NEWS RELEASE
Muise, et al v. G.P.U., Inc.,
Docket No.: MON-L-3587-99
Nearly two (2) years since the July 1999 catastrophic power failures in GPU's New Jersey service territories, there has been an industry wide acknowledgment of the need to improve infrastructure and transmission capabilities, according to wire and press reports. While the industry may contend that this is because of a careful and deliberative review of their service areas, it is more likely a result of the continued success of the Class Action lawsuit filed against GPU on behalf of those individuals in New Jersey who suffered through the week of the fourth of July in 1999. According to the Complaint filed after the outages by Frank Gaudio, Esq., Scott Arnette, Esq. and Gerhard Dietrich, Esq. which the Court has refused to dismiss despite repeated attempts by GPU's Lawyers, the Utility failed its customers because of a lack of planning, poor maintenance and its failure to comply with industry standard and state regulations.
The case continues to move forward at a reasonably rapid pace given the complexities of the issues. Plaintiffs' Counsel, Frank S. Gaudio, Esq.,and Scott Arnette, Esq. were recently encouraged by the Court's decision to deny Defendant GPU Energy's Motion to decertify the Class and require each of its individual customers to bring claims on their own. In response to GPU's contention that the Class Action Court Rule is not appropriate for the claims of GPU's customers against the Corporation and that the Class should be decertified and broken up, Arnette stated, "The purpose of Class Actions such as the one filed against GPU is to assist individuals who have claims that involve too small an amount to warrant them going out, hiring an individual Attorney, paying that Attorney and then litigating the matter against large corporate defendants with many law firms on retainer and limitless legal resources available, such as GPU in this matter. In such circumstances, the wrongs committed that have effectively damaged innocent third parties go without redress. The beneficial consequence of a Class Action lawsuit is the equalization of the playing field and the ability of the parties to prepare and pay for the advocacy of their rights. The Class Action is a procedural device that enables injured parties with small claims to band together against a common adversary".
After the Complaint had been filed and before GPU Energy answered the Complaint, they attempted to have the matter dismissed outright. After that was unsuccessful, they appealed the trial Court Judge's decision to the Superior Court of New Jersey Appellate Division. After receiving lengthy submissions compiled by the several law firms that had been retained by GPU Energy to defend this claim, briefs submitted by Class Counsel and numerous "friend of the Court" Briefs, mostly from industry groups, the three (3) Judge panel that heard the Appeal of GPU Energy's request to dismiss the claims from the Superior Court rejected the Appeal and returned the matter to the Trial Judge. Consequently, GPU was required to participate in the "discovery" phase of the litigation.
Before filing suit against GPU energy, Class Counsel were aware that GPU Energy had replacement transformers available at the Red Bank Substation for more than a year before the July, 1999 outages, but delayed replacing the two transformers which ultimately failed. The Board of Public Utilities later determined that the decision to defer the replacement of the transformers was "risky". The failure of the two transformers at Red Bank set off a chain of events which caused GPU customers to lose power. Plaintiffs, through their attorneys' investigation and discovery, have also learned of additional instances of poor planning and maintenance, and disregard for Orders from the Board of Public Utilities. These include:
- GPU Energy's failure to install and implement a new Outage Management System prior to the July, 1999 outages despite being ordered to do so in a December, 1997 Board of Public Utilities Order;
- GPU's deferral of other projects despite being identified in a 1998 MAAC Reliability Assessment as having tight deliverability margins which required improvement;
- GPU Energy's failure to have sufficient levels of certain type of equipment, such as distribution capacitors, installed and operating on its system at the time of the outages. This later deficiency has been noted in both internal GPU Energy documents and a report prepared by the Root Cause Analysis Review Team of the PJM Interconnection since the outages occurred.
