SENATE ECONOMIC GROWTH COMMITTEE

STATEMENT TO

SENATE, No. 877

with committee amendments

STATE OF NEW JERSEY

DATED:  December 11, 2025

      The Senate Economic Growth Committee reports favorably and with committee amendments Senate Bill No. 877.

      As amended and reported, this bill amends current law to exempt municipal electric utilities from regulation by the Board of Public Utilities (BPU) if a municipality provides electric utility service to customers beyond its corporate limits at the same rate that it provides electric utility service to customers within its corporate limits.  However, the bill provides that the BPU is to retain jurisdiction to regulate electric utility service and reliability as provided by a municipality.  The bill also establishes certain requirements for:  (1) determining whether a municipality provides electric utility service at the same rate to customers within and outside of its corporate limits; and (2) permitting customers located outside of a municipality’s corporate limits to provide feedback to a rate increase proposal. 

      In addition, the bill clarifies that the bill’s provisions are not to prevent a gas public utility that provides service to the same area in which a municipal electric utility operates from offering energy efficiency programs concerning electricity usage to a customer located within a municipal electric utility’s service area.  The bill also clarifies that any municipal electric utility rate that had previously been subject to the BPU’s regulation prior to the bill’s effective date is to remain subject to certain provisions of current law regarding restrictions on the transfer of utility surplus. 

      Under current law, municipal utilities generally are not regulated by the BPU.  However, if a municipality provides any product, including electricity, beyond its corporate limits, the municipality is considered to be a public utility and is regulated by the BPU.  In this event, the BPU is responsible for regulating the rates imposed by the municipality for the provision of these regulated services. 

      This bill was pre-filed for introduction in the 2024-2025 session pending technical review. As reported, the bill includes the changes required by technical review, which has been performed.

COMMITTEE AMENDMENTS:

      The committee amended the bill to: 

(1) exempt municipal electric utilities from BPU regulation if the municipality provides electric utility service to customers within and outside of its corporate limits at the same rate, rather than exempting municipal electric utilities from BPU regulation under any circumstance;

(2) clarify that any municipal electric utility rate increase is to be authorized by municipal ordinance;

(3) require a municipal electric utility to hold a public hearing prior to effectuating a rate increase;

(4) require a municipal electric utility to submit notice of a proposed rate increase to any municipality and county in which the utility provides electric utility service at least 20 days prior to a public hearing on the proposed rate increase;

(5) provide that customers affected by a proposed rate increase who reside outside of the municipality’s corporate limits are to have the opportunity to be heard at a public hearing on a proposed rate increase;

(6) clarify that the BPU is to maintain its jurisdiction to regulate service and reliability for any municipal electric utility that provides service beyond the municipality’s corporate limits;

(7) clarify that the bill’s provisions are not to prevent a gas public utility that operates in the same service area as a municipal electric utility from offering energy efficiency programs concerning electricity usage to a customer located within the municipal electric utility’s service area;

(8) exclude incentives, rebates, and financing options related to energy efficiency programs concerning electricity usage, as offered by a gas public utility operating in the same service area as a municipal electric utility, from the calculation of a municipal electric utility rate when determining, pursuant to the bill, whether a municipal electric utility provides service to customers within and outside of the municipality’s corporate limits at the same rate;

(9) clarify that any municipal electric utility rate subject to BPU regulation prior to the bill’s effective date is to maintain compliance with certain provisions of current law that concern restrictions on the transfer of utility surplus;

      (10) remove a provision from the bill that would have amended current law concerning BPU regulation of rural electric cooperatives to also preclude municipal electric utilities from BPU regulation;

(11) update the bill’s title and synopsis; and

(12) make technical corrections to the bill.