A3980 ACS

An Act concerning certain public utility infrastructure investments and supplementing Title 48 of the Revised Statutes.

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

1. This act shall be known and may be cited as the “Powering Up New Jersey Act.”

2. a. As used in this section:

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

“Customer-generator facility” means a customer-generator facility, as that term is defined pursuant to N.J.A.C.14:8-5.1 or it successor, that is eligible for a level 1 interconnection review by an electric public utility pursuant to N.J.A.C.14:8-5.4 or its successor or a level 2 interconnection review by an electric public utility pursuant to N.J.A.C.14:8-5.5 or its successor.

“Distributed energy resource” means distributed generation, energy storage systems, electric vehicles, microgrids, fuel cells and demand-side management measures, including energy efficiency, demand response, and demand flexibility, that are deployed at the distribution level on either the customer or utility side of the meter.

“Electric public utility” means the same as the term is defined in section 3 of P.L.1999, c.23 (C.48:3-51).

“Energization” or “energize” means connecting new customers to the electric distribution system, establishing adequate load capacity to provide electric public utility service to a new customer, or upgrading electric capacity to provide electric public utility service to an existing customer. “Energization” or “energize” does not include activities relating to the interconnection of electricity supply resources.

“Energization time period” means the period of time between when an electric public utility receives a request for distribution service and when the distribution service is installed and energized.

“Flexible interconnection or energization tariff” means a way to energize a new load or interconnect a distributed energy resource to an electric public utility’s distribution system without necessitating immediate modifications to the distribution system, which energization or interconnection is governed by a set of rules and requirements and includes an agreement for curtailing the import or export of electricity from and to the distribution system at certain times or operation conditions by use of certified power control systems or other load management technologies.

“Hosting capacity” means the amount of electric generation that can be interconnected to the electric distribution system at a given time and at a given location under existing electrical grid conditions and operations without adversely impacting safety, power quality, reliability, or other operational criteria.

“Interconnection time period” means the elapsed time between:

(1) when an electric public utility receives a substantially-complete interconnection application for a customer-generator facility and when the utility issues a signed part 1 interconnection agreement, as established by the board; and

(2) when an electric public utility receives confirmation of the construction official’s successful inspections and permit closing for a customer-generator facility and when the facility is granted permission to operate.

“Load capacity” means the amount of load that can be added to the electric distribution system at a given time and at a given location under existing electrical grid conditions and operations without adversely impacting safety, power quality, reliability, or other operational criteria.

b. To provide safe, adequate, and proper electric public utility service, an electric public utility shall:

(1) conduct sufficient advanced planning, engineering, and construction of electric distribution system hosting capacity and load capacity and sufficient preordering of transformers and other needed equipment so that electric public utility customers can be energized and interconnected without substantial delay; and

(2) upgrade its electric distribution system as needed and in time to allow for the achievement of federal, State, regional, and local air quality and decarbonization standards, plans, and regulations, including vehicle emissions standards.

c. An electric public utility shall include infrastructure investments needed to comply with subsection b. of this section as part of the utility’s Infrastructure Investment Program filed pursuant to sections 3 through 10 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill).

d. Within 240 days of the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), an electric public utility shall file with the board for approval:

(1) detailed mapping of electric distribution hosting capacity and available load capacity and any underlying data with appropriate safeguards to protect confidentiality and critical infrastructure;

(2) proposed reasonable average and maximum target energization time periods that may vary depending on the nature of the work required and factors beyond the electric public utility’s control, along with a record of recent energization time periods for various customer rate classifications and voltage service levels;

(3) a record of recent interconnection time periods for customer-generator facilities, broken out by whether the facilities meet screening criteria and other relevant attributes, as proposed by an electric public utility and approved by the board;

(4) proposed reasonable average and maximum target interconnection time periods for customer-generator facilities. However, the targets shall be less than the electric public utility’s recent interconnection time periods, submitted pursuant to paragraph (3) of this subsection, and the interconnection time periods specified in regulations adopted under subchapter 5 of chapter 8 of title 14 of the New Jersey Administrative Code;

(5) a plan to automate the processing of interconnection applications to instantly issue signed part 1 interconnection agreements, as established by the board, for any customer-generator facility that is eligible for level 1 interconnection review pursuant to N.J.A.C.14:8-5.4 or its successor and meets all relevant screening criteria for such review;

(6) optional flexible interconnection or energization tariffs;

(7) a plan to use distributed energy resources, which may include performance-based compensation for aggregated distributed energy resources, to avoid or minimize the need for traditional electric distribution system upgrades where feasible; and

(8) commercial and industrial rates designed for high-voltage electric vehicle charging applications, taking into account alternatives to traditional demand-based charges that appropriately recover the marginal costs associated with such applications.

