Elise Goldblat, DAGDepartment of Law & Public

SafetyDivision of Law124 Halsey Street, 5th FloorNewark, NJ 07101

Frances I. Sundheim, Esq.VP & Corporate RateCounselPublic Service Electric & Gas

Company80 Park Plaza, T -O8CNewark, NJ 07101

Nusha Wyner, DirectorBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

Babette Tenzer, DAGDepartment of Law & PublicSafetyDivision of Law124 Halsey Street, 5th FloorNewark, NJ 07101Alice Bator, Chief

Board of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

Leonard NavitskyAccount ManagerPPm Energy3301 Energy3301 Cherokee StreetEmmaus, PA 18049

Stefanie Brand, DirectorDivision of Rate Counsel31 Clinton Street -11th FloorPO Box 46005Newark, NJ 07101

Stacy PetersonBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

Ken Salamone

Sempra Energy TradingCorp.58 Commerce Ro~dStamford, CT 06902

Diane Schulze, Esq.Division of Rate Counsel31 Clinton Street -11th FloorPO Box 46005Newark, NJ 07101

Frank PerrottiBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

John GarveyBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

Ami Morita, Esq.Division of Rate Counsel31 Clinton Street -11th FloorPO Box 46005Newark, NJ 07101

Bob TrejoUBS677 Washington Blvd.Stamford, CT 06901

Sara BluhmNJBIA102 West State StreetTrenton, NJ 08608-1199

Rene DemuynckBoard of Public Utilities44 South Clinton AvenueCN-3~0Trenton, NJ 08625

John HolubNJ Retail MerchantsAssociates332 West State StreetTrenton, NJ 08618

Peter SchaubGeneral ManagerBulk Power Supply

ManagementPepco Holdings, Inc.701 9th Street NWWashington, DC 20068-0001Dennis Moran, Director

Board of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

Daniel J. O'Hearn, Jr.Becker Meisel, LLC499 Broad StreetSuite 110Shrewsbury, NJ 07702-4003

Randal Griffin, Esq.Assistant General CounselPepco Holdings, Inc.Legal Department800 King StreetPO Box 231Wilmington, DE 19899-0231

Mark BeyerChief EconomistBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

Clarice Savre Sylla,SupervisorDepartment of CommunityAffairsPO Box 806101 S. Broad StreetTrenton, NJ 08625-0806 Suzanne Patnaude

Legal SpecialistBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

Michael J. FilipponeJersey Central Power & Light

Company300 Madison AvenueMorristown, NJ 07962