SENATE, No. 1932

STATE OF NEW JERSEY

213th LEGISLATURE

 

INTRODUCED JUNE 9, 2008

 


 

Sponsored by:

Senator M. TERESA RUIZ

District 29 (Essex and Union)

Senator ROBERT M. GORDON

District 38 (Bergen)

 

 

 

 

SYNOPSIS

     Authorizes BPU to use revenue from retail margin assessed on certain customer classes to benefit only those customer classes by supporting development of combined heat and power, energy efficiency and demand response projects.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning the use of revenue from the retail margin assessed on certain classes of basic generation service customers and amending P.L.1999, c.23.

 

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

 

     1.  Section 3 of P.L.1999, c.23 (C.48:3-51) is amended to read as follows:

     "Assignee" means a person to which an electric public utility or another assignee assigns, sells or transfers, other than as security, all or a portion of its right to or interest in bondable transition property.  Except as specifically provided in [this act] P.L.1999, c.23 (C.48:3-49 et al.), an assignee shall not be subject to the public utility requirements of Title 48 or any rules or regulations adopted pursuant thereto;

     "Basic gas supply service" means gas supply service that is provided to any customer that has not chosen an alternative gas supplier, whether or not the customer has received offers as to competitive supply options, including, but not limited to, any customer that cannot obtain such service for any reason, including non-payment for services.  Basic gas supply service is not a competitive service and shall be fully regulated by the board;

     "Basic generation service" means electric generation service that is provided, pursuant to section 9 of [this act] P.L.1999, c.23 (C.48:3-57), to any customer that has not chosen an alternative electric power supplier, whether or not the customer has received offers as to competitive supply options, including, but not limited to, any customer that cannot obtain such service from an electric power supplier for any reason, including non-payment for services.  Basic generation service is not a competitive service and shall be fully regulated by the board;

     "Basic generation service transition costs" means the amount by which the payments by an electric public utility for the procurement of power for basic generation service and related ancillary and administrative costs exceeds the net revenues from the basic generation service charge established by the board pursuant to section 9 of P.L.1999, c.23 (C.48:3-57) during the transition period, together with interest on the balance at the board-approved rate, that is reflected in a deferred balance account approved by the board in an order addressing the electric public utility's unbundled rates, stranded costs, and restructuring filings pursuant to P.L.1999, c.23 (C.48:3-49 et al.).  Basic generation service transition costs shall include, but are not limited to, costs of purchases from the spot market, bilateral contracts, contracts with non-utility generators, parting contracts with the purchaser of the electric public utility's divested generation assets, short-term advance purchases, and financial instruments such as hedging, forward contracts, and options.  Basic generation service transition costs shall also include the payments by an electric public utility pursuant to a competitive procurement process for basic generation service supply during the transition period, and costs of any such process used to procure the basic generation service supply;

     "Board" means the New Jersey Board of Public Utilities or any successor agency;

     "Bondable stranded costs" means any stranded costs or basic generation service transition costs of an electric public utility approved by the board for recovery pursuant to the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.), together with, as approved by the board: (1) the cost of retiring existing debt or equity capital of the electric public utility, including accrued interest, premium and other fees, costs and charges relating thereto, with the proceeds of the financing of bondable transition property; (2) if requested by an electric public utility in its application for a bondable stranded costs rate order, federal, State and local tax liabilities associated with stranded costs recovery or basic generation service transition cost recovery or the transfer or financing of such property or both, including taxes, whose recovery period is modified by the effect of a stranded costs recovery order, a bondable stranded costs rate order or both; and (3) the costs incurred to issue, service or refinance transition bonds, including interest, acquisition or redemption premium, and other financing costs, whether paid upon issuance or over the life of the transition bonds, including, but not limited to, credit enhancements, service charges, overcollateralization, interest rate cap, swap or collar, yield maintenance, maturity guarantee or other hedging agreements, equity investments, operating costs and other related fees, costs and charges, or to assign, sell or otherwise transfer bondable transition property;

