ASSEMBLY TELECOMMUNICATIONS AND UTILITIES COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5436

STATE OF NEW JERSEY

DATED:  MAY 5, 2025

      The Assembly Telecommunications and Utilities Committee reports favorably Assembly Bill No. 5436.

      This bill requires the Board of Public Utilities (board) to determine and consider the lowest reasonable return on equity (ROE) in determining whether an electric public utility’s, gas public utility’s, or water public utility’s rate increase proposed as part of a base rate case is just and reasonable.  To determine the lowest reasonable ROE, the board is required to develop or adopt and apply an analytic model that reflects, at a minimum, State, federal, and industry standards for determining a fair and reasonable authorized ROE for electric public utilities, gas public utilities, and water public utilities.

      Under current law, the board may approve a petition by an electric public utility, a gas public utility, or a water public utility to increase, change, or alter any existing public utility rates upon a determination that the increase, change, or alteration is just and reasonable.  When determining the justness and reasonableness of a requested rate adjustment, the board is to consider:  (1) the public utility’s property valuation (i.e., the rate base); (2) the public utility’s expenses; and (3) the public utility’s rate of return, which includes the ROE.