Bill Text: NJ S728 | 2026-2027 | Regular Session | Introduced
Bill Title: Requires BPU to determine and consider lowest reasonable return on equity before approving electric, gas, and water public utility base rate cases.
Sponsorship: Partisan Bill (Democrat 3)
Status: (Introduced) 2026-01-13 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S728 Detail]
Download: New_Jersey-2026-S728-Introduced.html
STATE OF NEW JERSEY
222nd LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Senator JOHN J. BURZICHELLI
District 3 (Cumberland, Gloucester and Salem)
Senator SHIRLEY K. TURNER
District 15 (Hunterdon and Mercer)
SYNOPSIS
Requires BPU to determine and consider lowest reasonable return on equity before approving electric, gas, and water public utility base rate cases.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning the approval process for electric, gas, and water public utility rate increases and supplementing Title 48 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. As used in this section:
"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.
"Gas public utility" means a public utility, as that term is defined in R.S.48:2-13, that distributes gas to end users within the State.
"Return on equity" means the return on the equity portion of the rate base that electric public utilities, gas public utilities, or water public utilities are authorized to collect as part of a rate charged to ratepayers.
"Water public utility" means a public utility, as that term is defined in R.S.48:2-13, that transports and provides water to end users within the State.
b. In determining just and reasonable rates for any electric public utility, any gas public utility, or any water public utility pursuant to R.S.48:2-21, R.S.48:2-21.1, or section 31 of P.L.1962, c.198 (C.48:2-21.2), the board shall determine and consider the lowest reasonable return on equity as a factor in determining if an increase, change, or alteration to any existing rates, charges, or schedules thereof is just and reasonable.
c. To determine the lowest reasonable return on equity pursuant to subsection b. of this section, the board shall develop or adopt and apply analytic models that reflect, at a minimum, State, federal, and industry standards for determining a fair and reasonable authorized return on equity for electric public utilities, gas public utilities, and water public utilities.
d. 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.
2. This act shall take
effect on the first day of the sixth month next following enactment and shall
apply to petitions submitted to the Board of Public Utilities pursuant to
R.S.48:2-21, R.S.48:2-21.1, or section 31 of P.L.1962, c.198 (C.48:2-21.2) on
or after the effective date. The Board of Public Utilities may take any
anticipatory administrative action in advance as shall be necessary for the
implementation of this act.
STATEMENT
This bill requires the Board of Public Utilities (board) to determine and consider the lowest reasonable return on equity (ROE) in determining whether an electric public utility's, gas public utility's, or water public utility's rate increase proposed as part of a base rate case is just and reasonable. To determine the lowest reasonable ROE, the board is required to develop or adopt and apply analytic models that reflect, at a minimum, State, federal, and industry standards for determining a fair and reasonable authorized ROE for electric public utilities, gas public utilities, and water public utilities.
Under current law, the board may approve a petition by an electric public utility, gas public utility, or water public utility to increase, change, or alter any existing utility rates upon a determination that the increase, change, or alteration is just and reasonable. When determining whether a requested rate adjustment is just and reasonable, the board considers: (1) the public utility's property valuation (i.e., the rate base); (2) the public utility's expenses; and (3) the public utility's rate of return, which includes the ROE.
