S4424

An Act establishing a geothermal energy pilot program, supplementing Title 48 of the Revised Statutes, and amending R.S.48:2-13.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) a. As used in this section:

“Board” means the New Jersey Board of Public Utilities or its successor.

“Gas public utility” or “utility” means a public utility, as that term is defined pursuant to R.S.48:2-13, that distributes gas to end users in the State.

“Geothermal energy” means a renewable energy source derived from heat stored within the earth. “Geothermal energy” includes networked geothermal energy and deep geothermal energy.

“Geothermal energy infrastructure” means utility-scale distribution infrastructure that supplies heating or cooling from geothermal energy sources.

“Geothermal energy project” or “project” means a project undertaken by a gas public utility to replace aging or leaking natural gas pipelines with geothermal energy infrastructure.

“Infrastructure plan” means the plan submitted by a gas public utility to the board pursuant to subsection c. of this section.

b. The Board of Public Utilities shall establish a three-year pilot program to authorize a gas public utility to recover the cost of a geothermal energy project through the utility rates charged to the utility’s ratepayers. The purpose of the pilot program shall be to promote the adoption of geothermal energy infrastructure among gas public utilities.

c. To participate in the pilot program, a gas public utility shall submit to the board an infrastructure plan that shall include any information regarding the project that the board deems necessary for participation in the pilot program.

d. While reviewing a utility’s infrastructure plan, the board shall consider:

(1) the size, scope, and scale of the project;

(2) the cost of the project;

(3) the expected benefits of the project, which shall include, but not be limited to, the social value of greenhouse gas emissions reductions for the utility’s customers and for residents across the State;

(4) the project’s financial impact on the utility’s ratepayers;

(5) whether the project’s benefits, identified pursuant to paragraph (3) of this subsection, justify the cost of the project, determined pursuant to paragraph (2) of this subsection; and

(6) any other criteria that the board deems appropriate.

e. A gas public utility shall share with the board certain information to be determined by the board regarding the operations of the pilot program.

f. (1) Within one year of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and each year thereafter until the expiration of the pilot program, the board shall submit to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a written report detailing the operations of the pilot program. At a minimum, the report shall summarize the information provided by a gas public utility to the board pursuant to subsection e. of this section.

(2) In its third and final report, issued pursuant to paragraph (1) of this subsection, the board shall also determine whether to expand the pilot program to a permanent program.

(3) The board shall publish the findings of its reports, written pursuant to this subsection, on its Internet website.

g. If the board determines in its third and final report, pursuant to paragraph (2) of subsection f. of this section, that the pilot program shall become a permanent program, then the board shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations to facilitate the pilot program’s transition to a permanent program. In adopting said rules and regulations, the board shall consider similar laws, rules, and regulations in other states that have similar pilot programs or permanent programs at the state level.

h. (1) Within 60 days after the date of enactment of this act, and notwithstanding the provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), to the contrary, the board shall, immediately upon filing proper notice with the Office of Administrative Law, adopt rules and regulations necessary for the implementation of this section.

(2) The rules and regulations adopted pursuant to paragraph (1) of this subsection shall be in effect for a period not to exceed one year after the date of filing. These rules and regulations shall thereafter be adopted, amended, or readopted by the board in accordance with the requirements of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).

2. R.S.48:2-13 is amended as follows:

48:2-13. a. The board shall have general supervision and regulation of and jurisdiction and control over all public utilities as defined in this section and their property, property rights, equipment, facilities and franchises so far as may be necessary for the purpose of carrying out the provisions of this Title.

The term “public utility” shall include every individual, copartnership, association, corporation or joint stock company, their lessees, trustees or receivers appointed by any court whatsoever, their successors, heirs or assigns, that now or hereafter may own, operate, manage or control within this State any railroad, street railway, traction railway, autobus, charter bus operation, special bus operation, canal, express, subway, pipeline, gas, geothermal energy pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), electricity distribution, water, oil, sewer, solid waste collection, solid waste disposal, telephone or telegraph system, plant or equipment for public use, under privileges granted or hereafter to be granted by this State or by any political subdivision thereof.

b. Nothing contained in this Title shall extend the powers of the board to include any supervision and regulation of, or jurisdiction and control over any vehicles engaged in ridesharing arrangements with a maximum carrying capacity of not more than 15 passengers, including the driver, where the transportation of passengers is incidental to the purpose of the driver or any vehicles engaged in the transportation of passengers for hire in the manner and form commonly called taxicab service unless such service becomes or is held out to be regular service between stated termini; hotel buses used exclusively for the transportation of hotel patrons to or from local railroad or other common carrier stations, including local airports, or bus employed solely for transporting school children and teachers, to and from school, or any autobus with a carrying capacity of not more than 10 passengers now or hereafter operated under municipal consent upon a route established wholly within the limits of a single municipality or with a carrying capacity of not more than 20 passengers operated under municipal consent upon a route established wholly within the limits of not more than four contiguous municipalities within any county of the fifth or sixth class, which route in either case does not in whole or in part parallel upon the same street the line of any street railway or traction railway or any other autobus route.

