SENATE ECONOMIC GROWTH COMMITTEE
STATEMENT TO
SENATE, No. 4260
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 12, 2025
The Senate Economic Growth Committee reports favorably and with committee amendments Senate Bill No. 4260.
As amended and reported, this bill, which is designated as the “Electric Public Utility Fair Profit Act,” requires each electric public utility to annually review its actual revenues collected during the year and its total revenue requirement to determine if the electric public utility collected excess profits during that year.
After any year in which an electric public utility collected excess profits that exceed the total revenue requirement by more than 0.5 percent, the bill requires the electric public utility to redistribute its excess profits to customers as follows:
(1) for earnings above the total revenue requirement and up to one percent above the total revenue requirement, 50 percent of the excess profits is to be refunded to the customers and 50 percent is to be retained by the electric public utility;
(2) for earnings between one percent and two percent above the total revenue requirement, 75 percent of the excess profits is to be refunded to the customers and 25 percent is to be retained by the electric public utility; and
(3) for earnings exceeding two percent of the total revenue requirement, 100 percent of the excess profits is to be refunded to the customers.
The board has the authority to modify the requirements for redistribution of excess profits to customers and the percentages of the redistribution of excess profits.
The excess profits are to be redistributed to customers through a refund mechanism subject to board approval, including:
(1) 50 percent of the percentage of excess profits required to be redistributed to customers is to be provided as bill credits applied to future utility bills and as direct payments for customers with unpaid balances; and
(2) the remaining 50 percent of the percentage of excess profits required to be redistributed to customers is to be provided as payments for customers who are enrolled in a utility assistance program.
The bill provides that an electric public utility has 45 days to comply with the board’s order to redistribute its excess profits. The excess profits redistributed by an electric public utility are not recoverable from customers of the utility.
The board is to require an electric public utility to be in compliance with this bill before approving any future rate increases.
Electric 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 electric 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.
An electric 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 electric public utility’s total revenue requirement or 105 percent of the electric 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. Electric public utilities are prohibited from recovering any penalty from customers.
The bill defines “excess profit” as the amount of actual revenues collected by an electric 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 an electric 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 electric 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:
(1) remove gas and water public utilities from the provisions of the bill;
(2) require an electric public utility to redistribute excess profits that exceed the total revenue requirement by more than 0.5 percent in a manner described in the bill;
(3) authorize the board to modify the requirements for redistribution of excess profits to customers and the percentages of excess profits required to be redistributed to customers;
(4) require that an electric public utility redistribute excess profits to customers as follows: 50 percent as bill credits applied to future utility bills and direct payments for customers with unpaid balances; and the remaining 50 percent as payments for customers enrolled in a utility assistance program;
(5) clarify that the board will require an electric public utility to be in compliance with the distribution of excess profits before approving any future rate increase; and
(6) amend the title and synopsis to reflect the changes to the bill.