     "Bondable stranded costs rate order" means one or more irrevocable written orders issued by the board pursuant to [this act] P.L.1999, c.23 (C.48:3-49 et al.) which determines the amount of bondable stranded costs and the initial amount of transition bond charges authorized to be imposed to recover such bondable stranded costs, including the costs to be financed from the proceeds of the transition bonds, as well as on-going costs associated with servicing and credit enhancing the transition bonds, and provides the electric public utility specific authority to issue or cause to be issued, directly or indirectly, transition bonds through a financing entity and related matters as provided in [this act] P.L.1999, c.23, which order shall become effective immediately upon the written consent of the related electric public utility to such order as provided in [this act] P.L.1999, c.23;

     "Bondable transition property" means the property consisting of the irrevocable right to charge, collect and receive, and be paid from collections of, transition bond charges in the amount necessary to provide for the full recovery of bondable stranded costs which are determined to be recoverable in a bondable stranded costs rate order, all rights of the related electric public utility under such bondable stranded costs rate order including, without limitation, all rights to obtain periodic adjustments of the related transition bond charges pursuant to subsection b. of section 15 of [this act] P.L.1999, c.23 (C.48:3-64), and all revenues, collections, payments, money and proceeds arising under, or with respect to, all of the foregoing;

     "British thermal unit" or “Btu” means the amount of heat required to increase the temperature of one pound of water by one degree Fahrenheit;

     "Broker" means a duly licensed electric power supplier that assumes the contractual and legal responsibility for the sale of electric generation service, transmission or other services to end-use retail customers, but does not take title to any of the power sold, or a duly licensed gas supplier that assumes the contractual and legal obligation to provide gas supply service to end-use retail customers, but does not take title to the gas;

     "Buydown" means an arrangement or arrangements involving the buyer and seller in a given power purchase contract and, in some cases third parties, for consideration to be given by the buyer in order to effectuate a reduction in the pricing, or the restructuring of other terms to reduce the overall cost of the power contract, for the remaining succeeding period of the purchased power arrangement or arrangements;

     "Buyout" means an arrangement or arrangements involving the buyer and seller in a given power purchase contract and, in some cases third parties, for consideration to be given by the buyer in order to effectuate a termination of such power purchase contract;

     "Class I renewable energy" means electric energy produced from solar technologies, photovoltaic technologies, wind energy, fuel cells, geothermal technologies, wave or tidal action, and methane gas from landfills or a biomass facility, provided that the biomass is cultivated and harvested in a sustainable manner;

     "Class II renewable energy" means electric energy produced at a resource recovery facility or hydropower facility, provided that such facility is located where retail competition is permitted and provided further that the Commissioner of Environmental Protection has determined that such facility meets the highest environmental standards and minimizes any impacts to the environment and local communities;

     "Combined heat and power facility" means a facility which produces electric energy, steam or other forms of useful energy such as heat, which are used for industrial, commercial, heating or cooling purposes.

     "Competitive service" means any service offered by an electric public utility or a gas public utility that the board determines to be competitive pursuant to section 8 or section 10 of [this act] P.L.1999, c.23 (C.48:3-56 or C.48:3-58) or that is not regulated by the board;

     "Comprehensive resource analysis" means an analysis including, but not limited to, an assessment of existing market barriers to the implementation of energy efficiency and renewable technologies that are not or cannot be delivered to customers through a competitive marketplace;

     "Customer" means any person that is an end user and is connected to any part of the transmission and distribution system within an electric public utility's service territory or a gas public utility's service territory within this State;

     "Customer account service" means metering, billing, or such other administrative activity associated with maintaining a customer account;

     "Demand side management" means the management of customer demand for energy service through the implementation of cost-effective energy efficiency technologies, including, but not limited to, installed conservation, load management and energy efficiency measures on and in the residential, commercial, industrial, institutional and governmental premises and facilities in this State;

     "Electric generation service" means the provision of retail electric energy and capacity which is generated off-site from the location at which the consumption of such electric energy and capacity is metered for retail billing purposes, including agreements and arrangements related thereto;

