ASSEMBLY TELECOMMUNICATIONS AND UTILITIES COMMITTEE

STATEMENT TO

ASSEMBLY, No. 4844

with committee amendments

STATE OF NEW JERSEY

DATED:  MAY 5, 2025

      The Assembly Telecommunications and Utilities Committee reports favorably and with committee amendments Assembly Bill No. 4844.

      As amended and reported, this bill directs the New Jersey Board of Public Utilities (BPU) to establish a beneficial building electrification and decarbonization program (program), which is to be implemented by electric public utilities, gas public utilities, and State administrators of energy efficiency programs (State administrators).  As used in the bill, “beneficial building electrification and decarbonization” means a change in end-use equipment from a nonelectric type to an efficient electric type for any building end use, including water heating, space heating, industrial process, or transportation, provided that the change:  reduces cost from a societal perspective; reduces greenhouse gas emissions, or promotes the increased use of the electric grid in off-peak hours.

      The bill directs the BPU to adopt rules and regulations establishing a beneficial building electrification and decarbonization program no later than two years after the bill becomes law.  As part of the program, the BPU, in consultation with the Department of Environmental Protection, is required to develop Statewide greenhouse gas emission reduction targets for the program.  The BPU is further required to set a greenhouse gas emission reduction target for each electric public utility, gas public utility, and State administrator.  In addition, participating electric public utilities and gas public utilities are to prepare and implement beneficial building electrification and decarbonization plans.  A plan may meet the greenhouse gas emissions reduction targets set pursuant to the bill through the following means:  (1) conversion of fossil fuel-based space and water heating systems, including natural gas and propane systems as well as other unregulated fuels, to systems that employ high-efficiency electric heat pumps; (2) replacement of fossil fuel-based appliances with high-efficiency electric appliances such as induction cooking ranges and heat-pump clothes dryers; (3) conversion of fossil fuel-based industrial equipment or processes to energy-efficient, electric-powered equipment or processes; or (4) market transformation programs aimed at educating and training contractors to plan for and install appliances, equipment, and systems that are high efficiency.

      The bill establishes various provisions that the BPU would be required to include in the program, including, but not limited to, provisions to:  (1) accelerate the installation of electric heat pumps and other efficient equipment; (2) improve customer access to State-sponsored building electrification and decarbonization efforts; and (3) provide cost recovery mechanisms for the implementation of a program, provided that an electric public utility, a gas public utility, and a State administrator has first sought out any federal funding available to implement the program.  The bill also authorizes the BPU to require electric public utilities and gas public utilities to submit filings for investments in pilot projects for the development of utility-scale renewable thermal energy networks.  The bill establishes certain requirements for the approval of a thermal energy network pilot project, including, but not limited to, that a pilot project is to have a reasonable likelihood of facilitating substantial reductions in greenhouse gas emissions.

      In addition, the bill amends current law to authorize the use of monies collected through the societal benefits charge to fund the program.  The bill also amends current law to provide that the BPU is to take into account building electrification and decarbonization when establishing quantitative performance indicators to establish reasonably achievable targets for energy usage reductions and peak demand reductions for electric public utilities and gas public utilities pursuant to current law.

COMMITTEE AMENDMENTS:

      The committee amended the bill to: 

      (1) change the defined term “beneficial electrification” to “beneficial building electrification and decarbonization”;

      (2) revise the definition of “cost effective”;

      (3) require the beneficial building electrification and decarbonization program to begin two years, rather than one year, after the bill’s enactment;

      (4) provide that the program is to be implemented by electric public utilities, gas public utilities, and State administrators, and overseen by the BPU, rather than being directly implemented by the BPU and applying only to electric public utilities;

      (5) require the BPU to consult with the Department of Environmental Protection when establishing Statewide greenhouse gas emission reduction targets for the program, as outlined in the bill;

      (6) require the BPU to establish individual greenhouse gas reduction targets, as outlined in the bill, for each electric public utility, gas public utility, and State administrator that participates in the program;

      (7) remove the performance incentive mechanism for the implementation of the programs;

      (8) require the BPU to establish various new provisions for the program, including, but not limited to, provisions supporting access to beneficial building electrification and decarbonization programs for low- and moderate-income customers and for commercial and residential customers;

