Bill Text: NJ S877 | 2024-2025 | Regular Session | Amended
Bill Title: Exempts municipal electric utilities from regulation by BPU in certain circumstances.
Sponsorship: Moderate Partisan Bill (Republican 7-1)
Status: (Passed) 2026-01-20 - Approved P.L.2025, c.288. [S877 Detail]
Download: New_Jersey-2024-S877-Amended.html
SENATE, No. 877
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator ANTHONY M. BUCCO
District 25 (Morris and Passaic)
Senator JOSEPH PENNACCHIO
District 26 (Morris and Passaic)
Co-Sponsored by:
Senators Holzapfel and Schepisi
SYNOPSIS
Exempts municipal electric utilities from regulation by BPU in certain circumstances.
CURRENT VERSION OF TEXT
As reported by the Senate Economic Growth Committee on December 11, 2025, with amendments.
An Act concerning the regulation of municipal electric utilities and amending R.S.40:62-24 1[and P.L.1983, c.78]1.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.40:62-24 is amended to read as follows:
40:62-24. 1a.1 Every municipality 1[in]1 supplying [electricity,] 1electricity,1 gas, steam, or other 1[product, except for electricity,] products1 beyond its corporate limits is hereby declared to be a public utility. 1[The] Except as otherwise provided in subsection c. of this section, the1 Board of Public Utilities shall have the same supervision and regulation of, and jurisdiction and control over 1[such] , every1 municipality 1[in respect to its acts in]1 supplying [electricity,] 1electricity,1 gas, steam, or other 1[product, except for electricity,] products1 beyond its corporate limits, and of and over the property, property rights, equipment, facilities, and franchises used in supplying [electricity,] 1electricity,1 gas, steam, or other 1[product, except for electricity,] products1 beyond its corporate limits as over other public utilities. Every such municipality shall be subject as to its service, accounts, property rights, equipment, franchises, extensions, reports, issuance of bonds or other indebtedness maturing in more than [1] one year from the date thereof, to the jurisdiction of the Board of Public Utilities to the same extent as other public utilities.
1[Every] b. Except as otherwise provided in subsection c. of this section, every1 municipality supplying [electricity,] 1electricity,1 gas, steam, or other 1[product, except for electricity,] products1 beyond its corporate limits shall have the rates for these utilities subject to the jurisdiction of the Board of Public Utilities. 1[The board in] In1 regulating these rates 1, the board1 shall provide for a rate structure 1[which] that1 allows the municipality, within the limits of any covenants made with bondholders pursuant to law, to:
1[a. Recoup] (1) recoup1 all costs of operation, including 1,1 but not limited to 1,1 the costs of raw materials, administration, equipment, buildings, property, maintenance, taxes, debt service, fees, and offsetting any budget deficit occurring in the immediately preceding fiscal year; 1and1
1[b. Establish] (2) establish1 a surplus sufficient to provide for the reasonable anticipation of contingencies which may affect the operation of the utility and for an amount which may be transferred from the accounts of the municipal utility and included in the local budget pursuant to section 5 of [this amendatory and supplementary act] P.L.1983, c.111 (C.40A:4-35.1).
1c. (1) Notwithstanding any law, rule, regulation, or order to the contrary, a municipality providing electric utility service beyond its corporate limits pursuant to the provisions of Article 5 of Chapter 62 of Subtitle 3 of Title 40 of the Revised Statutes shall be exempt from the jurisdiction, regulation, and control of the Board of Public Utilities, with respect to the rates charged to the municipality's customers for electric utility service, provided that the municipality charges the same rate to its customers residing within and outside of the municipality's corporate limits. Any increase in rates shall be authorized by municipal ordinance. However, prior to effectuating an increase in rates, the governing body of the municipality shall hold a public hearing at which customers, including those customers who reside outside the municipality's corporate limits, shall have an opportunity to offer comments to be considered by the municipality prior to effectuating the rate increase. At least 20 days prior to the date of a public hearing to consider a proposed rate increase, the municipality shall transmit notice of the proposed rate increase to the clerk of every municipality in which the municipality provides electric utility service and to the clerk of the board of county commissioners of every county in which the municipality provides electric utility service.
(2) Nothing in this subsection shall be construed to exempt any municipality that provides electric utility service beyond its corporate limits from the jurisdiction, regulation, and control of the Board of Public Utilities with respect to electric utility service and reliability.
(3) Nothing in this subsection shall be construed to prevent a gas public utility that provides gas public utility service to the area in which a municipality provides electric utility service from offering energy efficiency programs concerning electricity usage to a customer located within the municipality's electric utility service area.
(4) Incentives, rebates, and financing options related to energy efficiency programs concerning electricity usage, which programs are offered by a gas public utility that provides gas public utility service to the area in which a municipality provides electric utility service, shall not be calculated as part of the municipality's rate charged for electric utility service when determining, for the purposes of paragraph (1) of this subsection, whether a municipality that provides electric utility service beyond its corporate limits charges the same rates to customers residing within and outside of the municipality's corporate limits.
d. The rate charged to a customer for electric utility service by a municipality that provides electric utility service beyond its corporate limits, which rate had been subject to the jurisdiction, regulation, and control of the Board of Public Utilities prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall continue to be subject to the restrictions on transfer of utility surplus established pursuant to section 5 of P.L. 1983, c.111 (C.40A:4-35.1).1
(cf: P.L.1983, c.111, s.2)
1[2. Section 1 of P.L.1983, c.78 (C.48:2-13.1) is amended to read as follows:
1. Notwithstanding the provisions of any other law, rule, or regulation to the contrary, with respect to a rural, electric cooperative which is exclusively owned and controlled by the consumers it serves or a municipal electric utility, the Board of Public Utilities shall not exercise any jurisdiction or control over the rates, charges, or operation of the cooperative or municipal electric utility, nor shall the approval of the board be required to authorize or validate any mortgage or encumbrance of real property of or the issuance or execution of any evidence of indebtedness by the cooperative or municipal electric utility, except that the board shall retain its jurisdiction to determine disputes concerning the territory served or to be served by an electric cooperative or municipal electric utility.
(cf: P.L.1983, c.78, s.1)]1
1[3.] 2.1 This act shall take effect on the first day of the third month following the date of enactment.