     "Electric power generator" means an entity that proposes to construct, own, lease or operate, or currently owns, leases or operates, an electric power production facility that will sell or does sell at least 90 percent of its output, either directly or through a marketer, to a customer or customers located at sites that are not on or contiguous to the site on which the facility will be located or is located.  The designation of an entity as an electric power generator for the purposes of [this act] P.L.1999, c.23 (C.48:3-49 et al.) shall not, in and of itself, affect the entity's status as an exempt wholesale generator under the Public Utility Holding Company Act of 1935, 15 U.S.C. s.79 et seq.;

     "Electric power supplier" means a person or entity that is duly licensed pursuant to the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.) to offer and to assume the contractual and legal responsibility to provide electric generation service to retail customers, and includes load serving entities, marketers and brokers that offer or provide electric generation service to retail customers.  The term excludes an electric public utility that provides electric generation service only as a basic generation service pursuant to section 9 of [this act] P.L.1999, c.23 (C.48:3-57);

     "Electric public utility" means a public utility, as that term is defined in R.S.48:2-13, that transmits and distributes electricity to end users within this State;

     "Electric related service" means a service that is directly related to the consumption of electricity by an end user, including, but not limited to, the installation of demand side management measures at the end user's premises, the maintenance, repair or replacement of appliances, lighting, motors or other energy-consuming devices at the end user's premises, and the provision of energy consumption measurement and billing services;

     "Electronic signature" means an electronic sound, symbol or process, attached to, or logically associated with, a contract or other record, and executed or adopted by a person with the intent to sign the record;

     "Energy agent" means a person that is duly registered pursuant to the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.), that arranges the sale of retail electricity or electric related services or retail gas supply or gas related services between government aggregators or private aggregators and electric power suppliers or gas suppliers, but does not take title to the electric or gas sold;

     "Energy consumer" means a business or residential consumer of electric generation service or gas supply service located within the territorial jurisdiction of a government aggregator;

     "Financing entity" means an electric public utility, a special purpose entity, or any other  assignee of bondable transition property, which issues transition bonds.  Except as specifically provided in [this act] P.L.1999, c.23 (C.48:3-49 et al.), a financing entity which is not itself an electric public utility shall not be subject to the public utility requirements of Title 48 or any rules or regulations adopted pursuant thereto;

     "Gas public utility" means a public utility, as that term is defined in R.S.48:2-13, that distributes gas to end users within this State;

     "Gas related service" means a service that is directly related to the consumption of gas by an end user, including, but not limited to, the installation of demand side management measures at the end user's premises, the maintenance, repair or replacement of appliances or other energy-consuming devices at the end user's premises, and the provision of energy consumption measurement and billing services;

     "Gas supplier" means a person that is duly licensed pursuant to the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.) to offer and assume the contractual and legal obligation to provide gas supply service to retail customers, and includes, but is not limited to, marketers and brokers.  A non-public utility affiliate of a public utility holding company may be a gas supplier, but a gas public utility or any subsidiary of a gas utility is not a gas supplier.  In the event that a gas public utility is not part of a holding company legal structure, a related competitive business segment of that gas public utility may be a gas supplier, provided that related competitive business segment is structurally separated from the gas public utility, and provided that the interactions between the gas public utility and the related competitive business segment are subject to the affiliate relations standards adopted by the board pursuant to subsection k. of section 10 of [this act] P.L.1999, c.23 (C.48:3-58);

     "Gas supply service" means the provision to customers of the retail commodity of gas, but does not include any regulated distribution service;

     "Government aggregator" means any government entity subject to the requirements of the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.), the "Public School Contracts Law," N.J.S.18A:18A-1 et seq., or the "County College Contracts Law," P.L.1982, c.189 (C.18A:64A-25.1 et seq.), that enters into a written contract with a licensed electric power supplier or a licensed gas supplier for: (1) the provision of electric generation service, electric related service, gas supply service, or gas related service for its own use or the use of other government aggregators; or (2) if a municipal or county government, the provision of electric generation service or gas supply service on behalf of business or residential customers within its territorial jurisdiction;

