ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5438

with committee amendments

STATE OF NEW JERSEY

DATED:  MAY 15, 2025

      The Assembly Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 5438.

      As amended and reported, this bill, which is designated as the “Public Utility Fair Profit Act,” requires each electric public utility and gas public utility to annually review its actual revenues collected during the year and its total revenue requirement to determine if the public utility collected excess profits during that year.

After any year in which a public utility collected excess profits, the bill requires the public utility to redistribute its excess profits to customers, in a proportional manner and in such intervals as may be prescribed by the board, through a refund mechanism subject to board approval, including:

      (1)  bill credits applied to future utility bills;

      (2)  direct payments for customers with unpaid balances; or

      (3)  direct payments for customers who are enrolled in a utility assistance program.

      The bill provides that a public utility has 45 days to comply with the board’s order to redistribute its excess profits.  The excess profit redistributed by a public utility is not recoverable from ratepayers of the utility.

      Public utilities are required to file an annual financial report with the board in a manner and form to be determined by the board.  At a minimum, the report is to include information documenting the public utility’s actual revenues collected, the total revenue requirement, and if excess profits were collected, any bill credits or direct payments issued to customers.

      A public utility that fails to redistribute excess profits to customers within 45 days of being ordered to do so by the board, or that knowingly misrepresents any information contained in the financial report, will be subject to a fine in an amount determined by the board, not to exceed the lesser of five percent of the public utility’s total revenue requirement or 105 percent of the public utility’s excess profits.  This civil penalty is to be recovered in an administrative proceeding and will be allocated to supplement existing funding for utility assistance programs.  Public utilities are prohibited from recovering any penalty from ratepayers.

      The bill defines “excess profit” as the amount of actual revenues collected by a public utility during a reporting period that exceeds the utility’s total revenue requirement approved by the board for the reporting period. “Total revenue requirement” means the total amount of revenue that a public utility is approved to recover through utility rates during a reporting period, as approved by the board in the utility’s most recent base rate case, and including any additional amounts of revenue that the board has approved the public utility to recover through an alternative rate recovery mechanism during the reporting period, including, but not limited to, any charge approved pursuant to an infrastructure investment program.

COMMITTEE AMENDMENTS:

      The committee amended the bill to remove water public utilities from the provisions of the bill.

FISCAL IMPACT:

      This bill is not certified as requiring a fiscal note.