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Utilities Dirty Secret

August 26, 2023 – Earlier this week, the Mayor and Council of Toms River, NJ publicly stated that action must be taken against JCP&L over the state of the electrical grid in the township after weeks of power outages. The mayor said he suspects there is more going on behind the scenes that JCP&L isn’t telling the public about the poor state of the local grid and infrastructure.

This is not a surprise.

Back in June 2020, California’s largest utility company PG&E pleaded guilty to 84 felony counts of involuntary manslaughter in a California fire that destroyed the town of Paradise in November 2028. In its bankruptcy proceeding, PG&E admitted to one of the dirty secrets of the industry – that it cannot afford to properly inspect and maintain its energy grid, even when ordered to do so by a US District Court judge.

In July, Chatham, NJ residents suffered an outage on two of the hottest days of the year. Even though it was a “catastrophic failure” at a substation, JCP&L customers were given a three-hour window for restoration that kept moving and moving.

More recently, there was a fire on Maui that devastated the town of Lahaina. While the causes of the fire are still under investigation, Hawaiian Electric, a for-profit utility company, is facing at least nine lawsuits for its role in allegedly sparking the wildfires. There are now reports that the Hawaii public utility hauled away fallen poles, power lines, transformers, conductors and other equipment before investigators from ATF arrived at the scene, against regulations or guidelines.

New Jersey and much of our nation operate under a business model whereby an essential public service (electrical power) is provided by for-profit companies that were granted a franchise to operate as a monopoly. This model has an inherent conflict of interest that benefits management and shareholders at the expense of captive customers who cannot switch their utility companies.

History is replete with stories that for-profit utility companies have worked against public interest despite their mandates to operate otherwise.

See the petition asking Governor Murphy and the Board of Public Utilities to revoke JCP&L’s franchise to operate as a monopoly:

Given the history, it seems clear that this business model with its inherent conflict of interest and the high costs to our society, which includes social and economic costs from power outages, can’t be the right model for an essential public service.

Past responses and measures have not shown to be effective. It is time for our New Jersey lawmakers to rethink this critical issue.

A good first step is for New Jersey to include a sunset clause for a utility franchise, say after 7 or 10 years, and to consider revoking JCP&L’s franchise. Currently, a franchise allows a utility company to operate as a monopoly. Without a sunset clause, there are minimal incentives for a utility to properly maintain its energy grid system since proper maintenance comes at the expense of the bottom line for these for-profit companies.

In California, some towns and counties proposed a co-op to replace PG&E, the utility company held to be responsible for the wildfire that destroyed Paradise. In parts of New Jersey, electricity is provided by a co-op, a non-profit entity that is owned by either a township or its customers.



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