     "Government energy aggregation program" means a program and procedure pursuant to which a government aggregator enters into a written contract for the provision of electric generation service or gas supply service on behalf of business or residential customers within its territorial jurisdiction;

     "Governmental entity" means any federal, state, municipal, local or other governmental department, commission, board, agency, court, authority or instrumentality having competent jurisdiction;

     "Market transition charge" means a charge imposed pursuant to section 13 of [this act] P.L.1999, c.23 (C.48:3-61) by an electric public utility, at a level determined by the board, on the electric public utility customers for a limited duration transition period to recover stranded costs created as a result of the introduction of electric power supply competition pursuant to the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.);

     "Marketer" means a duly licensed electric power supplier that takes title to electric energy and capacity, transmission and other services from electric power generators and other wholesale suppliers and then assumes contractual and legal obligation to provide electric generation service, and may include transmission and other services, to an end-use retail customer or customers, or a duly licensed gas supplier that takes title to gas and then assumes the contractual and legal obligation to provide gas supply service to an end-use customer or customers;

     "Net proceeds" means proceeds less transaction and other related costs as determined by the board;

     "Net revenues" means revenues less related expenses, including applicable taxes, as determined by the board;

     "On-site generation facility" means a generation facility, and equipment and services appurtenant to electric sales by such facility to the end use customer located on the property or on property contiguous to the property on which the end user is located.  An on-site generation facility shall not be considered a public utility.  The property of the end use customer and the property on which the on-site generation facility is located shall be considered contiguous if they are geographically located next to each other, but may be otherwise separated by an easement, public thoroughfare, transportation or utility-owned right-of-way;

     "Person" means an individual, partnership, corporation, association, trust, limited liability company, governmental entity or other legal entity;

     "Private aggregator" means a non-government aggregator that is a duly-organized business or non-profit organization authorized to do business in this State that enters into a contract with a duly licensed electric power supplier for the purchase of electric energy and capacity, or with a duly licensed gas supplier for the purchase of gas supply service, on behalf of multiple end-use customers by combining the loads of those customers;

     "Public utility holding company" means: (1) any company that, directly or indirectly, owns, controls, or holds with power to vote, ten percent or more of the outstanding voting securities of an electric public utility or a gas public utility or of a company which is a public utility holding company by virtue of this definition, unless the Securities and Exchange Commission, or its successor, by order declares such company not to be a public utility holding company under the Public Utility Holding Company Act of 1935, 15 U.S.C. s.79 et seq., or its successor; or (2) any person that the Securities and Exchange Commission, or its successor, determines, after notice and opportunity for hearing, directly or indirectly, to exercise, either alone or pursuant to an arrangement or understanding with one or more other persons, such a controlling influence over the management or policies of an electric public utility or a gas public utility or public utility holding company as to make it necessary or appropriate in the public interest or for the protection of investors or consumers that such person be subject to the obligations, duties, and liabilities imposed in the Public Utility Holding Company Act of 1935 or its successor;

     "Regulatory asset" means an asset recorded on the books of an electric public utility or gas public utility pursuant to the Statement of Financial Accounting Standards, No. 71, entitled "Accounting for the Effects of Certain Types of Regulation," or any successor standard and as deemed recoverable by the board;

     "Related competitive business segment of an electric public utility or gas public utility" means any business venture of an electric public utility or gas public utility including, but not limited to, functionally separate business units, joint ventures, and partnerships, that offers to provide or provides competitive services;

     "Related competitive business segment of a public utility holding company" means any business venture of a public utility holding company, including, but not limited to, functionally separate business units, joint ventures, and partnerships and subsidiaries, that offers to provide or provides competitive services, but does not include any related competitive business segments of an electric public utility or gas public utility;

     "Resource recovery facility" means a solid waste facility constructed and operated for the incineration of solid waste for energy production and the recovery of metals and other materials for reuse;

