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S684 1R
[First Reprint]
SENATE, No. 684
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Senator BOB SMITH
District 17 (Middlesex and Somerset)
Senator JOHN F. MCKEON
District 27 (Essex and Passaic)
SYNOPSIS
���� Establishes thermal energy network pilot program for
gas public utilities.
CURRENT VERSION OF TEXT
���� As reported by the Senate Environment and Energy
Committee on February 12, 2026, with amendments.
��
An Act
establishing a
1
[
geothermal
]
thermal
1
energy
1
network
1
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
1
[
a renewable
]
an
1
energy source derived from heat stored within the earth.� �Geothermal
energy� includes networked geothermal energy and deep geothermal energy.�
����� �
1
[
Geothermal
]
Thermal
1
energy infrastructure� means
1
[
utility-scale
]
thermal extraction and
1
distribution infrastructure that supplies
1
space
1
heating or cooling
1
,water heating, or refrigeration
1
from geothermal energy sources
1
,or other sources of renewable thermal energy, such
as redistributed thermal waste heat or surface or underground water,
wastewater, or other heat sources
1
.�
�����
1
�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.
1
����� �
1
[
Geothermal
]
Thermal
1
energy
1
network
1
project� or �project� means a project undertaken by
a gas public utility to
1
[
replace
]
establish thermal energy network infrastructure
in lieu of new or existing natural gas infrastructure for new or existing
developments, particularly in areas with
1
aging or leaking natural gas pipelines
1
[
with geothermal energy
]
or without existing natural gas
1
infrastructure.�
����� �
1
[
Infrastructure
]
Thermal infrastructure
1
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
1
[
three-year
]
four-year
1
pilot program to authorize
1
[
a
]
1
gas public
1
[
utility
]
utilities
1
to recover the cost of
1
[
a geothermal
]
one or more thermal
1
energy
1
[
project
]
network projects
1
through the utility rates charged to the utility�s
ratepayers.�
1
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.
1
� The purpose of the pilot program shall be to
1
[
promote the adoption
]
demonstrate the benefits and cost of thermal
energy networks as a means for supplying space or water conditioning
1
of
1
[
geothermal
]
thermal
1
energy infrastructure among gas public utilities.�
1
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.
1
����� c.�� To
participate in the pilot program,
1
[
a
]
each
1
gas public utility shall submit to the board
1
[
an
]
, 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
1
infrastructure plan that shall include any
information regarding the
1
utility�s proposed
1
project
1
or projects
1
that the board deems necessary for participation in
the pilot program.�
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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.
1
����� d.�� While
reviewing a utility�s
1
thermal
1
infrastructure plan, the board shall consider:�
����� (1)
�the size, scope, and scale of the
1
proposed
1
project
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or projects
1
;
����� (2)
�the
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lifecycle
1
cost of the
1
proposed
1
project
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or projects
1
;
����� (3)
�the expected benefits of the
1
proposed
1
project
1
or projects
1
, which shall include, but not be limited to
1
[
,
]
: (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)
1
the social value of greenhouse gas emissions
reductions for the utility�s customers and for residents across the State;
����� (4)
�the
1
proposed
1
project�s
1
or projects�
1
financial impact on the utility�s ratepayers;
����� (5)
�whether the
1
proposed
1
project�s
1
or projects�
1
benefits, identified pursuant to paragraph (3) of
this subsection, justify the cost of the project
1
or projects
1
, determined pursuant to paragraph (2) of this
subsection;
1
[
and
]
1
����� (6)
�
1
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)
1
�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
1
projects approved as part of
1
the pilot program.�
����� f.���
1
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
(1)
1
[
Within one year of the effective date of
P.L. , c.
(C. ) (pending before the
Legislature as this bill), and each year thereafter until
]
No later than six months after
1
the expiration of the pilot program, the board
shall
1
publish on its Internet website and
1
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
1
[
operations
]
implementation and results
1
of the pilot program.� At a minimum, the report
shall summarize the information provided by
1
[
a
]
the
1
gas public
1
[
utility
]
utilities
1
to the board pursuant to subsection e. of this
section.�
����� (2)�
1
[
In its third and final report, issued pursuant to
paragraph (1) of this subsection,
]
No later than six months after the expiration of
the pilot program,
1
the board shall also determine whether
1
or not
1
to
1
[
expand
]
extend
1
the pilot program
1
, convert the pilot program
1
to a permanent program
1
,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
1
.�
�����
1
[
(3)��������� The board shall publish the findings of
its reports, written pursuant to this subsection, on its Internet website.�
����� g.
]
h.
1
������� If the board determines
1
[
in its third and final report
]
1
, pursuant to paragraph (2) of subsection
1
[
f.
]
g.
1
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.�
�����
1
[
h.
]
i.
1
���� (1) Within
1
[
60
]
90
1
days after the date of enactment of
1
[
this act
]
P.L.��� , c.���� (C.������� ) (pending before
the Legislature as this bill)
1
,
1
[
and
]
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),
1
notwithstanding the provisions of the
�Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1 et seq.), to the
contrary, the board
1
[
shall
]
may
1
, immediately upon filing proper notice with the Office of Administrative
Law, adopt rules and regulations necessary for the implementation of
1
[
this section
]
P.L.��� , c.���� (C.������� ) (pending before
the Legislature as this bill)
1
.�
����� (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,
1
[
geothermal
]
thermal
1
energy
1
distribution
1
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.�
1
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).
1
����� 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.�
1
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).
1
����� 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
1
[
on the first day of the sixth month after enactment,
except that a gas public utility and the Board of Public Utilities may take any
anticipatory action in advance thereof as may be necessary to implement the
provisions of this act.� The act shall expire 30 days after the submission of
the board�s third and final report pursuant to subsection f. of section 1 of
P.L. , c.
(C. ) (pending before the
Legislature as this bill), provided that the board does not determine that the
pilot program shall become a permanent program in said report, pursuant to
paragraph (2) of subsection f. of section 1 of P.L. ,
c. (C. )
(pending before the Legislature as this bill)
]
immediately
1
.