New Credit for Commercial and Industrial Utility Customers

Governor Christie recently signed L. 2011, c. 216 authorizing a credit for commercial or industrial ratepayers against the societal benefits charge (“SBC”) imposed by N.J.S.A. 48:3-60 and collected as a non-bypassable charge by the electric and gas public utilities. Expenditures for energy efficient products and services in 2012 will be eligible for the credit in January 2013. A credit against the SBC may result in substantial savings for commercial and industrial ratepayers. The SBC is a charge incorporated into the electric and gas utility bills of customers throughout the State. The Board of Public Utilities (“BPU”) determines the SBC, which was intended to offset the cost of nuclear power plant decommissioning; energy-related social programs; manufactured gas plant remediation; energy-related consumer education programs; as well as energy efficiency and renewable energy programs. The SBC is a usage-based charge and so customers that use the most electricity and gas bear the greatest burden for the SBC. This new credit may provide some reprieve for those ratepayers. The credit will be available on or after January 1, 2013 for the purchase and installation of energy efficiency products or services in 2012 that would be eligible for incentives under the clean energy programs funded through the SBC pursuant to N.J.S.A. 48:3-60a(3). The authorized credit shall be equal to one half of the cost incurred by the commercial or industrial ratepayer for the purchase and installation of such energy efficiency products or services during the preceding calendar year. The amount of credit allowed in any calendar year will be determined by the BPU, but shall not exceed 100% of the commercial or industrial ratepayer’s liability for the SBC in the calendar year. When the amount of the credit authorized by this legislation exceeds the ratepayer’s SBC obligation for the next calendar year, the credit may be carried forward, if necessary, for a maximum of 10 calendar years following the initial year in which the credit was first applied.   It should be noted that the credit is intended to counteract the ratepayer’s liability for the SBC, pursuant to N.J.S.A. 48:3-60, which includes all intended uses of the SBC, not just the clean energy programs administered by the State. On the other hand, only the purchase and installation of energy efficiency products or services that would be eligible for incentives under the clean energy programs funded through the SBC pursuant to N.J.S.A. 48:3-60a(3) are eligible for the credit. Therefore, the statutory language suggests that the purchase of energy efficient products may be used as a credit against a commercial or industrial ratepayer’s entire SBC obligation, including the portions of the SBC intended for nuclear decommissioning or manufactured gas plant remediation. For credits beginning January 1, 2013, the BPU will look to the cost incurred by commercial and industrial ratepayers in 2012. The BPU has determined the energy efficiency products or services eligible for incentives under the clean energy programs funded through the SBC pursuant to N.J.S.A. 48:3-60a(3) by Order dated December 20, 2011 in Docket Nos. EO07030203 & EO11100631V and available here. In recent years, the BPU has revised its approved programs throughout the calendar year. If that practice of revising programs continues in 2012, the revisions may impact commercial and industrial ratepayers’ eligibility for the credit and require guidance from the BPU. The legislation also imposes an obligation on the electric and gas public utilities serving the commercial and industrial ratepayers. Upon request from the ratepayer, such utilities will be required to disclose in writing the amount of SBC collected pursuant to N.J.S.A. 48:3-60 by the utility from the requesting commercial or industrial ratepayer. The written disclosure shall cover each calendar year specified in the request from the ratepayer. This portion of the legislation became effective immediately.