Plaintiffs' Counsel have also learned through their investigation and discovery that the utilities industry has been estimating the cost of outages for over 20 years. The Electric Power Research Institute, published a "White Paper" describing these methods in October, 2000. GPU Energy is a member of EPRI and has itself purchased a study from E-Source which utilizes sampling and survey methods to estimate damages to customers caused by outages. In their opposition to the motion to decertify filed by GPU, Plaintiffs filed with the Court certifications from some of the leading experts in this area. Based on these estimates by industry accepted methods, Plaintiffs' Counsel believe that the damages to New Jersey citizens caused by the outages is in the range of $80,000,000 to $120,000,000.
In an effort to deflect criticism and/or blame for the extensive damage, GPU Energy has accused its customers of not reporting outages quickly enough so that their outage reaction time had been delayed. Also, GPU has blamed squirrels and other wild animals for chewing through power cables as a cause of outages in certain areas.
"GPU Energy has an obligation to its rate payers and customers first. Any profit margin to show to its shareholders is secondary to serving the public, which is a public utilities primary purpose" said Gaudio when he discovered the deferment of huge sums of money to purchase overseas assets rather than it being used for investment in infrastructure and transmission in GPU's domestic service area.
"The fact that industry watchdog groups and others familiar with generation and transmission of electricity have stated that the mid Atlantic region (New Jersey, New York, Maryland and Delaware) will not suffer outages such as the ones experienced in California confirms that had GPU Energy properly planned, maintained and invested in its infrastructure and transmission equipment, the 1999 July 4th week outages would have been averted" says Gaudio.
Continued litigation is expected with vigorous defense from GPU being likely, despite the corporate apology by CEO Fred Hofer and an admission regarding the July 1999 outages. Shamelessly, GPU continues to deny responsibility for the harm that its negligence caused. The next Court Hearing in this matter is anticipated to be in September.
If you have not opted out of the Class Action, you can still notify the Class Attorneys of your loss, and are encouraged to do so (sooner rather than later), so that the totality of your loss can be adequately and properly documented rather than forgotten over time. If you are in need of a claim form to submit to the Attorneys in this matter, you can obtain one at MillerGaudio.lawoffice.com or you can call Frank S. Gaudio, Esq. or Scott Arnette, Esq. at 732-741-6769.
SPEECH ON ELECTRICITY RELIABILITY STANDARDS
REMARKS OF BLOSSOM A. PERETZ, ESQ.
DIRECTOR, DIVISION OF THE RATEPAYER ADVOCATE
In The Matter of The Comprehensive Resource Analysis Of
The Energy Programs Pursuant To Section 12 Of The
Electric Discount And Energy Competition Act Of 1999
BPU Dkt. No: EX99050347, EO99050348, EO99050349,
EO99050350, EO99050351, GO99050352, GO99050353
and GO99050354
Supplemental Hearing
Board of Public Utilities
Newark, NJ 07102
October 11, 2000
PRESENT STATUS OF LAW SUIT - GPU
In November of 2002, G.P.U. renewed its Motion to Decertify the Class Action before a third Judge, The Honorable Jamie S. Perri, J.S.C. At that time, Judge Perri consequently ruled that the Class should be Decertified on the basis that individual causation issues predominated over common questions of law and fact. In addition, the Court also ruled that the damage model provided by the Plaintiff's through their experts was not acceptable to the Court. That ruling was appealed to the Appellate Division and the Appellate Division affirmed the Decertification of the originally Certified Class, but indicated that causation issues were not a problem for the Red Bank Class. This was because the failure of transformers at Red Bank was a more cohesive set of facts than those surrounding the power loss elsewhere in the G.P.U. service area. Accordingly, the Court directed Certification of a Red Bank area Class. However, the Court did uphold the denial of the use of the damage model. Subsequently, both Plaintiff counsel and defense counsel sought Leave to Appeal those issues to the Supreme Court of the State of New Jersey. The Supreme Court denied Leave to Appeal.
At the present time, Plaintiff's counsel will provide the Court with the revised damage model and will pursue the case for a Red Bank Class.
It is expected that this matter will go to Trial sometime in 2005. It is also expected that before the Trial date, further attempts will be made by counsel for G.P.U. to dismiss the claim.
Updates will follow as the case progresses.
