LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 4424

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: AUGUST 25, 2025

 

 

SUMMARY

 

Synopsis:

Establishes geothermal energy pilot program for gas public utilities. 

Type of Impact:

State expenditure increase and potential local expenditure increases over three years.

Agencies Affected:

Board of Public Utilities; certain State entities, local units, and school districts. 

 

 

Office of Legislative Services Estimate

Fiscal Impact

Years One through Three 

 

State Expenditure Increase

Indeterminate

 

Potential Local Expenditure Increase

Indeterminate

 

 

 

 

·         The Office of Legislative Services (OLS) finds that this bill will result in an indeterminate State expenditure increase to the Board of Public Utilities to adopt rules and regulations necessary to establish the geothermal energy pilot program for gas public utilities.  Furthermore, the board will incur additional annual expenditure increases for three years due to its review of program applications and other administrative duties that may be necessary to operate the program.

 

·         Additionally, the OLS finds that the bill may potentially result in increased annual expenditures for certain State entities, local units, and school districts that are serviced by a gas public utility that elects to participate in the geothermal energy pilot program if a public entity is required to pay an increased gas public utility rate due to cost recovery by the entity’s utility for the utility’s participation in the pilot program.

 

 

BILL DESCRIPTION

 

      This bill requires the Board of Public Utilities to establish a three-year pilot program to authorize a gas public utility to recover the cost of a geothermal energy project, which project involves the replacement of aging or leaking natural gas pipelines with geothermal energy infrastructure, through the utility rates charged to its ratepayers.  To participate in the pilot program, a utility is to submit an infrastructure plan with any information regarding the project that the board deems necessary.  While reviewing a plan, the board is to consider:  (1) the size, scope, and scale of the project; (2) the cost of the project; (3) the expected benefits of the project; (4) the project’s financial impact on the utility’s ratepayers; (5) whether the project’s benefits justify the cost of the project; and (6) any other criteria that the board deems appropriate. 

      In addition, a utility is required to submit certain information on the operations of the pilot program to the board.  The bill requires the board to summarize this information in an annual report to the Governor and the Legislature until the expiration of the pilot program.  In its third and final report, the board is required to also determine whether to expand the pilot program to a permanent program.  If the board decides to expand the pilot program, after considering laws, rules, and regulations in other states with similar programs, the board is to adopt rules and regulations to effectuate the transition from a pilot program to a permanent program.  The pilot program is to expire 30 days after the board’s submission of its third and final report on the pilot program, provided that the board has not decided to expand the pilot program to become a permanent program.  The board is to publish the reports on its Internet website.  In addition, the bill amends current law to provide that the term “public utility” is to include an entity that owns, operates, manages, and controls geothermal energy within the State. 

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received. 

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS finds that this bill will result in an indeterminate State expenditure increase to the board to adopt rules and regulations necessary to establish the three-year geothermal energy pilot program for gas public utilities.  Furthermore, the board will incur an additional annual increase for three years due to its review of applications and its other administrative duties that may be necessary to operate the program.  The OLS concludes that a large portion of the duties required under the bill could be subsumed within existing staff duties.  The OLS notes that the program is to begin as a three-year pilot program but that the bill directs the board to establish a permanent program if deemed successful.  Thus, any expenditure increases caused by hiring additional staff, paying overtime hours, or the rulemaking process will likely occur one year after the bill’s enactment and again four years after the bill’s enactment. 

      The OLS finds that the bill may potentially result in increased annual expenditures for certain State entities, local units, and school districts that are serviced by a gas public utility that elects to participate in the geothermal energy pilot program if these public entities are required to pay an increased surcharge as part of their gas public utility bill.  The OLS cannot calculate the magnitude of these potential expenditure increases because it cannot predict how many utilities will participate in the geothermal energy pilot program or the amount of the increased rates due to cost recovery by each utility that participates in the pilot program.

Section:

Authorities, Utilities, Transportation and Communications

Analyst:

Michael D. Walker

Associate Fiscal Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).