e. An electric public utility shall publish the information in paragraph (1) of subsection d. of this section on its Internet website so the information is accessible to customers, stakeholders, and verified third parties and shall, at a minimum, update the information on a quarterly basis.

f. An electric public utility shall publish the energization time periods adopted pursuant to paragraph (2) of subsection d. of this section, and the interconnection time periods adopted pursuant to paragraph (3) and (4) of subsection d. of this section, on its Internet website so the information is accessible to customers. An electric public utility shall make such information available in any other manner and by any other means as directed by the board.

g. In an Infrastructure Investment Program, and in a base rate case, an electric public utility shall report to the board, and the Department of Labor and Workforce Development, its current qualified staffing levels for each job classification needed to achieve the requirements of this section. In its report, the electric public utility shall include a review of anticipated needs for future electric public utility, affiliate, and contractor personnel.

h. An electric public utility shall provide an energization and interconnection report to the board at least annually, which report shall contain the following information:

(1) the utility’s average and median energization time period and the standard deviation for such time periods;

(2) the utility’s average and median interconnection time period for customer-generation facilities and the standard deviation for such time periods, broken out by whether the facilities meet screening criteria or other relevant attributes, as proposed by an electric public utility and approved by the board;

(3) an explanation for any energization time period or interconnection time period that exceeds the utility’s most recent maximum targets for such time periods, as filed with the board pursuant to either paragraph (2) or paragraph (4) of subsection d. of this section and as approved by the board; and

(3) a strategy for meeting any missed targets for energization time periods and interconnection time periods in the future.

i. To reflect changed circumstances and new information, and to achieve the goal of shortening energization time periods and interconnection time periods over time, the board shall periodically update the energization time periods and interconnection time periods submitted by an electric public utility pursuant to either paragraph (2) or paragraph (4) of subsection d. of this section and the energization and interconnection report requirements prescribed under subsection h. of this section.

j. The board may establish performance incentives or penalties and may require an electric public utility to take remedial actions to achieve the requirements of this section. However, the board shall establish penalties for repeated violations of the requirements adopted pursuant to this section, including for failure to undertake remedial actions authorized pursuant to this subsection, and other relevant requirements adopted by the board.

k. The board may adopt rules and regulations, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), as may be necessary to effectuate the provisions of this section.

3. As used in sections 3 through 10 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill):

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

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

“In service” means when a project approved for inclusion in a public utility’s Infrastructure Investment Program is functioning in its intended purpose, has finished construction and is actively in use, and is actively helping the public utility to provide efficient public utility service.

“Program” means the Infrastructure Investment Program established by the board pursuant to subsection a. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

“Public utility” means the same as that term is defined pursuant to R.S.48:2-13.

“Water public utility” means either: (1) an investor-owned public utility that provides water public utility service; or (2) a municipal public utility that provides water utility service to more than 1,000 billed customers in another municipality and charges a different rate to customers within the municipality than it charges to customers outside of the municipality.

4. a. The Board of Public Utilities shall permit, through a program to be known as an Infrastructure Investment Program, a public utility to accelerate its investment in the construction, installation, and rehabilitation of certain public utility plants and facilities that enhance safety, reliability, and resiliency or support economic growth and the achievement of applicable federal, State, regional, and local air quality and decarbonization standards, including, but not limited to, standards prescribed in section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). The purpose of an Infrastructure Investment Program shall be to provide a rate recovery mechanism that encourages and supports necessary accelerated construction, installation, and rehabilitation of certain public utility plants and equipment. As set forth in sections 3 through 10 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill), such investment shall occur in a systematic and sustained way to advance construction, installation, and rehabilitation of public utility infrastructure needed for continued system safety, reliability, and resiliency and for sustained economic growth in the State of New Jersey.

b. Through the Infrastructure Investment Program, a public utility may obtain accelerated recovery of qualifying investments, subject to the terms of sections 3 through 10 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill), and any other conditions set by the board in approving a public utility’s Infrastructure Investment Program. To participate in the program, a public utility shall apply to the board in a manner and form determined by the board.

c. The board shall require frequent and detailed reporting of expenditures during all phases of an Infrastructure Investment Program, as set forth in sections 3 through 10 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill), to ensure prudent investment and compliance with the provisions of sections 3 through 10 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill).

