A4490

An Act establishing a thermal energy network 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 an energy source derived from heat stored within the earth. “Geothermal energy” includes networked geothermal energy and deep geothermal energy.

“Thermal energy infrastructure” means thermal extraction and distribution infrastructure that supplies space heating or cooling, water heating, or refrigeration from geothermal energy sources, or other sources of renewable thermal energy, such as redistributed thermal waste heat or surface or underground water, wastewater, or other heat sources.

“Thermal energy network” means a project that supplies heating or cooling to multiple buildings connected via underground piping containing fluids that, in concert with heat pumps, exchange geothermal energy, or energy from other sources of renewable thermal energy, such as redistributed thermal waste heat or surface or underground water, waste water, or other heat sources.

“Thermal energy network project” or “project” means a project undertaken by a gas public utility to establish thermal energy network infrastructure in lieu of new or existing natural gas infrastructure for new or existing developments, particularly in areas with aging or leaking natural gas pipelines or without existing natural gas infrastructure.

“Thermal 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 four-year pilot program to authorize gas public utilities to recover the cost of one or more thermal energy network projects through the utility rates charged to the utility’s ratepayers. The board shall approve a maximum of one project in each of the northern, central, southern, and coastal regions of the State. The board and gas public utilities may establish a new tariff for the sale and delivery of thermal energy to the participating customers. The purpose of the pilot program shall be to demonstrate the benefits and cost of thermal energy networks as a means for supplying space or water conditioning of thermal energy infrastructure among gas public utilities. The term of the pilot program may be extended in the board’s discretion if the board so determines pursuant to paragraph (2) of subsection g. of this section. For purposes of this subsection: “northern,” when referring to regions of the State, means the counties of Bergen, Essex, Hudson, Morris, Passaic, Sussex, and Warren; “central,” when referring to regions of the State, means the counties of Hunterdon, Mercer, Middlesex, Somerset, and Union; “southern,” when referring to regions of the State, means the counties of Burlington, Camden, Cumberland, Gloucester, and Salem; and “coastal,” when referring to regions of the State, means the counties of Atlantic, Cape May, Monmouth, and Ocean.

c. To participate in the pilot program, each gas public utility shall submit to the board, in accordance with the minimum filing requirements set forth in the order issued by the board pursuant to subsection i. of this section, a thermal infrastructure plan that shall include any information regarding the utility’s proposed project or projects that the board deems necessary for participation in the pilot program. The board may establish one or more application periods for the submission of thermal infrastructure plans. The board may approve, deny, request modifications to, or partially approve and partially deny a submitted thermal infrastructure plan.

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

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

(2) the lifecycle cost of the proposed project or projects;

(3) the expected benefits of the proposed project or projects, which shall include, but not be limited to: (a) the information that the project will provide about efficiency of thermal energy networks in New Jersey, the benefits and costs for New Jersey customers of using thermal energy networks as a source of heating and cooling, and the opportunities and challenges related to construction and installation; (b) the anticipated energy capacity deferment; (c) the jobs associated with the project, including the extent to which existing natural gas utility workforce will be used for the project; and (d) the social value of greenhouse gas emissions reductions for the utility’s customers and for residents across the State;

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

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

(6) the extent to which the proposed project or projects serve low- to moderate-income households, residents of overburdened communities, and other vulnerable populations;

(7) the degree to which the proposed project or projects target or mitigate highly inefficient buildings;

(8) the potential opportunities for cost-effective retrofits or the inclusion of future potential for thermal waste heat system tie-ins;

(9) the extent to which the utility has identified non-ratepayer sources of funding to implement the proposed project or projects;

(10) the degree to which the proposed project or projects target or mitigates old or leaking natural gas infrastructure, or presents an alternative to potential natural gas expansion; and

(11) 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 projects approved as part of the pilot program.

f. No gas public utility that provides safe, proper, and adequate thermal energy distribution services to customers via a project approved as a part of the pilot program shall be deemed to be in violation of subsection a. of R.S.48:3-3 because it refuses to also provide natural gas distribution services to such customers.

g. (1) No later than six months after the expiration of the pilot program, the board shall publish on its Internet website and 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 implementation and results of the pilot program. At a minimum, the report shall summarize the information provided by the gas public utilities to the board pursuant to subsection e. of this section.

(2) No later than six months after the expiration of the pilot program, the board shall also determine whether or not to extend the pilot program, convert the pilot program to a permanent program, or recommend that New Jersey allow the distribution of geothermal energy as a regulated public utility service. The board’s recommendations shall be included in the report issued pursuant to paragraph (1) of this subsection.

h. If the board determines, pursuant to paragraph (2) of subsection g. 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.

i. (1) Within 90 days after the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall issue an order implementing the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill). If the board determines that rules and regulations are necessary for the implementation of P.L. , c. (C. ) (pending before the Legislature as this bill), notwithstanding the provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), to the contrary, the board may, immediately upon filing proper notice with the Office of Administrative Law, adopt rules and regulations necessary for the implementation of P.L. , c. (C. ) (pending before the Legislature as this bill).

(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 to read 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, thermal energy distribution 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. The provisions of this subsection shall not apply to the distribution of thermal energy pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

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. The provisions of this subsection shall not apply to the distribution of thermal energy pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

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 immediately.

STATEMENT

This bill would require the Board of Public Utilities (board) to establish a four-year pilot program to authorize gas public utilities to recover the cost of one or more thermal energy network projects, which would establish thermal energy network infrastructure in lieu of existing new natural gas infrastructure for new or existing developments, particularly in areas with aging or leaking natural gas pipeline or without existing natural gas infrastructure, through the utility rates charged to its ratepayers. The board would be authorized to locate a maximum of one project in each of the northern, central, southern, and coastal regions of the State. To participate in the pilot program, a utility would submit a thermal infrastructure plan with any information regarding the proposed project that the board deems necessary. While reviewing a plan, the board would consider: (1) the size, scope, and scale of each project; (2) the lifecycle cost of each project; (3) the expected benefits of the project; (4) the project’s financial impact on the utility’s ratepayers; (5) whether each project’s benefits justify the cost of the project; (6) the extent to which each project serves low- to moderate-income households, residents of overburdened communities, and other vulnerable populations; (7) the degree to which each project targets or mitigates highly inefficient buildings; (8) the potential opportunities for cost-effective retrofits or the inclusion of future potential for thermal waste heat system tie-ins; (9) the extent to which the utility has identified non-ratepayer sources of funding; (10) the degree to which each project targets or mitigates old or leaking natural gas infrastructure, or presents an alternative to potential natural gas expansion; and (11) any other criteria that the board deems appropriate.

In addition, a utility would be required to submit certain information on the operations of the pilot program to the board. The bill would require, no later than six months after the expiration of the pilot program, the board to, at a minimum, summarize this information in an annual report to be published on its Internet website and submit to the Governor and the Legislature. The bill would also require the board to determine, no later than six months after the expiration of the pilot program, whether or not to extend the pilot program, convert the pilot program to a permanent program, or recommend that New Jersey allow the distribution of geothermal energy as a regulated public utility service. If the board decides to convert the pilot program to a permanent 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.

Finally, the bill amends current law to provide that the term “public utility” is to include an entity that owns, operates, manages, and controls thermal energy distribution within the State, and to provide exceptions to certain statutory provisions that prohibit the board from regulating the sale of thermal energy.