ASSEMBLY, No. 1993

 

STATE OF NEW JERSEY

 

INTRODUCED MAY 13, 1996

 

 

By Assemblymen COHEN amd WISNIEWSKI

 

 

An Act concerning certain standards and incentives for public utilities, and supplementing Title 48 of the Revised Statutes.

 

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

 

    1. The Board of Public Utilities is authorized to adopt rules and regulations establishing performance standards, operability ratings and financial incentives for rewarding above-average performance and operability of nuclear electric generating plants, to be used by the board in fixing just and reasonable rates, pursuant to Title 48 of the Revised Statutes, for service provided by nuclear electric generating plants. The rules and regulations adopted pursuant to this section, shall take into account the performance and operability of all other nuclear generating plants in the nation, or the Northeastern region of the nation and may include, but need not be limited to:

    a. A determination of factors which shall be considered by the board in establishing performance standards and operability ratings, and in determining whether a plant's performance is rated above-average for operability including, but not limited to, outages due to poor construction, ineffective quality control in the construction of the plant, or poor maintenance procedures;

    b. A determination of factors, which shall not be considered by the board in establishing performance standards and operability ratings, and in determining whether a plant's performance is rated above-average for operability including, but not limited to, planned outages for refueling or scheduled maintenance, or certain other outages as determined by the board which are necessary to comply with regulations issued by the Nuclear Regulatory Commission; and 

    c. A determination of an appropriate rate-making mechanism using graduated increments for the granting of financial incentives to a nuclear electric plant which is rated above-average for operability including, but not limited to, an increase in the rate of return allowed the utility company owning the plant, accelerated depreciation and credits for the amount of avoided costs associated with the plant's above-average rating, or any combination thereof.


    2. Within 30 days of the adoption of the rules and regulations authorized pursuant to section 1 of this act, the board shall submit a written report to the Governor and the Legislature outlining the provisions of the regulations.

 

    3. Notwithstanding any other law, rule, regulation or administrative order to the contrary, the board may utilize the rules and regulations adopted pursuant to section 1 of this act in fixing just and reasonable rates for nuclear electric services provided by the utility's plant.

 

    4. This act shall take effect immediately.

 

 

STATEMENT

 

    This bill authorizes the Board of Public Utilities to establish performance standards, operability ratings and financial incentives for use in fixing the rates to be charged for electricity service provided by nuclear electric generating plants in the State. These standards and ratings may be used as a basis for rewarding nuclear generating plants with financial incentives when the plant performance is rated above-average for operability.

     The economic benefits of nuclear electric generating plants, which in comparison to other kinds of plants are more expensive to build but produce savings in fuel costs, are predicated on the attainment of a certain level of performance and reliability. This factor of performance becomes increasingly critical as the cost of the plant increases, because the economic consequences of an idled plant increases correspondingly.

     Accordingly, this bill authorizes the Board of Public Utilities to establish a special rate-making procedure designed to reward nuclear electric generating plants that achieve an above-average operability rating in comparison to all other nuclear plants in the nation, or in the Northeastern region of the nation, as determined by the board.

    This bill authorizes the board to grant financial incentives, as part of a special rate-making procedure, when the board determines that a nuclear plant's performance achieves an above-average operability rating. These incentives may include the granting of a higher rate of return for the utility owning the plant, accelerated depreciation and credits for the amount of avoided costs associated with the higher plant performance rating.

 

                             

 

Authorizes BPU to establish certain standards and incentives for use in fixing rates for nuclear electric generating plants.