Dive Brief:
- New Jersey Gov. Mikie Sherrill, D, signed legislation Tuesday that aims to make electricity more affordable, including a bill that requires state regulatory review of “supplemental” transmission projects.
- Another bill that was signed into law requires utilities to be PJM Interconnection members in an effort to strip them of an extra 0.5% return on equity they are awarded for voluntarily joining the grid operator. A third bill aims to insulate existing customers from potential bill increases by creating a new ratepayer class and rate structure for data centers.
- The new laws are the latest efforts by states to try to keep consumers’ electric bills as low as possible — a major issue during the governor’s race in New Jersey last year. "I made a commitment to rein in energy costs, and today we are delivering on that commitment," Sherrill said in a press release. "For too long, New Jersey families have paid the price for poor oversight, outdated policies, and rising demand on our electric grid by unchecked actors.”
Dive Insight:
In addition to signing the bills, Sherrill said New Jersey ratepayers will receive a $25 credit through the Residential Universal Bill Credit program, and low- to moderate-income families will get an additional $150 credit through the Residential Energy Assistance Payment program.
Utilities affected by the new laws and bill credits include Consolidated Edison’s Rockland Electric, Exelon’s Atlantic City Electric, FirstEnergy’s Jersey Central Power & Light and Public Service Enterprise Group’s Public Service Electric and Gas.
PSE&G understands its customers are concerned about the recent jump in electricity costs, according to William Smith, a utility spokesman.
“As we continue to review this legislation, we remain committed to working constructively with policymakers to ensure New Jersey maintains both affordable energy and the reliable electric and gas infrastructure customers depend on every day,” Smith said in an email to Utility Dive.
However, some of the just-signed legislation includes provisions that could undermine the stable investment framework that has supported reliability improvements in New Jersey, he said.
Increased transmission oversight
One of the bills Sherrill signed increases state oversight of supplementary transmission projects — a class of projects that critics say receives little regulatory scrutiny.
Supplementary projects, also called local projects, are typically designed to replace aging infrastructure and are planned by utilities outside of PJM’s regional transmission planning process. As a result, they receive relatively little regulatory scrutiny.
Supplemental projects in New Jersey totaled $14.7 billion from 2008 to 2025, making up 79% of total ratepayer transmission expenses, according to Sherrill.
The New Jersey law aims to fill that regulatory gap by requiring transmission owners to obtain a certificate of public convenience and necessity for the project from the BPU. The agency will make a decision on an application within 180 days, or, if the project includes advanced transmission technologies, within 120 days.
Mandatory RTO participation
Another of the laws aims to trim the amount of money utilities earn on their transmission assets. In an effort to boost transmission development, the Federal Energy Regulatory Commission allows transmission owners to earn an extra 0.5% ROE for being a voluntary member of a regional transmission organization, like PJM.
States like California, Maryland and Ohio have passed laws requiring transmission owners to be an RTO member, making them ineligible for the extra ROE. Courts have upheld those laws.
By being required to be a PJM member, PSE&G, New Jersey’s largest electric utility, stands to lose about $40 million a year in net income and cash inflow, according to PSEG’s most recent annual report.
“This legislation now requires utilities to join PJM, making it essential that the market delivers reliable, affordable generation for customers,” PSE&G’s Smith said.
First-of-its-kind data center rules
The data center bill Sherrill signed requires New Jersey’s utilities to craft tariffs for data centers larger than 50 MW that include measures aimed at protecting ratepayers from possible costs related to serving the facilities. Data center owners, for example, must guarantee that they will pay for at least 85% of their requested service for at least 10 years.
Those and other requirements can be released if the data center owner commits to providing operational flexibility or to bringing additional energy and capacity online to meet its load, according to the legislation.
The law also requires the tariffs to include incentives for energy efficiency and for data centers to supply their own new clean energy and energy storage. They must also include rules for colocated power supplies.
Under a first-of-its-kind framework, data centers will be able to offset their capacity obligations by paying third parties to reduce demand elsewhere on the grid, such as through energy efficiency improvements, demand response enrollment, behind-the-meter energy storage and managed electrification, according to the bill.
