A3859

An Act concerning the provision of basic generation service and amending P.L.1999, c.23 and P.L.2005, c.215.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 9 of P.L.1999, c.23 (C.48:3-57) is amended to read as follows:

9. a. (1) Simultaneously with the starting date for the implementation of retail choice as determined by the board pursuant to subsection a. of section 5 of [this act] P.L.1999, c.23 (C.48:3-53), and for at least three years subsequent and thereafter until the board specifically finds it to be no longer necessary and in the public interest, each electric public utility shall provide basic generation service. Power procured for basic generation service by an electric public utility shall be purchased, at prices consistent with market conditions. The charges assessed to customers for basic generation service shall be regulated by the board and shall be based on the reasonable and prudent cost to the utility of providing such service, including the cost of power purchased at prices consistent with market conditions by the electric public utility in the competitive wholesale marketplace and related ancillary and administrative costs, as determined by the board.

(2) Of the monies paid to the board from revenues collected as a retail margin imposed, pursuant to the board's continuing regulation of basic generation service pursuant to sections 3 and 9 of P.L.1999, c.23 (C.48:3-51 and 48:3-57), by an electric power supplier or an electric public utility, as appropriate, for providing basic generation service to certain hourly-priced and larger non-residential customers, $6 million shall be used annually by the board solely for the purposes of granting financial assistance to any contractor that undertakes a “comprehensive energy audit,” as that term is defined in section 2 of P.L.1995, c.180 (C.48:2-21.25), on behalf of such customers, which audit shall evaluate cost-effective energy efficiency and conservation measures as part of those customers’ efforts to reduce energy costs. The board shall utilize a competitive bidding process in the awarding of any contract for financial assistance to a contractor that undertakes a comprehensive energy audit for the benefit of those hourly-priced and larger non-residential customers. The board shall annually report, pursuant to section 2 of P.L.1991. c.164 (C.52:14-19.1), to the Legislature, describing the contracts awarded pursuant to this paragraph and, if the full amount provided by this paragraph is not awarded through contracts in accordance with provisions of this paragraph, the report by the board shall include an explanation of the reasons the amount was not so awarded.

(3) The board shall approve unbundled rates to assure that aggregate rate reductions established pursuant to section 4 of [this act] P.L.1999, c.23 (C.48:3-52) are sustained notwithstanding changes in basic generation charges approved pursuant to this section.

b. The board may allow an electric public utility to purchase power for basic generation service through a bilateral contract from a related competitive business segment of its public utility holding company only if:

(1) The related competitive business segment is not a related competitive business segment of the electric public utility; and

(2) The board determines that the procurement of power from the related competitive business segment of the public utility holding company is necessary in order to ensure the reliability of service to basic generation service customers or to address other extraordinary circumstances, and that the purchase price does not exceed the market price for such power or the power was procured through a competitive bid process subject to board review and approval. The board shall require that all net revenues derived from such sales, when the source of power is assets or contracts which costs are included in stranded costs recovery charges assessed pursuant to sections 13 and 14 of [this act] P.L.1999, c.23 (C.48:3-61 and C.48:3-62), shall be applied:

(a) To offset any market transition charge or equivalent rate mechanism assessed to customers pursuant to section 13 of [this act] P.L.1999, c.23 (C.48:3-61); or

(b) If the electric public utility is not assessing a market transition charge, to offset the rates charged to customers for distribution service, except that such offset shall cease to be required after the term of the transition bond charge has expired as provided in paragraph (1) of subsection d. of section 14 of [this act] P.L.1999, c.23 (C.48:3-62).

(3) The board may devise an alternative accounting or cost recovery process that permits an electric public utility to purchase power from a related competitive business segment of its public utility holding company, or otherwise, to provide basic generation service to its customers during the period that the electric public utility is providing for sustainable rate reductions pursuant to subsection j. of section 4 of [this act] P.L.1999, c.23 (C.48:3-52) and subsection a. of this section, if the board determines that such process is necessary to mitigate the impacts of market price fluctuations and to sustain such rate reductions.

c. No later than three years after the starting date of retail competition as provided in subsection a. of section 5 of [this act] P.L.1999, c.23 (C.48:3-53), the board shall issue a decision as to whether to make available on a competitive basis the opportunity to provide basic generation service to any electric power supplier, any electric public utility, or both.

d. Power procured for basic generation service by an electric power supplier shall be purchased at prices consistent with market conditions. The charges assessed to customers for basic generation service shall be regulated by the board and shall be based on the reasonable and prudent cost to the supplier of providing such service, including the cost of power purchased at prices consistent with market conditions, by the supplier in the competitive wholesale marketplace and related ancillary and administrative costs, as determined by the board or shall be based upon the result of a competitive bid.

