Agenda Date: 09/12/08Agenda Item: 2A-1

STATE OF NEW JERSEYBoard of Public Utilities

Two Gateway CenterNewark, NJ 07102www.ni.aov/bou

ENERGY

IN THE MATTER OF THE PROVISION OF BASICGENERATION SERVICE FOR YEAR TWO OF THEPOST TRANSITION PERIOD

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

IN THE MATTER OF THE PROVISION OF BASICGENERATION SERVICE FOR THE PERIOD BEGINNING)JUNE 1, 2006

IN THE MATTER OF THE PROVISION OF BASICGENERATION SERVICE FOR THE PERIOD BEGINNINGJUNE 1, 2007

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DOCKET NOS. EOO3050394,EOO5040317, EOO6020119, ANDERO7060379

IN THE MATTER OF THE PROVISION OF BASIC )GENERATION SERVICE FOR THE PERIOD BEGINNING)JUNE 1, 2008 )

(SERVICE LIST ATTACHED)

BY THE BOARD:

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

Attached to the petition are copies of tariff sheets proposed by each of the EDCs and revised toreflect changes to the PJM Open Access Transmission Tariff ("OATT") made in response to afiling made by Potomac-Appalachian Transmission Highline, L.L.C. ("PATH") in FERC DocketNo. ER08-386-000. The proposed tariffs specifically reflect additional PJM transmission chargesor Transmission Enhancement Charges ("TECs") to Basic Generation service ("BGS") FixedPrice ("BGS-FP") and Commercial and Industrial Energy Pricing ("BGS-CIEP") rates tocustomers resulting from the PATH filings that were approved by FERC on February 29,2008.

The EDCs stated that the BGS rates had been modified in accordance with the Board-approved methodology contained in each of the EDC's company-specific Addenda in the above-referenced BGS proceedings and in conformance with each of the EDC's Board-approved BGStariff sheets. The EDCs requested approval to implement their revised tariff rates effective as of

June 1, 2008. In the event the Board approve the implementation of these tariffs subsequent toJune 1, 2008, the EDCs requested authority to compress the resulting rates to recover theTECs costs over the nLlmber of months remaining in 2008.

The EDCs also reque~)t that the BGS suppliers be compensated for the increases caused bythese changes, subje!ct to the terms and conditions of the applicable Supplier MasterAgreements ("SMAs") and that any difference between the payments to BGS suppliers andcharges to customers flow through each EDC's BGS Reconciliation Charge.

Also, since it is expected that the FERC-approved TEC for the PATH project will change eachyear in January and may also change from time to time, the EDCs further request Boardapproval to submit cornpliance tariff sheets as required to implement any subsequent FERC-approved changes to l:he TECs resulting from the PATH project without having to seek priorBoard approval.

The EDCs state that this filing satisfies the requirements of paragraph 15.9 (a)(i) and (ii) of theBGS-FP and BGS-CIE:P 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.

Backaround

The specific additional PJM transmission charges related to the PATH filings, referred to asTECs, are found in S,chedule 12 of the PJM OATT and were implemented to compensatetransmission owners for the annual transmission revenue requirements of "RequiredTransmission Enhancements" (as defined in the PJM OATT) that are requested by PJM forreliability or economiic purposes. TECs are recovered by PJM through an additionaltransmission charge iln the transmission zones assigned cost responsibility for RequiredTransmission Enhancel11ent projects.

The EDCs state that the determinants for calculation of the PJM charges are set forth inSchedule 12 of the PJI~ GATT and on the Formula Rates page of the PJM website. The costimpact for the 2008/:2009 period for each of the EDCs were allocated to the varioustransmission zones using the cost information from the formula rates for the PATH projectposted on the PJM weblsite.

Each EDC is allocated a different amount of TEGs from PJM based on the cost for RequiredTransmission Enhancelments in each EDC's transmission zone. As such, if the rates had beenimplemented on June 'I, 2008, a residential customer would have seen the following BGS rateincrease per month per utility (including Sales and Use Tax ("SUT")): ACE $0.000061 per kWh;JCP&L $0.000058 per IcWh; PSE&G $0.0000642 per kWh; RECO $0.00005 per kWh.