5. a. The projects within an Infrastructure Investment Program shall be:

(1) related to safety, reliability, or resiliency or are otherwise necessary to comply with section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);

(2) non-revenue producing unless the project is necessary to comply with section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);

(3) specifically identified by the public utility within its petition in support of an Infrastructure Investment Program; and

(4) approved by the board for inclusion in a public utility’s Infrastructure Investment Program in response to the public utility’s petition.

b. Projects within a public utility’s Infrastructure Investment Program may include:

(1) the replacement of gas utilization pressure cast iron mains with elevated pressure mains and associated services;

(2) the replacement of mains and services that are identified as high risk in a gas public utility’s Distribution Integrity Management Plan;

(3) the installation of gas excess flow valves where existing gas public utility service line replacements require them, excluding excess flow valves installed upon customer request pursuant to 49 C.F.R. s.192.383;

(4) electric distribution automation investments, including, but not limited to, supervisory control and data acquisition equipment, cybersecurity investments, relays, reclosers, voltage and reactive power control, communications networks, and distribution management system integration;

(5) the installation of break-predictive water sensors and wastewater sensors to curtail combined sewer overflows;

(6) electric distribution infrastructure investments, including, but not limited to, poles, wires, substations, and other facilities; and

(7) other projects deemed appropriate by the board.

c. A public utility shall maintain its capital expenditures on projects similar to those proposed within the public utility’s Infrastructure Investment Program approved by the board. These capital expenditures shall amount to at least 10 percent of any approved Infrastructure Investment Program. These capital expenditures shall be made in the normal course of business and recovered in a base rate proceeding and shall not be subject to the recovery mechanism set forth in N.J.A.C.14:3-2A.6 or it successor.

6. a. A public utility seeking to establish an Infrastructure Investment Program shall, within its petition to the board, propose annual baseline spending levels to be maintained by the public utility throughout the length of the proposed Infrastructure Investment Program. These expenditures shall be recovered by the public utility in the normal course within the public utility’s next base rate case.

b. In proposing annual baseline spending levels pursuant to subsection a. of this section, the public utility shall provide appropriate data to justify the proposed annual baseline spending levels, which may include historical capital expenditure budgets, projected capital expenditure budgets, depreciation expenses, and any other data relevant to the public utility's proposed baseline spending level.

c. Upon approving a public utility’s proposed Infrastructure Investment Program, the board shall establish, within its order approving the public utility’s Infrastructure Investment Program, annual baseline spending levels for each year of the Infrastructure Investment Program. In establishing the annual baseline spending levels, the board shall set forth, within its order approving the Infrastructure Investment Program, the factors used to establish the annual baseline spending levels. The board, in its discretion, may consider a public utility’s historical capital expenditure budgets, projected capital expenditure budgets, depreciation expenses, or any other data deemed relevant by the board in establishing the annual baseline spending levels.

d. Only expenditures in excess of the annual baseline spending levels, established by the board pursuant to subsection c. of this section, and that meet the other requirements of sections 3 through 10 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be eligible for accelerated recovery pursuant to N.J.A.C.14:3-2A.6 or it successor.

7. a. A public utility may petition the board for approval of an Infrastructure Investment Program extending for a period of five years or less.

b. The board may limit the size of a public utility’s Infrastructure Investment Program due to its anticipated impact on public utility rates or for any other reason determined by the board.

c. A public utility that offers more than one regulated service may file separate petitions to establish separate Infrastructure Investment Programs for each regulated service offered by the public utility. Under these circumstances, each Infrastructure Investment Program approved by the board shall be subject to its own respective spending cap.

d. A water public utility shall not simultaneously maintain an Infrastructure Investment Program and utilize the board's Distribution System Improvement Charge authorized pursuant to N.J.A.C.14:9-10.1 et seq. or its successor. Before filing a petition in support of a proposed Infrastructure Investment Program pursuant to sections 3 through 10 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill), a water public utility shall first close out any existing Distribution System Improvement Charge program.

e. Allowance for Funds Used During Construction shall be permitted under an Infrastructure Investment Program but a public utility shall not utilize Allowance for Funds Used During Construction once Infrastructure Investment Program facilities are placed in service.

f. Year-to-year variations in a public utility’s approved Infrastructure Investment Program’s annual budget of up to 10 percent shall be permitted, provided that the total budget for a public utility’s Infrastructure Investment Program is not exceeded. Variations in excess of 10 percent shall require the board’s approval.

8. a. The board shall not require a public utility to establish an Infrastructure Investment Program.

b. A public utility requesting approval of an Infrastructure Investment Program shall include within its petition:

(1) projected annual capital expenditure budgets for a five-year period, identified by major categories of expenditures;

(2) actual annual capital expenditures for the previous five years, identified by major categories of expenditures;

(3) an engineering evaluation and report identifying the specific projects to be included in a public utility’s proposed Infrastructure Investment Program with descriptions of project objectives, including the specific expected resilience benefits, detailed cost estimates, in-service dates, and any applicable cost-benefit analysis for each project;

(4) an Infrastructure Investment Program budget setting forth annual budget expenditures;

(5) a proposal addressing when the public utility intends to file its next base rate case, consistent with N.J.A.C.14:3-2A.6(f) or its successor;