      (9) require electric public utilities, gas public utilities, and the State to improve customer access to other funding and programs related to electrification and decarbonization;

      (10) require the BPU to establish provisions to enhance load management, including demand response;

      (11) require electric public utilities, gas public utilities, and State administrators to seek any available federal funding for the program prior to leveraging the cost recovery mechanism established by the BPU pursuant to the bill;

      (12) exempt programs serving low- and moderate-income customers from the cost-effectiveness criteria outlined in the bill;

      (13) authorize the BPU to require electric public utilities or gas public utilities to submit filings for investments in pilot projects for the development of utility-scale renewable thermal energy networks;

      (14) establish certain requirements and a cost recovery mechanism for utility-scale renewable thermal energy network pilot projects, as outlined in the bill;

      (15) provide that any increase in the use of electricity due to the beneficial building electrification and decarbonization program is not to be counted against the electricity usage reduction targets established pursuant to N.J.S.A.48:3-87.8 et al.;

      (16) authorize the use of monies collected through the societal benefits charge to fund the program created by the bill;

      (17) require the BPU, when establishing certain performance indicators pursuant to N.J.S.A.48:3-87.9, to consider an electric public utility’s or gas public utility’s building electrification and decarbonization efforts;

      (18) make technical changes to the bill; and

      (19) update the bill’s title and synopsis.

MINORITY STATEMENT

By Assemblymen Sauickie, Barranco, and Kanitra

      “First, we can stop passing legislation that increases utility bills.”  This committee received that advice from the Director of the Division of the Rate Counsel in October 2024.

      Despite the sponsors’ undoubtedly good intentions, this bill represents exactly what the State government should not be doing.

      The committee convenes today to consider an agenda suggesting a general intention to address energy affordability issues in the wake of its two public hearings on that subject.  Those, in turn, followed the news of an impending 17 to 20 percent increase in electricity rates either as scheduled in June 2025, or sometime later if the Board of Public Utilities (BPU) succeeds in forcing electric companies to delay the increases past June and perhaps to as late as November.

      Included on today’s agenda is other legislation that would direct the BPU to conduct a study on the effect of electricity usage by data centers on electricity rates in the State.  Notably, that bill would also require the BPU to assess various policies that could protect ratepayers from increased costs caused by data center expansion.  That provision, of course, reflects the consensus that additional demand for electricity without the concomitant addition of supply will inevitably increase rates.

      This bill, Assembly Bill No. 4844, added late to the original agenda, strikes a discordant note.  Whatever the relative merits of the other legislation to be considered today, they do not appear likely to make matters worse for ratepayers or for the grid.  Unfortunately, this bill will.

      This bill furthers the extreme goals of the Governor’s Energy Master Plan by encouraging the conversion or replacement of various systems and devices powered by fossil fuels, including natural gas, with those powered by electricity.  These include space and water heating systems, appliances, and industrial equipment.  It directs the BPU to create a cost recovery and performance incentive mechanism.

      In this committee’s most recent joint hearing, we heard about the enormous scope of residential electrification in this State, and what it would mean.  Out of about 3.5 million households in New Jersey, approximately 75 percent are powered by natural gas, meaning the goal is to convert more than 2.6 million homes to electrical power.

      For each one of those homes, replacing a gas-powered heating system with an electric heat pump would require a 50-60 ampere, 240 volt circuit.  Replacing a gas stove with an electric one would require another 50 ampere, 240 volt circuit, and switching out a gas-powered water heater for an electric one would require a 30 ampere, 240 volt circuit.  A typical small residence currently has a 100 ampere circuit, a medium one 150 amperes, and a four-bedroom colonial home a 200 ampere circuit.

      Just like the data centers that will place new strains on the grid and likely lead to rate increases, as recognized by the other legislation, this bill, if it meets its goals, will do the same through those new electric systems and devices.

      Further, there is no hint of what these incentives will cost nor how they will be funded.  To meaningfully cause individuals and businesses to participate, the incentives will have to be very significant.  This appears to be a plan to spend a lot of money in order to create more strain on the grid and higher rates for New Jerseyans already reeling from high energy costs and anticipated hikes of up to 20 percent.