TRENTON, NJ — A new bill introduced in the New Jersey Legislature would eliminate the recovery of demand side management (DSM) program costs—such as energy efficiency and renewable energy initiatives—through the state’s societal benefits charge, a utility fee imposed on electric and gas customers.
The legislation proposes to amend Section 12 of the Electric Discount and Energy Competition Act (P.L.1999, c.23), repealing provisions that previously allowed utilities to recover the costs of board-approved DSM programs through this non-bypassable customer surcharge. It would also remove the business, commercial, and industrial components of the state’s clean energy program from the scope of state-provided business incentives requiring tax clearance.
What is New Jersey’s Societal Benefits Charge?
The Societal Benefits Charge (SBC) is a mandatory surcharge on New Jersey electric and gas utility bills, created to fund programs that benefit society. It ensures all utility customers contribute to initiatives promoting energy efficiency, renewable energy, low-income assistance, and other public benefits in a deregulated energy market.
What It Funds
The SBC supports:
- Clean Energy Programs: Initiatives for energy efficiency and renewable energy, like solar, wind, and combined heat and power projects.
- Low-Income Assistance: Programs providing utility bill relief and energy efficiency upgrades for low-income households.
- Universal Service Fund: Helps cover uncollectible bills and supports low-income customers.
- Environmental Efforts: Funds cleanup of gas plants and nuclear plant decommissioning.
- Consumer Education and Market Stability: Supports utility market stability and customer awareness.
- Other Social Programs: Additional public benefit initiatives.
How Much It Costs
The SBC varies by utility and customer type, with residential customers typically paying a few dollars monthly and large commercial or industrial users facing significantly higher costs. The charge is set annually by the New Jersey Board of Public Utilities.
Why It Exists
The SBC ensures funding for programs previously covered by utility rates before deregulation. It promotes renewable energy, supports equitable energy access, funds environmental cleanup, and maintains market stability, aligning with New Jersey’s energy and social goals.
SBC Credit Program
Commercial and industrial customers can apply for credits to offset their SBC payments by investing in energy efficiency projects. Credits cover half the project costs, up to 50% of their annual SBC contribution, and can be carried over for years.
Controversies
The SBC is debated for:
- Cost Impact: Businesses argue it raises operating costs, reducing competitiveness.
- Transparency: Some see it as a hidden fee for programs they may not support.
- Fund Management: Past diversions of funds for unrelated purposes have sparked concerns.
Under the bill, the societal benefits charge would still be used to fund legacy social programs, nuclear plant decommissioning, manufactured gas plant remediation, and consumer education. However, cost recovery for programs promoting energy efficiency, plug-in electric vehicle infrastructure, and Class I renewable energy—including solar, wind, and fuel cell projects—would be eliminated from this funding mechanism.
Impact on clean energy and regulatory oversight
Currently, the Board of Public Utilities (BPU) administers the clean energy program with funding from the societal benefits charge, using the money to support various environmental and efficiency improvements. The proposed legislation would cut off this funding stream, requiring utilities to seek alternative ratemaking methods or state appropriations if they wish to continue such programs.
Repealed sections include P.L.2011, c.126 (C.48:3-60.2) and P.L.2011, c.216 (C.48:3-60.3), which had reinforced DSM-related cost recovery through this charge.
The bill also modifies Section 13 of P.L.2007, c.340 to reflect the removal of societal benefits charge references as a cost recovery option, although utilities would still be permitted to offer DSM and Class I renewable programs subject to BPU approval.
The act would take effect immediately upon passage.
Key Points
- The bill eliminates recovery of demand side management costs through New Jersey’s societal benefits charge.
- Clean energy and energy efficiency programs would no longer be funded through utility customer surcharges.
- Utilities may continue offering these programs but must seek cost recovery through alternative methods.
If enacted, the measure would mark a major shift in how New Jersey funds its clean energy initiatives.