(6) proposed annual baseline spending levels, consistent with N.J.A.C. 14:3-2A.3(a) and (b) or its successor;

(7) the maximum dollar amount, in aggregate, that the public utility seeks to recover through its Infrastructure Investment Program; and

(8) the estimated rate impact of the proposed Infrastructure Investment Program on the public utility’s customers.

c. In considering a public utility’s petition in support of an Infrastructure Investment Program, the board may require that the public utility:

(1) provide any supplemental information, beyond the information required under N.J.A.C.14:3-2A.5(b) or its successor, that the board deems necessary to evaluate the public utility’s petition in support of its Infrastructure Investment Program;

(2) retain an independent Infrastructure Investment Program monitor, as a condition of approval of the public utility’s petition, to review and provide quarterly or semi-annual reports to the board and to the Division of Rate Counsel, where the monitor shall be paid by the public utility. If the board requires an independent Infrastructure Investment Program monitor, the monitor’s reports shall address:

(a) the effectiveness of Infrastructure Investment Program investments in meeting project objectives;

(b) the cost-effectiveness and efficiency of investments;

(d) any other information required by the board.

d. Before the board approves a public utility’s Infrastructure Investment Program, the board shall conduct a public hearing. Notice of the public hearing shall contain the maximum dollar amount the public utility seeks to recover through its Infrastructure Investment Program and the estimated rate impact of the public utility’s Infrastructure Investment Program on the public utility’s customers.

e. Following the board’s approval of a public utility’s petition in support of the public utility’s Infrastructure Investment Program, the public utility shall file supportive semi-annual status reports with the board and the Division of Rate Counsel for project management and oversight purposes that, at a minimum, contain the following:

(1) forecasted and actual costs of the public utility’s Infrastructure Investment Program for the applicable reporting period, and for the Infrastructure Investment Program to date, where Infrastructure Investment Program projects are identified by major category;

(2) the estimated total quantity of work completed under the public utility’s Infrastructure Investment Program identified by major category. If the work cannot be quantified, major tasks completed shall be provided;

(3) estimated completion dates for the public utility’s Infrastructure Investment Program as a whole and estimated completion dates for each major Infrastructure Investment Program category;

(4) anticipated changes to Infrastructure Investment Program projects, if any;

(5) actual capital expenditures made by the public utility in the normal course of business on similar projects, identified by major category; and

(6) any other performance metrics concerning a public utility’s Infrastructure Investment Program as may be required by the board.

9. a. A public utility may file for annual or semi-annual rate recovery for facilities constructed and placed in service under an Infrastructure Investment Program.

b. Each filing made by a public utility seeking accelerated recovery under an Infrastructure Investment Program shall seek recovery, at a minimum, of at least 10 percent of overall Infrastructure Investment Program expenditures.

c. A public utility’s expenditures made prior to the board’s approval of an Infrastructure Investment Program shall not be eligible for accelerated recovery.

d. Rates approved by the board for recovery of expenditures under an Infrastructure Investment Program shall be accelerated and recovered through a separate clause of the utility’s board-approved tariff. However, the separate clause shall not exceed five percent of the amount billed to the public utility’s customers under the applicable delivery rates of the public utility. The board may, upon petition by a public utility, waive the five percent-limit under this subsection to ensure and maintain adequate, efficient, safe, reliable, and reasonable public utility service.

e. Rates approved by the board for recovery of expenditures under a public utility’s Infrastructure Investment Program shall be provisional, subject to refund and interest. Prudence of Infrastructure Investment Program expenditures shall be determined in the public utility’s next base rate case.

f. A public utility shall file its next base rate case not later than five years after the board’s approval of the public utility’s Infrastructure Investment Program start date. However, the board may require a public utility to file its next base rate case within a shorter period.

g. A public utility may continue to file for accelerated recoveries during the approved Infrastructure Investment Program period notwithstanding the filing of the public utility’s next base rate case.

h. An earnings test shall be required, where return on equity shall be determined based on the actual net income of the public utility for the most recent 12-month period divided by the average of the beginning and ending common equity balances for the corresponding period.

i. For any Infrastructure Investment Program approved by the board, if the calculated return on equity exceeds the allowed return on equity from the public utility’s last base rate case by 50 basis points or more, accelerated recovery shall not be allowed for the applicable filing period.

10. The board shall adopt rules and regulations, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), as may be necessary to effectuate the provisions of sections 3 through 9 of P.L. , c. (C. through C. ) (pending before the Legislature as this bill), including, but not limited to, rules and regulations updating the board’s existing Infrastructure Investment Program established pursuant to regulations adopted under subchapter 2A of chapter 3 of Title 14 of the New Jersey Administrative Code.

11. This act shall take effect immediately.