Bill Text: NJ S684 | 2026-2027 | Regular Session | Amended
Bill Title: Establishes thermal energy network pilot program for gas public utilities.
Sponsorship: Partisan Bill (Democrat 2)
Status: (Introduced) 2026-02-12 - Referred to Senate Budget and Appropriations Committee [S684 Detail]
Download: New_Jersey-2026-S684-Amended.html
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] thermal1 energy 1network1 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] an1 energy source derived from heat stored within the earth. "Geothermal energy" includes networked geothermal energy and deep geothermal energy.
"1[Geothermal] Thermal1 energy infrastructure" means 1[utility-scale] thermal extraction and1 distribution infrastructure that supplies 1space1 heating or cooling 1,water heating, or refrigeration1 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 sources1.
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] Thermal1 energy 1network1 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 with1 aging or leaking natural gas pipelines 1[with geothermal energy] or without existing natural gas1 infrastructure.
"1[Infrastructure] Thermal infrastructure1 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-year1 pilot program to authorize 1[a]1 gas public 1[utility] utilities1 to recover the cost of 1[a geothermal] one or more thermal1 energy 1[project] network projects1 through the utility rates charged to the utility's ratepayers. 1The 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 conditioning1 of 1[geothermal] thermal1 energy infrastructure among gas public utilities. 1The 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] each1 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 thermal1 infrastructure plan that shall include any information regarding the 1utility's proposed1 project 1or projects1 that the board deems necessary for participation in the pilot program. 1The 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 1thermal1 infrastructure plan, the board shall consider:
(1) the size, scope, and scale of the 1proposed1 project 1or projects1;
(2) the 1lifecycle1 cost of the 1proposed1 project 1or projects1;
(3) the expected benefits of the 1proposed1 project 1or projects1, 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 1proposed1 project's 1or projects'1 financial impact on the utility's ratepayers;
(5) whether the 1proposed1 project's 1or projects'1 benefits, identified pursuant to paragraph (3) of this subsection, justify the cost of the project 1or projects1, determined pursuant to paragraph (2) of this subsection; 1[and]1
(6) 1the 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 1projects approved as part of1 the pilot program.
f. 1No 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 after1 the expiration of the pilot program, the board shall 1publish on its Internet website and1 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 results1 of the pilot program. At a minimum, the report shall summarize the information provided by 1[a] the1 gas public 1[utility] utilities1 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 1or not1 to 1[expand] extend1 the pilot program 1, convert the pilot program1 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 subsection1.
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] 901 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] may1, 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 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] thermal1 energy 1distribution1 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. 1The 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. 1The 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)] immediately1.
