S1673 2R

An Act concerning electric transmission facilities and supplementing Title 48 of the Revised Statutes.

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

¹1. The Legislature finds and declares that:

a. The reliable operation of the electric transmission system is essential to the health, safety, and economic welfare of the residents of the State and to the State’s ongoing response to the electricity affordability emergency declared by the Governor;

b. ²The regional coordination of electric transmission facilities, through entities approved by the Federal Energy Regulatory Commission (FERC) to serve as regional transmission organizations, independent system operators, or functionally-similar entities, promotes system reliability;

c.² Membership in ²[an RTO, as defined in section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), for electric transmission facilities placed in service on or after January 1, 2027,] such entities² is necessary to provide regulatory certainty for transmission planning, protect the State’s investment in regional transmission infrastructure, and ensure that changes in the ownership or business strategy of any individual transmission owner do not disrupt the reliable operation of the State’s electric transmission system; and

²[c.] d.² It is therefore in the public interest of the State to require ²[that]² each electric transmission facility located in New Jersey ²[and placed in service on or after January 1, 2027 is] to be² owned and operated by a transmission owner that ²is a member of, and² has transferred operational control of those facilities to ²,² an entity approved by ²[the Federal Energy Regulatory Commission] FERC² to serve as a regional transmission organization, independent system operator, or functionally-similar entity.¹

¹[1.] 2.¹ ²a.² As used in ²[P.L. , c. (C. ) (pending before the Legislature as this bill)] this section²:

¹[“Affiliate” means any individual or entity that directly or indirectly controls, is under common control with, or is controlled by a public utility.

“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.]¹

“Electric transmission facility” means an interconnected group of electric transmission lines and associated equipment for moving or transferring electric energy in bulk between points of supply and points at which it is transformed for delivery over the distribution system lines to consumers or is delivered to other electric systems.

¹[“Rate pancaking” means the practice of multiple transmission providers charging consumers multiple, duplicative transmission charges for electricity deliveries crossing multiple transmission systems.

“Transmission entity”] “RTO”¹ means an entity approved by the Federal Energy Regulatory Commission to serve as a regional transmission organization, independent system operator, or ¹[functionally similar] functionally-similar¹ entity.

“Transmission owner” means the owner or operator of an electric transmission facility. ¹[“Transmission owner” includes, but is not limited to, an electric public utility.

“User” means any entity or affiliate of that entity that buys or sells electric energy in the transmission entity’s region or in a neighboring region.]¹

²b. Notwithstanding any law, rule, regulation, or order to the contrary, a transmission owner located in this State on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be a member of, and transfer control of any electric transmission facilities that it owns or operates to, an RTO.

c. The Board of Public Utilities may 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 to implement this section.²

¹[2.] ²[3.¹a. Notwithstanding any law, rule, regulation, or order to the contrary, ¹[no] but subject to subsections b., c., and d. of this section, any¹ transmission owner ¹[shall own or control an electric transmission facility]¹ located in this State on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) ¹[unless that transmission owner is] shall be¹ a member of, and ¹[transfers] transfer operational¹ control of ¹[those] any¹ electric transmission facilities ¹it owns or operates that are located in New Jersey and placed in service on or after January 1, 2027¹ to, ¹[one or more transmission entities that are operational and meet the specifications outlined in subsection b. of this section.

b. A transmission owner located in this State shall be in compliance with this section if each transmission entity of which the transmission owner is a member meets all of the following specifications:

(1) the transmission entity is approved by the Federal Energy Regulatory Commission;

(2) the transmission entity separates control of electric transmission facilities from control of electric generation facilities;

(3) the transmission entity implements, to the extent reasonably possible, policies and procedures designed to minimize rate pancaking within the State;

(4) the transmission entity improves service reliability within the State;

(5) the transmission entity achieves the objectives of an open and competitive electric generation marketplace, including the elimination of barriers to market entry and the preclusion of control of bottleneck electric transmission facilities in the provision of electric retail choice;

(6) the transmission entity is of sufficient scope or otherwise operates to substantially increase economical supply options for consumers;

(7) the governance structure or control of the transmission entity is independent of the users of the electric transmission facilities, and no member of the transmission entity’s board of directors has an affiliation with a user during the member’s tenure on the board, such as to unduly affect the transmission entity’s performance;

(8) the transmission entity operates under policies that promote positive performance designed to satisfy the electricity requirements of consumers; and

(9) the transmission entity is capable of maintaining real-time reliability of the electric transmission system, ensuring comparable and non-discriminatory transmission access and necessary services, minimizing system congestion, and further addressing real or potential transmission constraints] an RTO.

b. A transmission owner shall:

(1) not be required to transfer operational control of an electric transmission facility placed in service prior to January 1, 2027 to an RTO;

(2) have the right to voluntarily include any electric transmission facility constructed prior to January 1, 2027 in an RTO; and

(3) shall not be prohibited by P.L. , c. (C. ) (pending before the Legislature as this bill) from withdrawing any electric transmission facility constructed prior to January 1, 2027 from an RTO, if federal law otherwise permits the withdrawal.

c. This section shall not: impact transmission rates, including adders, approved by the Federal Energy Regulatory Commission with respect to electric transmission facilities placed in service in this State prior to January 1, 2027; or be the basis for any modification sought to any rate, charge, or incentive applicable to such facilities. Nothing in P.L. , c. (C. ) (pending before the Legislature as this bill) shall be construed to limit the independent statutory authority of the Division of Rate Counsel pursuant to sections 46 through 55 of P.L.2005, c.155 (C.52:27EE-46 through C.52:27EE-55) with respect to any proceeding or filing not premised on P.L. , c. (C. ) (pending before the Legislature as this bill).

d. This section shall not apply to any electric transmission facility, or project to construct an electric transmission facility, commenced before or after January 1, 2027 that is cancelled and never placed in service.

e. Nothing in this section shall govern or operate as a condition upon the ownership, operation, or control of any electric transmission facility placed in service in this State before January 1, 2027. Nothing in this section shall require any transmission owner to divest, transfer, or relinquish any ownership interest, contractual right, or operational arrangement in existence on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill)¹.]²

¹[3.] ²[4.¹ The Board of Public Utilities may 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 P.L. , c. (C. ) (pending before the Legislature as this bill).]²

¹[4.] ²[5.¹] 3.² This act shall take effect ¹[immediately] on January 1, 2027¹.