By: James Nash |
Public Service Electric & Gas Co. is seeking a 1 percent increase in utility rates for its 2 million customers in New Jersey, despite a cut in corporate income taxes that could yield its parent company as much as $850 million.
Newark-based PSE&G estimated that the rate increase, its first in eight years, would cost the average household $19.70 a year.
Its parent company, Public Service Enterprise Group, plans to renew its push for a rate surcharge to keep its two nuclear generating plants in Salem County profitable. Company-backed legislation that would have raised residential bills by $30 to $40 a year failed to pass in the waning days of the last legislative session earlier this month.
PSEG will realize a one-time benefit of $660 million to $850 million from a sweeping change to federal taxes that President Donald Trump signed into law in December, the company said in a Wall Street filing. The reduction in the corporate tax rate from 35 percent to 21 percent will also benefit the company’s bottom line in the future, although the company did not project how much.
Savings from the federal tax law are reflected in the modest rate increase that the state’s largest utility is seeking from the New Jersey Board of Public Utilities, company officials said. PSE&G customers could see the higher rates in October.
“As a result of strong cost control, our residential customer bills are lower today than they were eight years ago,” David Daly, the PSE&G president, said in a statement. “Together with passing along savings from recent tax law changes, we’ve been able to minimize the impact on our customers.”
The NJ Coalition for Fair Energy, which includes rival power companies, contended that the tax benefits undercut PSEG’s argument for a rate surcharge to sustain its nuclear plants, which the company says will lose money within two years. PSEG’s Power subsidiary, which operates the Salem and Hope Creek nuclear plants, is expected to realize the largest share of the company’s tax benefit, between $530 million and $650 million.
“The amount PSEG will make off the new tax law is significantly more than what they’d be given under a ratepayer-funded New Jersey subsidy,” Matt Fossen, a spokesman for the NJ Coalition for Fair Energy, said in a statement.
In a conference call with reporters Wednesday, Daniel Cregg, the PSEG chief financial officer, said a tax cut on money-losing nuclear plants isn’t a benefit at all.
“To the extent that the asset is lacking earnings, the asset would lack tax benefits on those earnings from a lower rate,” Cregg said.