SENATE, No. 2207
STATE OF NEW JERSEY
INTRODUCED JUNE 16, 1997
By Senator SINAGRA
An Act establishing an assessment on qualifying facilities, and supplementing Title 54 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Public Interest Initiatives Protection Act."
2. The Legislature finds and declares: that it is the policy of the State to ensure that New Jersey's transition to a more competitive electricity market will allow its citizens and businesses to achieve the economic benefits of electric industry restructuring without diminishing environmental quality, energy efficiency and energy security; that it is the policy of the State to foster a more diverse, efficient and competitive electricity market by encouraging the construction of electric generation facilities consistent with federal law, which encourages the construction of "qualifying facilities" under the "Public Utility Regulatory Policy Act of 1978," Pub.L.95-617; and that the transition to a competitive electricity market will result in a more market-oriented, less regulatory form of oversight, which could jeopardize the funding of public interest initiatives provided for under the current regulatory framework.
The Legislature therefore determines that owners and operators of "qualifying facilities" who have significantly benefited from State policies fostering a more efficient and competitive electricity market have an obligation to contribute toward the funding of public interest initiatives during the transition to a more competitive electricity market.
3. As used in this act:
"Base Profit margin" means the typical profit margin that would be earned by a public utility engaged in the generation and delivery of electricity under the regulatory framework in place up to the effective date of this act;
"Board" means the Board of Public Utilities;
"Contributor" means the owner or operator of a qualifying facility;
"Director" means the Director of the Division of Taxation in the Department of the Treasury;
"Initial Transition Period" means the period established pursuant to subsection a. of section 7 of this act, and subject to extension pursuant to subsection b. of that section, to allow for the successful transition from the current regulatory framework to a more competitive electricity market;
"Profit Margin" means the ratio of net income to net sales of a qualifying facility resulting from the sale of electricity during the calendar year, including any capacity payments received by the qualifying facility during the calendar year. For the purposes of this act, the amount of the contributor's net income shall be the same as taxable income, before net operating loss deductions and special deductions, which the contributor is required to report to the United States Treasury Department for the purposes of computing its federal income tax; and
"Qualifying facility" means a person or business entity that owns or operates a cogeneration facility in the State, which facility is a plant installation or other structure whose primary purpose is the sequential production of electricity and steam or other forms of useful energy used for industrial or commercial heating or cooling purposes, and which is designated by the Federal Energy Regulatory Commission, or its successor, as a "qualifying facility" pursuant to the provisions of the "Public Utility Regulatory Policies Act of 1978," Pub.L.95-617.
4. An annual assessment is imposed on contributors under the provisions of this act, beginning in 1998 and each year thereafter for the duration of the initial or extended transition period, as follows:
a. That portion of net income that causes profit margin to exceed the base profit margin by up to 50%, multiplied by 33%; and
b. That portion of net income that causes the profit margin to exceed the base profit margin by over 50%, multiplied by 66%.
5. a. The base profit margin shall be established by the board, and shall be equivalent to typical profit margins earned by utilities engaged in the generation and delivery of electricity, subject to the current regulatory framework.
b. For implementation purposes, the initial base profit margin shall be established as 15%, subject to review and modification by the board.
6. a. Commencing in 1998 and each year of the initial or extended transition period thereafter, as appropriate, a contributor shall make a payment of the estimated assessment imposed pursuant to section 4 of this act, on or before April 1 of each year.
b. From the second year of the initial transition period forward:
(1) the payment required pursuant to subsection a. of this section shall not be less than the assessment paid by the contributor in the preceding year; and
(2) the contributor shall, on or before April 1 of each year of the initial or extended transition period, as appropriate, file a report form as shall be prescribed by the director sufficient to demonstrate the contributor's liability, if any, for the assessment imposed pursuant to section 4 of this act, and shall pay the amount of any remaining assessment liability.
c. The contributor shall be entitled to a credit against assessment due and payable in the next year, or a refund, of any amount of the estimated assessment payment which is in excess of the total amount payable pursuant to this act.
7. a. An initial transition period shall be established from April 1, 1998 to April 1, 2002.
b. Beginning one year prior to the end of the initial transition period, the board shall annually conduct a review to assess the progress of the transition to a competitive electricity market. In assessing the progress, the board shall consider, but not be limited to, the following indications of a fully competitive electricity market:
(1) the establishment of mechanism for the recovery of above market utility investments;
(2) the establishment of a long term funding mechanism for public interest initiatives;
(3) the elimination of technical barriers to wholesale competition;
(4) the resolution of jurisdictional issues associated with State and federal regulatory agencies;
(5) the implementation of one or more power exchanges; and
(6) the choice of alternative electricity supply is available to at least 80% of all residential customers.
c. Based upon its findings, the board may extend the transition period an additional year, at which time it will be subject to another review, or the board may make a recommendation to the director to suspend the transition period as of April 1 of the following year.
8. Notwithstanding the provisions of any law, rule or regulation to the contrary, the director, upon his written order, shall be provided access to and may inspect and examine books, accounts, papers, records, and memoranda, wherever located, of a qualifying facility to the extent necessary to carry out the provisions of this act.
9. The revenue annually derived from the assessment imposed pursuant to this act shall be appropriated only for the following purposes:
a. universal service and low income assistance;
b. customer service protection;
c. energy efficiency and renewable energy;
d. research and development;
e. customer information and education; and
f. electric industry transition costs deemed appropriate by the board.
10. This act shall take effect immediately, and shall expire on December 31 of the last year for which assessments are imposed pursuant to this act, except that assessments imposed but not paid prior to that expiration date shall remain subject to collection by the director after that date.
STATEMENT
This bill establishes a temporary funding mechanism to ensure that important energy related public programs that protect the poor, the environment and energy security are sufficiently funded during the transition from current reliance on public utilities for electricity to a more competitive electricity market. The assessment will be repealed once the transition to a competitive electricity market occurs and a long term funding mechanism has been established for public interest initiatives.
The "Public Interest Initiatives Protection Act."