     "Restructuring related costs" means reasonably incurred costs directly related to the restructuring of the electric power industry, including the closure, sale, functional separation and divestiture of generation and other competitive utility assets by a public utility, or the provision of competitive services as such costs are determined by the board, and which are not stranded costs as defined in [this act] P.L.1999, c.23 (C.48:3-49 et al.) but may include, but not be limited to, investments in management information systems, and which shall include expenses related to employees affected by restructuring which result in efficiencies and which result in benefits to ratepayers, such as training or retraining at the level equivalent to one year's training at a vocational or technical school or county community college, the provision of severance pay of two weeks of base pay for each year of full-time employment, and a maximum of 24 months' continued health care coverage.  Except as to expenses related to employees affected by restructuring, "restructuring related costs" shall not include going forward costs;

     "Retail choice" means the ability of retail customers to shop for electric generation or gas supply service from electric power or gas suppliers, or opt to receive basic generation service or basic gas service, and the ability of an electric power or gas supplier to offer electric generation service or gas supply service to retail customers, consistent with the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.);

     "Retail margin" means a charge, reflecting differences in costs that electric power suppliers and electric public utilities may incur in providing electric generation service and basic generation service, respectively, to retail customers, which the board may authorize to be charged to categories of basic generation service customers of electric public utilities in this State, under 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), for the purpose of promoting a competitive retail market for the supply of electricity.

     "Shopping credit" means an amount deducted from the bill of an electric public utility customer to reflect the fact that such customer has switched to an electric power supplier and no longer takes basic generation service from the electric public utility;

     "Social program" means a program implemented with board approval to provide assistance to a group of disadvantaged customers, to provide protection to consumers, or to accomplish a particular societal goal, and includes, but is not limited to, the winter moratorium program, utility practices concerning "bad debt" customers, low income assistance, deferred payment plans, weatherization programs, and late payment and deposit policies, but does not include any demand side management program or any environmental requirements or controls;

     "Societal benefits charge" means a charge imposed by an electric public utility, at a level determined by the board, pursuant to, and in accordance with, section 12 of [this act] P.L.1999, c.23 (C.48:3-60);

     "Stranded cost" means the amount by which the net cost of an electric public utility's electric generating assets or electric power purchase commitments, as determined by the board consistent with the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.), exceeds the market value of those assets or contractual commitments in a competitive supply marketplace and the costs of buydowns or buyouts of power purchase contracts;

     "Stranded costs recovery order" means each order issued by the board in accordance with subsection c. of section 13 of [this act] P.L.1999, c.23 (C.48:3-61) which sets forth the amount of stranded costs, if any, the board has determined an electric public utility is eligible to recover and collect in accordance with the standards set forth in section 13 of P.L.1999, c.23 (C.48:3-61) and the recovery mechanisms therefor;

     “Thermal efficiency” means the useful electric energy output of a facility, plus the useful thermal energy output of the facility, expressed as a percentage of the total energy input to the facility.

     "Transition bond charge" means a charge, expressed as an amount per kilowatt hour, that is authorized by and imposed on electric public utility ratepayers pursuant to a bondable stranded costs rate order, as modified at any time pursuant to the provisions of [this act] P.L.1999, c.23 (C.48:3-49 et al.);

     "Transition bonds" means bonds, notes, certificates of participation or beneficial interest or other evidences of indebtedness or ownership issued pursuant to an indenture, contract or other agreement of an electric public utility or a financing entity, the proceeds of which are used, directly or indirectly, to recover, finance or refinance bondable stranded costs and which are, directly or indirectly, secured by or payable from bondable transition property.  References in [this act] P.L.1999, c.23 (C.48:3-49 et al.) to principal, interest, and acquisition or redemption premium with respect to transition bonds which are issued in the form of certificates of participation or beneficial interest or other evidences of ownership shall refer to the comparable payments on such securities;

     "Transition period" means the period from August 1, 1999 through July 31, 2003;

     "Transmission and distribution system" means, with respect to an electric public utility, any facility or equipment that is used for the transmission, distribution or delivery of electricity to the customers of the electric public utility including, but not limited to, the land, structures, meters, lines, switches and all other appurtenances thereof and thereto, owned or controlled by the electric public utility within this State; and

     "Universal service" means any service approved by the board with the purpose of assisting low-income residential customers in obtaining or retaining electric generation or delivery service.

