48:2-21.28. Petitions for alternative forms of regulation; NJSAVE program

5. a. An electric or gas public utility may petition the Board of Public Utilities to be regulated under an alternative form of regulation for its distribution system only, for the setting of prices for all or a portion of its retail customer base, or for the purpose of creating incentives consistent with the provisions of this act without changing the rate reductions for the sustained period as set forth under section 4 of P.L.1999, c.23 (C.48:3-52), no earlier than 12 months after the starting date of retail competition as provided in subsection a. of section 5 of P.L.1999, c.23 (C.48:3-53). The public utility shall submit its plan for an alternative form of regulation with its petition. The public utility shall also file its petition and plan concurrently with the Director of the Division of the Ratepayer Advocate, or its successor. The public utility shall provide, within 15 days of the filing of its petition and plan, notice of the specific filing to the clerk of each municipality, to the clerk of each board of Chosen Freeholders, and to each county executive, in the service territory of the public utility. The public utility shall also provide, within 15 days of the filing, public notice to its customers of the filing, either by notice in a newspaper that has a general circulation in its service territory or by bill inserts as directed by the board. The board shall review the plan and may approve the plan, or approve it with modifications, if the board finds, after notice and hearing, that the plan will provide benefits to customers of the public utility, and that the plan meets the following standards:

(1) Will further the State's objective of producing lower rates for New Jersey consumers;

(2) Will provide incentives for the utility to lower its costs and rates;

(3) Will provide incentives to improve utility efficiency and productivity;

(4) Will foster the long-term delivery of electricity or natural gas in a manner that will improve the quality and choices of service;

(5) Includes a mechanism for the board to monitor and review the plan on a periodic basis over its term and to take appropriate actions if it is found that the plan is not achieving its intended results;

(6) Will maintain or improve pre-existing service quality standards, except that an individual customer may agree to accept lower quality service. A public utility shall continue to provide safe, adequate and proper service pursuant to R.S.48:2-23;

(7) Will not result in cross-subsidization among or between groups of utility customers, or between the portion of the utility's business or operations subject to the alternative form of regulation and the portion of the utility's business or operations that is not subject to the alternative form of regulation;

(8) Will reduce regulatory delay and cost;

(9) Is in the public interest and will produce just and reasonable rates;

(10) Will enhance economic development in the State;

(11) Will not discourage energy efficiency or distributed generation as alternatives to distribution plant investment and will explore ways to remove the linkage between retail throughput and the recovery of fixed and stranded costs; and

(12) Is otherwise consistent with the provisions of P.L.1999, c.23 (C.48:3-49 et al.).

In preparation for the development of such plans, each electric public utility shall begin to collect distribution cost data that will be needed to evaluate accurately alternatives to traditional infrastructure investments.

b. Consistent with the provisions of P.L.1995, c.180 (C.48:2-21.24 et seq.), and provided that the plan meets the standards established in subsection a. of this section, the board may approve a plan for an alternative form of regulation that permits a gas or electric public utility to establish a rate for a group of retail customers without a finding of rate base and reasonable rate of return pursuant to the pre-existing provisions of Title 48 of the Revised Statutes, if the board determines that the rate being charged by the utility to a retail customer is no lower than a minimum price that is determined by the board to prevent anti-competitive pricing and that:

(1) The group of customers has access to a competitive market for supply of power to its site and that market pricing of delivery services for that group of customers is thereby appropriate; or

(2) The group of customers has otherwise voluntarily agreed in writing to accept a price that has not been established based upon rate base and reasonable rate of return standards pursuant to Title 48 of the Revised Statutes; or

(3) At the time of the plan's approval, the level of retail prices of the utility for the group of customers is determined to be reasonably reflective of the level necessary to produce a fair and reasonable rate of return pursuant to a current evaluation under pre-existing standards of Title 48 of the Revised Statutes, and that the plan provides mechanisms for prospective adjustments to rates that will track trends in utility rates.

c. (Deleted by amendment, P.L.1999, c.23).

d. An alternative regulation plan as provided for in this section shall not include any mechanism for:

(1) Recovery of revenue erosion from other ratepayers; or

(2) A reduction in the gross receipts and franchise tax or a successor tax pursuant to P.L.1997, c.162 (C.54:30A-100 et seq.).

e. The board may require an independent audit or such accounting and reporting systems from electric and gas utilities as are necessary to allow a proper allocation of investments, costs or expenses for all services provided under the provisions of P.L.1995, c.180 (C.48:2-21.24 et seq.) that are subject to the jurisdiction of the board.

f. Consistent with the provisions of this section, the Legislature hereby authorizes and directs the New Jersey Economic Development Authority, in conjunction with the Board of Public Utilities, to establish the New Jersey Senior and Alternate Vital Energy (NJ SAVE) program for the purpose of funding capital improvements of natural gas distribution facilities, and for purchase and installation of natural gas heating equipment and appliances located on the premises of homeowners, where those homeowners reside in all-electric homes in age-restricted communities.

The authority may issue bonds on behalf of gas public utilities, the proceeds of which may be used for the purpose of distributing in the form of loans to eligible customers for the purpose of allowing such customers to pay home heating and appliance conversion costs and the customer's contribution, to the extent applicable, to gas distribution system extension costs required to serve those customers.

The gas public utility shall be permitted to assess a meter charge, as approved by the board, to recover the funds to repay loan principal and interest. Monies collected by the gas public utility as a result of such meter charge shall be utilized by the gas public utility to repay the bonds issued by the authority. Nothing in this section shall be construed to relieve the gas public utility of its obligation to repay any bonds issued by the authority.

L.1995,c.180,s.5; amended 1999, c.23, s.55.