MADISON – In a joint prepared statement, Madison Mayor Bob Conley, Councilwoman Maureen Byrne and Madison Planning Board member Rachel Ehrlich express pride in Madison’s electric utility, considering it an important and valuable municipal asset. Conley and Byrne are running for reelection in 2019 and Ehrlich is running for her first term on the borough council.

Candidates Conley, Byrne, and Ehrlich stated, “We believe that the value provided by the borough-owned electric utility represents a good deal for Madison residents, who receive high quality electrical service at competitive rates.  The net earnings (or “surplus”) from the utility is transferred to the municipality to help pay for borough services and investments in our infrastructure and equipment rather than paying for dividends and interest to stockholders and creditors of an investor-own utility.

This year, the borough council increased the utility dividend returned to Madison electric rate payers from $1.5 million to $2.0 million.  Based on CFO Jim Burnet’s published YE 2018 analysis of New Jersey investor owned utilities (excluding JCP&L), with the increase in the dividend, the net costs for a typical Madison residential rate payer consuming 855 KWH of electricity per month is essentially equal to that of the average  of the other NJ investor owned utilities.  With the current dividend, the net 2019 rate is 11% lower than the rate Madison residents paid for their electricity in 2016.”

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Mayor Conley continued, “We acknowledge that JCP&L customers pay less than Madison rate payers and the rate payers of the other New Jersey investor owned utilities pay. (The difference in cost for an average 855 KWH residential user is about $30 a month.)  However, one must remember that the quality of the service that JCP&L rate payers receive is commensurate with what they pay – it is notoriously poorer. In 2017, Madison was ranked in the top 10% of all utilities in the US for the fewest outages that year. JCP&L was nowhere near the top 10%, and the company’s inability to restore service in a timely manner has been a great inconvenience to many of its customers. As recently as March 2018, Madison utility workers were called in to help JCP&L workers restore service to our Harding Township neighbors.”

“Madison has been transferring utility surplus to the municipal budget to meet capital needs since 1927,” stated Councilwoman Byrne. “Of the $6.68 million in electric utility surplus to be transferred to the municipal budget this year, $3.8 million will go for capital investment. This minimizes the need for future bonding and helps to maintain our AAA credit rating. (Only 29 out of the 565 municipalities in New Jersey have a AAA rating.)  An additional $2.26 million will go to servicing the debt incurred from previously bonded projects and about $620,000 will go to help pay for services, like police and fire protection.  The result is that Madison residents pay less in municipal taxes than residents in many of the immediate surrounding communities. 

This works out well for Madison residential tax payers since our 50 largest electric utility customers – a number of which are non-profits that pay no property taxes – account for approximately 40% of the total revenue collected by the utility, whereas the top 50 property tax payers account for only 13.1% of the municipal government’s tax revenue.

Drew University, a non-profit that is also the utility’s largest customer, pays about $1.9 million a year for electric service. Its contribution to the surplus helps to pay for borough services and infrastructure that benefit the university – just as they benefit the rest of the community.” 

Candidate Ehrlich concluded, “Bob, Maureen, and I fully support Madison’s long standing policy of transferring the utility surplus – a substantial portion of which comes from large non-residential customers like Realogy, the Giralda tenants, and Drew University – to fund capital investment.  We pay less in taxes and at the same time, we receive high quality electric service at a competitive rate. 

For more information on borough finance and utility rates, voters are invited to visit our website at https://madisonnjdems.com and to follow us on Facebook, @MadisonNJDemCommittee for the latest information on how we will continue to make Madison a great place to live.”