Challenge to PSEG’s Roseland-to-Pleasant Valley Transmission Fraud
By Tyson Slocum
Read a full pdf of our filing in Federal Energy Regulatory Commission docket ER09-1257 here PSEGb2986
On January 10, 2025, Public Citizen protested PJM’s proposed amendments to Schedule 12 of its Open Access Transmission Tariff to provide updated annual cost allocations for certain projects in its regional transmission expansion plan. Our protest focused on proposed cost allocations for Public Service Electric and Gas Company’s (PSEG) transmission projects identified by baseline project code b2986 as unjust and unreasonable, as they include imprudently incurred expenditures as revealed in a December 5, 2024 Commission enforcement action.
While the Commission determined that our challenge was “beyond the scope” of the PJM proceeding, it directed that “challenges to the recovery of the costs that PSEG incurred for the Roseland-to-Pleasant Valley transmission project may be raised through PSEG’s formula rate annual update process”. Following the Commission’s clear guidance to raise the prudence of PSEG’s cost recovery for the Roseland-to-Pleasant Valley transmission project here in PSEG’s formula rate annual update process, we file this protest.
Given the stipulated facts, summarized below, the Commission should not apply its presumption of prudence. To the extent the Commission presumes the expenditures related to b2986 were prudently incurred, the stipulated facts create “serious doubt” that the expenditures were prudently incurred (“The regulated entity has the burden of proof to establish prudence. However, in order to ensure that rate cases are manageable, a presumption of prudence applies until the challenging party ‘creates a serious doubt as to the prudence of an expenditure.’” (quoting Iroquois Gas Transmission Sys., 87 FERC at 62,170)). The Commission must find the proposed rates to be unjust and unreasonable, and set the matter for hearing.
To the extent that PSEG’s formula rate protocols require a party such as Public Citizen raising prudence challenges prior to raising them in a section 205 proceeding, the Commission should waive that requirement, since it was the Commission itself that directed parties to pursue a challenge of cost recovery in this proceeding. In addition, he Commission’s December 5 enforcement order reveals new information that clearly raises “serious doubt” about the prudence of these expenditures and is relevant to whether these rates are just and reasonable. There is therefore good cause for waiving any procedural requirements in the Tariff.
The December 5 enforcement action details, in our opinion, harrowing fraud committed by PSEG. While the enforcement order documents clear wrongdoing committed by PSEG—imposing a civil penalty upon the transmission owner of $6.6 million payable to the U.S. Treasury—the enforcement order fails to protect consumers from unjust and unreasonable rates resulting from PSEG’s scam.
As the enforcement order states at ¶ 10, PSEG recommended that PJM approve its $546 million Roseland-to-Pleasant Valley transmission line replacement project. PSEG submitted PowerPoint presentations to PJM that claimed 67 transmission towers in this corridor featured “foundations requiring extensive reconstruction”, when in reality only 8 towers met that criteria. And the enforcement order notes that, rather than conduct any independent evaluation, PJM relied entirely on PSEG’s PowerPoints in approving the $546 million project, failed to perform any independent due diligence, and did not maintain basic recordkeeping of meetings where hundreds of millions of dollars in ratepayer-funded projects were discussed.
PSEG’s Roseland-to-Pleasant Valley transmission project includes imprudently incurred charges that were the subject of a Commission enforcement action. PSEG’s formula rate annual update is unjust and unreasonable, and the Commission must set the matter for hearing to ensure that families do not shoulder PSEG’s falsified charges.