DISCUSSION AND FINDINGS

In its Order dated December 2, 2003, in Docket No. EO03050394, the Board authorized theEDCs to recover FERIC-approved changes in firm transmission service-related charges andfound that the pass through of any changes in the network integration transmission charge, andother charges associated with the FERC-approved Open Access Transmission Tariff isappropriate. Furthermore, by subsequent Orders, the Board approved Section 15.9 of theSMAs as filed by the EDCs which requires that the EDCs file for Board approval of any

BPU Docket Nos. EOO305094, EOO5040318,EOO6020119, andERO7060378

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increases or decrease!s in their transmission charges that have been approved by the FERC..The associated SMAs ,also authorized the EDCs to increase the rates paid to BGS suppliers forFERC-approved rates and increases to Firm Transmission Services. The Board furtherrequired that the EDCs review and verify the requested FERC authorized increases prior to anypass through to BGS cl.Jstomers.

After review of the verifications and supporting documentation, the Board HEREBY APPROVESthe increase to the B(3S-FP and BGS-CIEP rates requested by each EDC for its increasedtransmission charges resulting from the FERC-approved changes to the TECs effective on orafter October 1, 2008. The Board FURTHER APPROVES the EDCs' request to compress therates to reflect the implementation date of these changes. The average increase in BGS rates,after compression, for residential customers in each utility's service territory is approximately0.12%. The EDCs are HEREBY ORDERED to compensate the BGS suppliers for thistransmission rate increase subject to the terms and conditions of the SMAs.

In addition, the Board HEREBY DENIES the EDCs' request that any subsequent FERCapproved changes to the TECs resulting from the PATH project, be implemented throughsubmission of compliance tariff sheets. The EDCs must continue to file for approval by theBoard of the amount 01: any proposed pass through to BGS customers of any FERC-approvedchanges to Schedule 1 :2, after review and verification by the EDCs.

Further, the Board HER:EBY DIRECTS the EDCs to file revised tariffs and rates consistent withthe Board's approval of an October 1, 2008 implementation date and resulting compressedrates within five (5) business days of the date of this Order.

BOARD OF PUBLIC UTiliTIESBY:

'¥J---t/1/'\;JJJ &,yM. FOX

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L. FIORDALISOCOMMISSIOtl(ER

aNICHOLAS ASSEtiACOMMISSIONER I HEREBY CERTIFY that the withinCOMf>41S~

document is a true copy ot the original ~in the tiles of tl,e Board of PublicUtilities J I ..' -

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SIGNER

ATTEST: ~I ~/\ ---

KRISTIIZZ~!~OSECRETARY IJ

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

In the Matter of Basic Generation Service for Year Two of the Post Transition Period and In theMatter of the Provisiorl 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. EO03050394. EO05040317, EO06020119 and ER07060379

SERVICE LIST

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

Gregory MarquisBulk Power Supply

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

Michael J. FilipponeJersey Central Power & Light

Company300 Madison AvenueMorristown, NJ 07962

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 0833G

Steven GabelGabel Associates417 Denison StreetHighland Park, NJ 08904

Michael DragoFirstEnergy Solutions24 Fisher PlaceTrenton, NJ 08618

John StutzTellus Institute11 Arlington StreetBoston, MAO2116,"341_t

Jay KooperAmerada HessOne Hess PlazaWoodbridge, NJ 07095

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

Phillip J. Passanante, Esq.Assistant General CounselPepco Holdings, Inc./ACE:800 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 DirectorEnergy 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

Marilena Marrelli

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

Eastern Energy Services4 Ridge RoadSouthampton, NJ 08088-3505

Steve SheppardDTE Energy Trading414 S. Main StreetSuite 200Ann Arbor, MI 48104

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

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

Vice 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 -08CNewark, NJ 07101

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

Babette Tenzer, DAGDepartment of Law & Public

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

Leonard NavitskyAccount ManagerPPm Energy3301 Energy3301 Cherokee StreetEmmaus, PA 18049

Alice Bator, ChiefBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

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 RoadStamford, 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

Bob TrejoUBS677 Washington BlvdStamford, CT 06901

John GarveyBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

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

Sara BluhmNJBIA102 West State StreetTrenton, NJ 08608-1199

Rene DemuynckBoard of Public Utilities44 South Clinton AvenueCN-350Trenton, 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

Mark BeyerChief EconomistBoard of Public UtilitiesTwo Gateway CenterNewark, NJ 07102

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

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