48:3-55. Competitive service to retail customers requires board approval

7. a. An electric public utility or a related competitive business segment of an electric public utility shall not offer any competitive service to retail customers within this State without the prior express written approval of the board. The board shall require that an electric public utility file and maintain tariffs for competitive services, which tariffs shall be subject to review and approval by the board. The board shall approve a competitive service only upon a finding that:

(1) The provision of a competitive service by an electric public utility or its related competitive business segment shall not adversely impact the ability of the electric public utility to offer its non-competitive services to customers in a safe, adequate and proper manner, and in all instances where resources are jointly deployed by the utility to provide competitive and non-competitive services and resource constraints arise, the provision of non-competitive services shall receive a higher priority; and

(2) The price which an electric public utility charges for a competitive service shall not be less than the fully allocated cost of providing such service, as determined by the board, which cost shall include an allocation of the cost of all equipment, vehicles, labor, related fringe benefits and overheads, and administration utilized, and all other assets utilized and costs incurred, directly or indirectly, in providing such competitive service.

b. The board shall apply 50 percent of the net revenues earned from the offering of competitive services by an electric public utility or its related competitive business segment, or from the offering of competitive services by an electric public utility holding company or its related competitive business segment when the provision of such services utilizes affiliated electric public utility assets, including, but not limited to, equipment and personnel, unless the board finds that the electric public utility will receive and reflect such receipt as an offset to its regulated rates the full market value for the use of such assets pursuant to a contract between the parties filed with the board by the electric public utility and subject to the provisions of this section and section 8 of this act:

(1) To offset any market transition charge or equivalent rate mechanism assessed to customers pursuant to section 13 of this act; or

(2) 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.

c. For the purposes of subsection b. of this section the following shall not constitute the utilization of electric public utility assets:

(1) movement or delivery of power pursuant to a federally-regulated open access tariff over transmission facilities owned by the electric public utility;

(2) movement or delivery of power pursuant to board regulated tariffs over distribution facilities owned by the electric public utility; and

(3) shared corporate overhead or administrative services subject to the provisions of section 8 of this act.

d. Pursuant to rules and regulations to be adopted by the board, the transfer of electric public utility assets from an electric public utility to a related competitive business segment of that electric public utility or of a public utility holding company, other than in the ordinary course of business, shall require board approval, and shall be recorded at full value as determined by the board. Notwithstanding this subsection, no transfer of assets shall affect the whole value of the assessment of the transitional energy facility assessment set forth in P.L.1997, c.162 (C.54:30A-100 et al.).

e. Tariffs for competitive services filed with the board shall be in the public records, except that if the board determines that the rates are proprietary, they shall be filed under seal and made available under the terms of an appropriate protective agreement, as provided by board order. A public utility shall have the burden of proof by affidavit and motions to demonstrate the need for proprietary treatment. The rates shall become public upon board approval.

f. Subject to the approval of the board pursuant to subsection a. of this section, an electric public utility or a related competitive business segment of that electric public utility may provide the following competitive services:

(1) Metering, billing and related administrative services that are deemed competitive by the board pursuant to section 8 of this act;

(2) Services related to safety and reliability of utility businesses;

(3) Competitive services that have been offered by any electric public utility or gas public utility prior to January 1, 1993 or that have been approved by the board prior to the effective date of this act to be offered by any electric public utility or gas public utility. An electric public utility that has offered a competitive service since prior to January 1, 1993 or a competitive service that was approved by the board prior to the effective date of this act is not required to obtain board approval pursuant to subsection a. of this section for that service, but any electric public utility that has not offered a competitive service since prior to January 1, 1993 or has not received previous board approval for such a competitive service shall apply for approval pursuant to subsection a. of this section. Except as otherwise provided by this paragraph, a competitive service that is permitted pursuant to this paragraph shall be subject to all requirements of this act for competitive services and to any standards or other rules or regulations adopted pursuant to this act;

(4) Services that the board determines to be substantially similar to competitive services that are permitted under paragraph (3) of this subsection; and

(5) Competitive services to non-residential customers using existing utility employees.

g. An electric public utility or a related competitive business segment of that electric public utility may provide other services that are offered for nominal or no consideration to existing non-residential customers in the ordinary course of business.

h. An electric public utility shall not use regulated rates to subsidize its competitive services or competitive services offered by a related competitive business segment of the public utility holding company of which the electric public utility is an affiliate, and expenses incurred in conjunction with its competitive services shall not be borne by its regulated rate customers. The regulated rates of an electric public utility shall be subject to the review and approval of the board to determine that there is no subsidization of its related competitive business segment. Each such public utility shall maintain books and records, and provide accounting entries of its regulated business to the board as may be required by the board, to show that there is strict separation and allocation of the utility's revenues, costs, assets, risks and functions, between the electric public utility and its related competitive business segment.

i. Any other provision of this act to the contrary notwithstanding, commencing on the effective date of this act, an electric public utility or a related competitive business segment of that electric public utility shall not offer any competitive service except those approved or pending approval as of July 1, 1998 pursuant to subsections a. and f. of this section.

j. A public utility holding company may offer any competitive service, including, but not limited to, electric generation service, telecommunications service, and cable television service, to retail customers of an electric public utility that is owned by the holding company, but only through a related competitive business segment of the holding company that is not an electric public utility or a related competitive business segment of the electric public utility. Competitive services shall be offered in compliance with all rules and regulations promulgated by the board for carriers of such services, including, but not limited to, telecommunications and cable.

k. Notwithstanding any other provisions of this section, by no later than December 31, 2000, the board shall render a decision, after notice and hearing, on any further restrictions required for any or all non-safety related competitive services offered by an electric public utility in addition to the provisions of this section, including whether an electric public utility offering non-safety related services shall establish and provide such services through a business unit which is functionally separated from the electric public utility business unit.

(1) Upon completion of the audit process required pursuant to paragraph (1) of subsection f. of section 8 of this act, the board shall commence a hearing process to examine the use of utility assets in providing retail competitive services as permitted in subsection f. of this section. The board shall evaluate and balance the following factors: the prevention of cross-subsidization; the issues attendant to separation and relative to the board's affiliate relation and fair competition standards as provided in section 8 of this act; the effect on ratepayers of the use of utility assets in the provision of non-safety related competitive services; the effect on utility workers; and the effect of utility practices on the market for such services.

(2) The relationship between the electric public utility and its related competitive service business unit shall be subject to affiliate relations standards to be promulgated by the board pursuant to subsection f. of section 8 of this act.

l. If a separate unit is established by the electric public utility as a related competitive business segment of the electric public utility such that other than shared administration and overheads, employees of the competitive services business unit shall not also be involved in the provision of non-competitive utility and safety services, and the competitive services are provided utilizing separate assets than those utilized to provide non-competitive utility and safety services, the board shall apply 25 percent of the net revenues:

(1) To offset any market transition charge or equivalent rate mechanism assessed to customers pursuant to section 13 of this act; or

(2) If the electric public utility is not assessing or has eliminated a market transition charge, to offset the rates charged to customers for distribution service, except that such offset shall cease to be required eight years after the start date of retail competition as provided in subsection a. of section 5 of this act.

L.1999,c.23,s.7.