The New Jersey and indeed the US Electric Power Market Industry is in the midst of rapid change. The Energy Deregulation and Competition Act ("EDECA") signed by Governor Whitman in February 1999 completely restructured the 90 year old electric monopoly industry. Except for PSE&G, all the New Jersey utilities have divested their generation plants, and have become involved in various mergers and acquisitions leading, to among other things, spin offs of newly created affiliates to the energy marketplace for services to electric consumers.
The turmoil and change within the industry has been accompanied with significant problems related to load growth and reliability, resulting in increasing demand for electric energy and heightened concerns about reliability. The increasing outages and signs of improperly maintained infrastructure have brought new concerns about the ability of the new marketplace to meet expanding capacity needs of all consumers - the residential, commercial and industrial customers. Witness the class action in Monmouth County as the result of the July 1999 outage.
There is a need for development of new resources to meet the growing demand for electricity at reasonable rates for consumers, with assurances of quality and reliability. This is, of course, a legislative concern, a part of EDECA, which brings me to the current Comprehensive Resource Analysis proceeding.
Since the issues have been debated and extensively briefed, I will limit my remarks to very specific concerns:
My priority concern is that we facilitate an environment that will vigorously encourage and provide a fertile breeding ground for new ideas and new technologies with maximum end user energy choices and design choices and a high level of reliability, particularly during peak load demand time and during times of high market energy price swings. All of this can be done while respecting the environment through proper efficiency programs and use of our renewable resources. That is the pledge of EDECA to New Jersey ratepayers.
Let's quickly talk about the changing nature of demand. The "e" in e-commerce stands for electronic. All computer devices that move electronic bits and bytes are driven by electricity and the uninterrupted flow of electricity is critical to this new economy. The backbone of our new economy is the electric power grid. All major outages impact the entire economy. And electricity is only as clean and efficient as the fuel that is used to produce it. We must liberate New Jersey from dependence on the constraints of the current grid if we are to maintain our role as a state that fosters its current business customers and attracts new businesses to New Jersey.
The benefits of the energy efficiency and renewables provisions of the EDECA legislation are apparent. Here is my concern: we must place this development in the hands of a independent state wide administrator who will act on behalf of all the interests of the citizens of the state of New Jersey. The Board took a big step yesterday in that direction by imposing Board administration of the interim $10 million energy efficiency and renewable energy programs it approved. This is especially important, since our electric utility companies mostly are no longer based in New Jersey.
GPU - with the recent merger and consolidation of the GPU companies - the GPU corporate headquarters place has moved to Pennsylvania. More importantly with the pending takeover of GPU by First Energy of Ohio, GPU headquarters will be in Ohio and New Jersey GPU will be part of a new conglomerate based in Ohio. Let's look at what we used to call Atlantic Electric. With the Delmarva merger it is now Conectiv with corporate headquarters in Wilmington, Delaware. Rockland Electric, formerly part of Orange and Rockland, has now been subsumed by the giant Con Edison, with a new pending merger with Northeast Utilities. My point is that our electric utilities except for PSE&G, who is buying energy plants in New York and building energy plants in Arizona and South America, have left the state of New Jersey. Do we want decisions of New Jersey energy efficiency and energy renewables being made in Pennsylvania, Ohio, Delaware or New York? Let's keep New Jersey priorities up front - let's delegate management of New Jersey energy efficiency strategies to an independent New Jersey administrator or this Board - let's not make our customers have to compete with the interests of other states or in the case of PSE&G, with interests of non-regulated energy projects throughout the country and the world.
The need for reliable electricity influencing the design of an important new technology is not unprecedented. When Alexander Graham Bell was contemplating deploying the telephone as a commercial technology, he chose not to depend on the new electricity industry to power his invention. He built an independent capacity into his system. How can e-commerce companies respond today if there are continual supply interruptions, devastating them economically so that they could not rely on electricity? Reliability for New Jersey residential customers, businesses, our schools, hospitals and libraries has never been more important.
Exclusion Request
Notice Of Claim Form To Be Used
Notice Of Class Action
