ASSEMBLY, No. 2263
STATE OF NEW JERSEY
INTRODUCED JULY 18, 1996
By Assemblymen WISNIEWSKI and COHEN
An Act directing the Board of Public Utilities to establish a pilot program.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares that:
a. The business of generating, transmitting and selling electricity for ultimate distribution to residential customers within this State is a matter of the public interest, and that reasonable, competitive electricity prices are necessary to promote the public health, safety and economic welfare;
b. This State's retail electricity customers pay significantly higher prices than customers in many other states, and the current negotiation of special case rate reductions for large commercial and industrial electric customers, if continued, will increase the pressure for an ultimate cost shift to smaller customers, including residential customers;
c. Retail wheeling may provide a basis for the determination of electricity price levels that relies to a greater extent upon competition than upon regulation, and there are relatively few technical barriers to the establishment of retail wheeling in this State;
d. New Jersey's residential electricity customers may be further handicapped if this State lags behind other states in the Northeast with high electricity costs, such as Maine, Massachusetts, New Hampshire and New York, who have established or are considering retail wheeling programs; and
e. It is in the public interest for the Board of Public Utilities to develop a pilot program in six municipalities, two each within the northern, central and southern regions of the State to examine the benefits and risks of the establishment of retail wheeling in this State.
2. For the purposes of this act:
"Central region" means the counties of Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset and Union;
"Local electric public utility" means a public utility regulated by the Board of Public Utilities which provides electric light, heat or power service to a customer within its service territory and to which the customer is connected solely for the purpose of transmitting or distributing electric power to the customer after the implementation of this act;
"Northern region" means the counties of Bergen, Essex, Hudson, Morris, Passaic, Sussex, and Warren;
"Remote supplier" means an electric energy producer, broker, or other supplier, other than a local electric public utility;
"Retail wheeling" means a commercial transaction arrangement by which an electric power customer contracts with a remote supplier to transmit energy through the electrical distribution system of the local electric public utility to which the customer is connected;
"Southern region" means the counties of Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, and Salem.
3. Within one year of the effective date of this act, the Board of Public Utilities (hereinafter, "the board") shall develop a pilot program to examine the benefits and risks of residential retail wheeling in six municipalities within this State. Two of each of the six municipalities shall be located in northern, central and southern regions of the State. At least one of the six municipalities shall contain residential areas where residential customers depend on electric power as the primary source of energy for lighting, heating and air conditioning. A requirement of the pilot program shall be that the local electric public utility shall physically continue to provide electric service to the residential customer, who shall pay the local electric public utility a regulated fee for the transmission and distribution services provided, and who shall pay the remote supplier for the electricity in an unregulated market.
4. The board, after reviewing standards or guidelines in those states that have established retail wheeling programs or projects for residential customers, shall develop criteria for the development of such a program in this State. Such criteria shall include, but not be limited to: regulatory pricing mechanisms for the "unbundled" costs of necessary transmission and distribution and the cost effectiveness of such mechanisms; transmission and distribution performance and safety standards; the impact on service quality, reliability and adequacy; the possible disposition of stranded assets of the local electric public utility; the effect on current environmental and conservation-related programs; and the effect on low-income subsidies or other energy assistance programs.
5. Nothing in this act shall reduce or inhibit the amount of revenues a municipality receives from the annual gross receipts and franchise taxes paid by public utilities and collected for distribution to municipalities, pursuant to chapters 30 and 30A of Title 54 of the Revised Statutes.
6. In order to carry out the purposes of this act, the board is authorized to contract for and to accept any gifts or grants or loans of funds or property or financial or other aid in any form from the United States of America or any agency or instrumentality thereof, or from the State or any agency, instrumentality or political subdivision thereof, or from any other source, including, but not limited to, assistance from appropriate sources at Rutgers, the State University, the New Jersey Institute of Technology, and Stevens Institute of Technology, and to comply, subject to the provisions of the act, with the terms and conditions thereof.
7. The board shall prepare a report to the Governor and Legislature within two years of the effective date of this act, identifying the department's progress in establishing a residential retail wheeling pilot program and any findings and recommendations regarding the costs and benefits of the retail wheeling pilot program, including recommendations on legislation to expand the program or make the program permanent.
8. The board shall promulgate, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), such rules and regulations as may be necessary to effectuate the purposes of this act.
9. This act shall take effect 60 days after enactment, but the board may take anticipatory administrative action in advance as shall be necessary for the implementation of the act and shall expire upon the issuance of the board's report.
STATEMENT
The business of generating, transmitting and selling electricity for ultimate distribution to residential customers within this State is a matter of the public interest, and reasonable, competitive electricity prices are necessary to promote the public health, safety and economic welfare. Compared with customers in other states, this State's retail electricity customers pay significantly higher prices, and the current negotiation of special case rate reductions for large commercial and industrial electric customers increases the pressure for an ultimate cost shift to smaller customers, including residential customers. Retail wheeling may provide a basis for the determination of electricity price levels that relies to a greater extent upon competition than upon regulation and there are relatively few technical barriers to the establishment of retail wheeling in this State.
The bill tests the concept of competitive electricity pricing by directing the Board of Public Utilities ("the board") to establish a pilot program, within one year of the bill's effective date, in six municipalities, two each within the northern, central and southern regions of the State, to examine the benefits and risks of allowing residential electricity customers to choose a source of electricity which is not the local electric public utility. At least one of the six municipalities shall contain residential areas where residential customers depend on electric power as the primary source of energy for lighting, heating and air conditioning.
Nothing in this act will reduce or inhibit the amount of revenues a municipality receives from the annual gross receipts and franchise taxes paid by public utilities and collected for distribution to municipalities, pursuant to chapters 30 and 30A of Title 54 of the Revised Statutes.
The board is to report to the Governor and the Legislature within two years identifying the board's progress in establishing this pilot program and any findings regarding the costs and benefits of such usage, and recommendations on legislation to expand the program or make it permanent.
Directs BPU to establish "retail wheeling" pilot program for residential electric customers in six municipalities within the State.