(cf: P.L.2002, c.84, s.1)

 

     2.  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.  The charges assessed to customers for basic generation service pursuant to this subsection may include a retail margin, as determined by the board.  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.

     (2)  Each electric public utility shall remit to the State Treasurer all monies collected by the utility as a retail margin authorized pursuant to paragraph (1) of this subsection.  A Retail Margin Fund shall be established as a non-lapsing, revolving fund in the General Fund for the deposit of all retail margin monies received from the electric public utilities and remitted to the State Treasurer.

     (3)  Except for monies appropriated for the purposes set forth in section 4 of P.L.2005, c.215 (C.48:2-95), all monies in the Retail Margin Fund as of the effective date of P.L.   , c.  (C.   ) (pending before the Legislature as this bill), and all monies that are deposited in the Retail Margin Fund through June 30, 2008, are hereby appropriated for the purpose of funding grants by the board to support development of combined heat and power production as follows:

     (a)  The board, in consultation with the BPU Business Ombudsman created under section 4 of P.L. 2005, c.215 (C.48:2-95), shall issue a solicitation to advertise the availability of grants for projects to install or expand combined heat and power production at new or existing facilities of commercial, institutional, and industrial electricity customers in this State;

     (b)  The solicitation shall provide for grants to be awarded on a first-come, first-served basis for projects that satisfy all of the following eligibility criteria:  the project shall serve a commercial, institutional, or industrial electricity customer in this State with electric demand of at least 750 kilowatts or such level of demand as subjects the customer to payment of a retail margin in accordance with paragraph (1) of this subsection; the project shall establish by contract or other arrangement that all electric output from the project will be used within this State; the project shall have an electric generating capacity of greater than one megawatt; and the project shall be designed to achieve thermal efficiency of at least 70 percent.

     (c)  The solicitation shall further provide that the amount of each grant shall be a function of the kilowatt-hours of electricity and the Btus of thermal energy that the combined heat and power production facility generates, over a period of four years beginning with the facility’s commencement of operation.  The amount of the grant per kilowatt-hour and per Btu shall be calculated so that, if a facility receiving a grant were to have an electric capacity factor of 80 percent and a thermal capacity factor of 80 percent, then the present value of the grant over the four-year period would equal $350 per kilowatt of installed electric generation capacity.

     (d)  The board shall make a total of $90 million available for these grants; provided however, that any portion of that amount that has not been allocated to specific grants within three years after the solicitation has been issued shall be available for use pursuant to paragraph (4) of this subsection.

     (4)  The board may use monies paid in connection with the retail margin, from any portion of the amount of the $90 million that has not been allocated pursuant to subparagraph (d) of paragraph (3) of this subsection, to provide financial assistance for commercial, institutional, and industrial electricity customers with electric demand of at least 750 kilowatts or such other level of demand as subjects the customer to payment of a retail margin in accordance with paragraph (1) of this subsection, to increase energy efficiency at such facilities, or to facilitate measurable and verifiable reductions of such facilities’ demand for electricity at times of peak electricity demand.  The board shall establish the types of measures to receive such financial assistance, the eligibility criteria for such financial assistance, the procedures and criteria for awarding such financial assistance, and the conditions of such financial assistance, by order or orders issued after notice and an opportunity for public comment, notwithstanding any provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary. 

     (5)  Except as provided paragraph (3) of this subsection, nothing in this section shall preclude the board from using the retail margin as the board may determine pursuant to section 13 of P.L.2007, c. 340 (C.48:3-98.1) and section 4 of P.L.2005, c. 215 (C.48:2-95).

     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 al.).

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


     3.  This act shall take effect immediately.

 

 

STATEMENT

 

     This bill authorizes the Board of Public Utilities (the “BPU”) to use revenue from the retail margin assessed on certain classes of customers to benefit only those classes of customers by supporting the development of combined heat and power projects and other energy efficiency and demand response projects.