c. Except as provided in section 7 of P.L.1995, c.101 (C.58:26-25), the board shall have no regulatory authority over the parties to a contract negotiated between a public entity and a private firm pursuant to P.L.1995, c.101 (C.58:26-19 et al.) in connection with the performance of their respective obligations thereunder. Nothing contained in this title shall extend the powers of the board to include any supervision and regulation of, or jurisdiction and control over, any public-private contract for the provision of water supply services established pursuant to P.L.1995, c.101 (C.58:26-19 et al.).

d. Unless otherwise specifically provided pursuant to P.L.1999, c.23 (C.48:3-49 et al.), all services necessary for the transmission and distribution of electricity and gas, including but not limited to safety, reliability, metering, meter reading and billing, shall remain the jurisdiction of the Board of Public Utilities. The board shall also maintain the necessary jurisdiction with regard to the production of electricity and gas to assure the reliability of electricity and gas supply to retail customers in the State as prescribed by the board or any other federal or multi-jurisdictional agency responsible for reliability and capacity in the State.

e. Notwithstanding the provisions of subsection a. of this section, the board shall have the authority to classify as regulated the sale of any thermal energy service by a cogenerator or district heating system, for the purpose of providing heating or cooling to a residential dwelling if, after notice and hearing, it determines that the customer does not have sufficient space on its property to install an alternative source of equivalent thermal energy, there is no contract governing the provision of thermal energy service for the relevant period of time, and that sufficient competition is no longer present, based upon consideration of such factors as: ease of market entry; presence of other competitors; and the availability of like or substitute services in the relevant geographic area. Upon such a classification, the board may determine such rates for the thermal energy service for the purpose of providing heating or cooling to a residential dwelling as it finds to be consistent with the prevailing cost of alternative sources of thermal energy in similar situations. The board, however, shall continue to monitor the thermal energy service to such residential dwellings and, whenever the board finds that the thermal energy service has again become sufficiently competitive pursuant to the criteria listed above, the board shall cease to regulate the sale or production of the service. The board shall not have the authority to regulate the sale or production of steam or any other form of thermal energy, including hot and chilled water, to non-residential customers.

f. Nothing contained in this Title shall extend the powers of the board to include supervision and regulation of, or jurisdiction and control over, an entity engaged in the provision or use of sewage effluent for the purpose of providing a cooling medium to an end user or end users on a single site, which provision results in the conservation of potable water which would otherwise have been used for such purposes.

g. Except as provided herein, the board shall have no regulatory authority over the parties to a contract entered into between the governing body of a city of the first class and a duly incorporated nonprofit association in connection with the performance of their respective obligations thereunder when the governing body of a city of the first class shall determine by ordinance that it is in the public interest to contract with that duly incorporated nonprofit association for the provision of water supply services as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15), or for the provision of wastewater treatment services as defined in subsection (19) of section 15 of P.L.1971, c.198 (C.40A:11-15), or the designing, financing, construction, operation, or maintenance, or any combination thereof, of a water supply facility as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15) or a wastewater treatment system as defined in subsection (19) of section 15 of P.L.1971, c.198 (C.40A:11-15), or any component part or parts thereof, including a water filtration system as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15), upon approval of the contract pursuant to the provisions of section 6 of P.L.2002, c.47 (C.58:28-7).

Notwithstanding any other provision of P.L.2002, c.47 whenever the governing body of a city of the first class enters into a contract with a duly incorporated nonprofit association for the provision of water supply services as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15), or the designing, financing, construction, operation, or maintenance, or any combination thereof, of a water supply facility as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15), and that governing body operates water supply facilities as authorized pursuant to the provisions of N.J.S.40A:31-4, which supply water to customers within another local unit, the nonprofit association or governing body shall be subject to the jurisdiction, rate regulation and control of the Board of Public Utilities as provided in N.J.S.40A:31-23, to the extent the nonprofit association or governing body supplies water to customers within that other local unit.

(cf: P.L.2002, c.47, s.10)

3. This act shall take effect on the first day of the sixth month after enactment, except that a gas public utility and the Board of Public Utilities may take any anticipatory action in advance thereof as may be necessary to implement the provisions of this act. The act shall expire 30 days after the submission of the board’s third and final report pursuant to subsection f. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), provided that the board does not determine that the pilot program shall become a permanent program in said report, pursuant to paragraph (2) of subsection f. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

STATEMENT

This bill requires the Board of Public Utilities (board) to establish a three-year pilot program to authorize a gas public utility (utility) to recover the cost of a geothermal energy project (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, at a minimum, 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.

Under the bill, “geothermal energy” means a renewable energy source derived from heat stored within the earth. “Geothermal energy” includes networked geothermal energy and deep geothermal energy. In addition, the bill defines “geothermal energy infrastructure” to mean utility-scale distribution infrastructure that supplies heating or cooling from geothermal energy sources.