e. Each electric public utility or electric power supplier that provides basic generation service pursuant to subsection a., c. or d. of this section shall be permitted to recover in its basic generation charges on a full and timely basis all reasonable and prudently incurred costs incurred in the provision of basic generation services consistent with the provisions of this section, except to the extent that certain costs related to the provision of basic generation service are already being recovered in other elements of an electric public utility's charges. The board may approve ratemaking and other pricing mechanisms that provide incentives, including financial risks and rewards, for the utility or electric power supplier to procure a portfolio of electric power supply that provides maximum benefit to basic generation service customers.

f. Each electric public utility shall submit a quarterly report to the board of all electricity generation contracts between the public utility and any related competitive business segment. A utility that submits a report pursuant to this subsection may petition the board for confidential treatment as trade secrets of any or all of the information provided.

g. Nothing in this section shall apply to any existing board approved bilateral power purchase contract by an electric public utility as of the effective date of [this act] P.L.1999, c.23 (C.48:3-49 et seq.).

(cf: P.L.1999, c.23, s.9)

2. Section 4 of P.L.2005, c.215 (C.48:2-95) is amended to read as follows:

4. a. There is hereby created a BPU Business Ombudsman in the board to provide information and assistance to any business, located in this State or seeking to relocate in this State, with regard to energy costs, potential benefits from switching to or utilizing third-party energy suppliers, State energy programs, subsidies or grants available to businesses to reduce their energy costs and promotion of energy efficiencies.

b. The ombudsman office shall be headed by a BPU Business Ombudsman who shall be appointed by the President of the Board and shall serve at the pleasure of the President of the Board. The BPU Business Ombudsman shall be a person qualified by training, experience, or both, to direct the work of the office. In appointing an Ombudsman, the President of the Board may select from, but shall not be restricted to, candidates from within the board as presently constructed.

c. The Ombudsman, under the supervision of the board, shall organize the work of that office and employ such professional, technical, research and clerical staff as may be necessary, proper and expedient to carry out the purposes of P.L.2005, c.215 (C.48:2-92 et seq.). The board, in consultation with the Ombudsman, may formulate and adopt rules and regulations and prescribe duties for the efficient conduct of the business, work and general administration in connection with P.L.2005, c.215 (C.48:2-92 et seq.). The Ombudsman may delegate to subordinate employees such of the Ombudsman's powers as the Ombudsman may deem desirable, to be exercised under the Ombudsman's supervision and direction.

d. [The] Subject to the provisions of paragraph (2) of subsection a. of section 9 of P.L.1999, c.23 (C.48:3-57), the BPU Business Ombudsman and staff shall be funded through use of a portion of the monies received by the board as a result of the board's inclusion of a retail margin on certain hourly-priced and larger non-residential customers pursuant to the board's continuing regulation of basic generation service pursuant to sections 3 and 9 of P.L.1999, c.23 (C.48:3-51 and 48:3-57). Nothing in P.L.2005, c.215 (C.48:2-92 et seq.) should be interpreted to restrict the board's discretion to set the level of the retail margin. Should the board determine to reduce or eliminate the retail margin or take any action that might implicate the funding of the activities or position, or both, of the BPU Business Ombudsman, the board shall assess the continuing need for the Ombudsman and upon a determination that the position remains necessary and useful shall consider alternative funding options.

(cf: P.L.2005, c.215, s.4)

3. This act shall take effect immediately.

STATEMENT

This bill provides that of the monies paid to the Board of Public Utilities (“board”) from revenues collected as a retail margin imposed, pursuant to the board's continuing regulation of basic generation service pursuant to sections 3 and 9 of P.L.1999, c.23 (C.48:3-51 and 48:3-57), by an electric power supplier or an electric public utility, as appropriate, for providing basic generation service to certain hourly-priced and larger non-residential customers, $6 million shall be used annually by the board solely for the purposes of granting financial assistance to any contractor that undertakes a “comprehensive energy audit,” as that term is defined in section 2 of P.L.1995, c.180 (C.48:2-21.25), on behalf of such customers, which audit shall evaluate cost-effective energy efficiency and conservation measures as part of those customers’ efforts to reduce energy costs. The board is to utilize a competitive bidding process in the awarding of any contract for financial assistance to a contractor that undertakes a comprehensive energy audit for the benefit of those hourly-priced and larger non-residential customers.

The bill further directs the board to report annually to the Legislature on the contracts awarded to the contractors to perform energy audits and, if the full amount of funding has not been awarded for such audits, the bill requires the board to include an explanation of the reasons the full amount of funding was not so awarded.