S1818

An Act concerning electricpublic utility profits, designated as the Electric Public Utility Fair Profit Act,and supplementing Title 48 of the Revised Statutes.

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

1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):

“Bill credits” means credits issued to customers to be applied to future utility statements.

“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.

“Excess profit” means the amount of actual revenues collected by an electricpublic utility during a reporting period that exceeds the utility’s total revenue requirement approved by the board for the reporting period.

“Reporting period” means the 12-month period prescribed by the board for the purpose of an electric public utility’s compliance with P.L. , c. (C. ) (pending before the Legislature as this bill).

“Total revenue requirement” means the total amount of revenue that an electric public utility is approved to recover through utility rates during a reporting period, as approved by the board in the utility’s most recent base rate case, and including any additional amounts of revenue that the board has approved the electric public utility to recover through an alternative rate recovery mechanism during the reporting period, including, but not limited to, any charge approved pursuant to an infrastructure investment program.

“Utility assistance program” means any State program that offers financial assistance for utility services to residential customers or otherwise establishes utility protections for residential customers.

2. a. No later than three months following the completion of its reporting period, an electric public utility shall perform an annual review of the actual revenues collected by the utility during the reporting period and the total revenue requirement approved by the board for that reporting period, which review shall be used to determine the utility’s excess profits, if any, for the reporting period.

b. If an electric public utility collected excess profits during the previous reporting period that exceeds the total revenue requirement by more than 0.5 percent, the electric public utility shall redistribute its excess profits to customers as follows:

(1) for earnings above the total revenue requirement and up to one percent above the total revenue requirement, 50 percent of the excess profits shall be refunded to customers pursuant to subsection c. of this section and 50 percent shall be retained by the electric public utility;

(2) for earnings between one percent and two percent above the total revenue requirement, 75 percent of the excess profits shall be refunded to customers pursuant to subsection c. of this section and 25 percent shall be retained by the electric public utility; and

(3) for earnings exceeding two percent of the total revenue requirement, 100 percent of the excess profits shall be refunded to customers pursuant to subsection c. of this section.

Notwithstanding the forgoing, the board shall have the authority to modify the requirements for redistribution of excess profits to customers and the percentages of the redistribution of excess profits pursuant to this subsection.

c. If an electricpublic utility collected excess profits during the previous reporting period, the electric public utility shall redistribute its excess profits to customers through a refund mechanism to be reviewed and approved by the board, including:

(1) 50 percent of the percentage of excess profits required to be redistributed to customers pursuant to subsection b. of this section shall be provided asbill credits applied to future utility bills and as

direct payments for customers with unpaid balances; and

(2) the remaining 50 percent of the percentage of excess profits required to be redistributed to customers pursuant to subsection b. of this section shall be provided as payments for customers who are enrolled in a utility assistance program.

d. An electric public utility shall redistribute its excess profits to customers, pursuant to subsections b. and c. of this section, in such intervals and forms as may be prescribed by the board. An electric public utility shall have 45 days to comply with the board’s order to redistribute its excess profits. Any excess profits redistributed to customers pursuant to this section shall not be recoverable from customers of the utility.

e. The board shall require an electric public utility to be in compliance with this section before approving any future rate increase.

3. a. Within five months following the completion of its reporting period, an electric public utility shall file an annual financial report with the board in a manner and form to be determined by the board. The annual report shall include, at a minimum, information documenting the actual revenues collected by the utility during the reporting period, the total revenue requirement approved by the board for the reporting period, and if excess profits were collected, any credits or payments issued to customers pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. An electric public utility that fails to redistribute excess profits to customers within 45 days of being ordered to do so by the board, as required pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), or that knowingly misrepresents any information contained in the financial report submitted pursuant to this section, shall be subject to a fine in an amount determined by the board, except not to exceed the lesser of five percent of the electric public utility’s total revenue requirement or 105 percent of the excess profits for the reporting period. The civil penalty provided for in this section shall be recovered in an administrative proceeding held pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.). Any monies recovered pursuant to this penalty shall be allocated to supplement existing funding for utility assistance programs administered by the board. Any penalty imposed pursuant to this section shall not be recoverable from customers of the utility.

4. 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.

5. This act shall take effect immediately, except that sections 2 and 3 of this act shall remain inoperative until the board adopts rules and regulations pursuant to section 4 of this act.

STATEMENT

This bill, which is designated as the “Electric Public Utility Fair Profit Act,” requires each electric public utility to annually review its actual revenues collected during the year and its total revenue requirement to determine if the electric public utility collected excess profits during that year.

After any year in which an electric public utility collected excess profits that exceed the total revenue requirement by more than 0.5 percent, the bill requires the electric public utility to redistribute its excess profits to customers as follows:

(1) for earnings above the total revenue requirement and up to one percent above the total revenue requirement, 50 percent of the excess profits is to be refunded to the customers and 50 percent is to be retained by the electric public utility;

(2) for earnings between one percent and two percent above the total revenue requirement, 75 percent of the excess profits is to be refunded to the customers and 25 percent is to be retained by the electric public utility; and

(3) for earnings exceeding two percent of the total revenue requirement, 100 percent of the excess profits is to be refunded to the customers.

The board has the authority to modify the requirements for redistribution of excess profits to customers and the percentages of the redistribution of excess profits.

The excess profits are to be redistributed to customers through a refund mechanism subject to board approval, including:

(1) 50 percent of the percentage of excess profits required to be redistributed to customers is to be provided as bill credits applied to future utility bills and as direct payments for customers with unpaid balances; and

(2) the remaining 50 percent of the percentage of excess profits required to be redistributed to customers is to be provided as payments for customers who are enrolled in a utility assistance program.

The bill provides that an electric public utility has 45 days to comply with the board’s order to redistribute its excess profits. The excess profits redistributed by an electric public utility are not recoverable from customers of the utility.

The board is to require an electric public utility to be in compliance with this bill before approving any future rate increases.

Electric public utilities are required to file an annual financial report with the board in a manner and form to be determined by the board. At a minimum, the report is to include information documenting the electric public utility’s actual revenues collected, the total revenue requirement, and if excess profits were collected, any bill credits or direct payments issued to customers.

An electric public utility that fails to redistribute excess profits to customers within 45 days of being ordered to do so by the board, or that knowingly misrepresents any information contained in the financial report, will be subject to a fine in an amount determined by the board, not to exceed the lesser of five percent of the electric public utility’s total revenue requirement or 105 percent of the electric public utility’s excess profits. This civil penalty is to be recovered in an administrative proceeding and will be allocated to supplement existing funding for utility assistance programs. Electric public utilities are prohibited from recovering any penalty from customers.

The bill defines “excess profit” as the amount of actual revenues collected by an electric public utility during a reporting period that exceeds the utility’s total revenue requirement approved by the board for the reporting period. “Total revenue requirement” means the total amount of revenue that an electric public utility is approved to recover through utility rates during a reporting period, as approved by the board in the utility’s most recent base rate case, and including any additional amounts of revenue that the board has approved the electric public utility to recover through an alternative rate recovery mechanism during the reporting period, including, but not limited to, any charge approved pursuant to an infrastructure investment program.