Requires BPU to determine and consider lowest reasonable return on equity before approving electric, gas, and water public utility base rate cases.

A1208

ASSEMBLY, No. 1208

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman ALEXANDER "AVI" SCHNALL

District 30 (Monmouth and Ocean)

Assemblywoman ROSAURA "ROSY" BAGOLIE

District 27 (Essex and Passaic)

Assemblywoman ELIANA PINTOR MARIN

District 29 (Essex and Hudson)

Co-Sponsored by:

Assemblywomen Rowan and Simmons

SYNOPSIS

���� Requires BPU to determine and consider lowest
reasonable return on equity before approving electric, gas, and water public
utility base rate cases.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

concerning
the
approval process for electric, gas, and water public utility rate increases
and
supplementing Title 48 of the Revised Statutes.

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

���� 1.��� a.� As used in this
section:

���� �Board� means the Board of
Public Utilities.

���� �Electric public utility�
means a public utility, as that term is defined in R.S.48:2-13, that transmits
and distributes electricity to end users within the State.

���� �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.

���� �Return on equity� means the
return on the equity portion of the rate base that electric public utilities,
gas public utilities, or water public utilities are authorized to collect as
part of a rate charged to ratepayers.

���� �Water public utility� means a
public utility, as that term is defined in R.S.48:2-13, that transports and
provides water to end users within the State.

���� b.��� In determining just and
reasonable rates for any electric public utility, any gas public utility, or
any water public utility pursuant to R.S.48:2-21, R.S.48:2-21.1, or section 31
of P.L.1962, c.198 (C.48:2-21.2), the board shall determine and consider the
lowest reasonable return on equity as a factor in determining if an increase,
change, or alteration to any existing rates, charges, or schedules thereof is
just and reasonable.

���� c.���� To determine the lowest
reasonable return on equity pursuant to subsection b. of this section, the
board shall develop or adopt and apply analytic models that reflect, at a
minimum, State, federal, and industry standards for determining a fair and
reasonable authorized return on equity for electric public utilities, gas
public utilities, and water public utilities.

���� d.��� The board shall adopt,
pursuant to the �Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1 et
seq.), rules and regulations as may be necessary for the implementation of this
act.

���� 2.��� This act shall take
effect on the first day of the sixth month next following enactment and shall
apply to petitions submitted to the Board of Public Utilities pursuant to
R.S.48:2-21, R.S.48:2-21.1, or section 31 of P.L.1962, c.198 (C.48:2-21.2) on
or after the effective date.� The Board of Public Utilities may take any
anticipatory administrative action in advance as shall be necessary for the
implementation of this act.

STATEMENT

���� This bill requires the Board
of Public Utilities (board) to determine and consider the lowest reasonable
return on equity (ROE) in determining whether an electric public utility�s, gas
public utility�s, or water public utility�s rate increase proposed as part of a
base rate case is just and reasonable.� To determine the lowest reasonable ROE,
the board is required to develop or adopt and apply an analytic model that
reflects, at a minimum, State, federal, and industry standards for determining
a fair and reasonable authorized ROE for electric public utilities, gas public
utilities, and water public utilities.

���� Under current law, the board
may approve a petition by an electric public utility, a gas public utility, or
a water public utility to increase, change, or alter any existing public
utility rates upon a determination that the increase, change, or alteration is
just and reasonable.� When determining the justness and reasonableness of a
requested rate adjustment, the board is to consider:� (1) the public utility�s
property valuation (i.e., the rate base); (2) the public utility�s expenses;
and (3) the public utility�s rate of return, which includes the ROE.