New Jersey contractors fight cross-subsidization ‘loopholes’

September 13, 2000
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NEWARK, N.J. — New Jersey’s new utility deregulation law, which takes effect August 1, will allow consumers to choose between gas and electric providers. However, hvac contractors are questioning some of the language in the new “Retail Choice” regulations.

“There’s a loophole in these regulations you could steer the Titanic through,” said Bill Potter, attorney for the Coalition for Fair Competition.

Potter was referring to the “affiliate relations” rules, which set down guidelines meant to prevent utilities from subsidizing service companies with ratepayer money.

According to Potter, the cross-subsidization rules would only apply to a separate entity established by the utility to compete for hvac service and replacement work. They don’t appear to apply to the parent utility itself.

Therefore, utilities would have no incentive to set up a separate entity that would be required to abide by the rules against cross-subsidization.

Contractors, power marketers, utilities, and other interest groups were granted a hearing by the Board of Public Utilities (BPU). Under terms of deregulation, the BPU is mandated to adopt standards on cross-subsidization.

During the three-hour hearing in late April, groups from all sides expressed their concerns with the new regulations.

According to Potter, most of the time was devoted to the loophole. The remainder was spent discussing whether the use of utility names and logos constituted an unfair competitive advantage.

“The legislation is tough on cross-subsidization and we want the same regulations to apply to utilities and their separate entities,” said Potter.

The BPU is required to enact the new regulations 60 days after the implementation of the deregulation bill. In this case, the enactment date would be no later than October 1, and possibly sooner.

Potter encouraged hvac contractors around the country to write their concerns to the New Jersey BPU.

He said all contractors should assume that the same thing can happen in their own states.

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