New Jersey Board of Public Utilities’ First Phase of Commissioned Study on Utility Reforms Identifies Key Solutions but Falls Short of Bold Action

The New Jersey Board of Public Utilities released the first phase of a commissioned study on potential pathways to modernize the state’s utility business model. Conducted by Energy and Environmental Economics Inc. (E3), the study explores modernization pathways that would reduce utility bills while achieving better outcomes for the grid, customers, and advancing New Jersey’s clean energy goals. The process was first launched under Governor Sherrill's first executive order after New Jersey experienced utility bill increases larger than any other state last year.

Among its key findings, the study identifies utility financing modernization and stronger oversight of utility spending as two of the most promising near-term pathways for reform. Modernizing utility financing would reduce utility profits made from major infrastructure investments and would enable more effective, cost-saving solutions like local solar and storage. Coupled with increased public scrutiny of utility spending, these reforms could deliver near-term savings for customers while laying the foundation for long-term cost stabilization and reductions.

While Phase 1 of the study identifies key opportunities for reform, Vote Solar is concerned that this study shies away from the ambitious action needed to address New Jersey’s affordability challenges. To lower bills by reducing excessive infrastructure spending and unreasonable utility profits, Vote Solar recommends implementing a competitive equity auction model, similar to what is being pursued in every state neighboring New Jersey. This model ensures utilities wanting to build more infrastructure receive a return on equity that is determined through a transparent auction process involving diverse investors, rather than closed door negotiations. This sets the stage for better deployment of cost-saving local solar and storage solutions. The New Jersey study names this model but undermines it by failing to capture its potential and its successful use by the U.S. Treasury and across diverse industries.

Vote Solar’s Mid-Atlantic Regulatory Director, Kartik Amarnath, issued the following statement:

“Right now, New Jersey’s utilities are posting record profits while communities are facing some of the highest energy bill increases nationwide. Governor Sherrill rightly described New Jersey’s electricity affordability crisis as a state of emergency. While this study puts a needed magnifying glass on a broken utility business model that prioritizes profits over communities, the study recommends more modest approaches when a more transformative vision is desperately needed.

New Jersey has a once-in-a-generation opportunity to fundamentally rethink how utilities earn profits and ensure their business decisions are aligned with affordability, reliability, and public interest. Every neighboring state is actively pursuing competitive equity auctions to fight utility bill increases that aren’t as bad as New Jersey’s have been. Yet, this report offers recommendations that emphasize gradualism over aspiration. Without a more ambitious vision, New Jersey risks falling behind its neighbors.

Customers are paying more on their energy bills but aren’t getting the service they deserve. During the historic heat wave and storms over the July 4th weekend, 20% of New Jersey lost power while utilities continue to earn returns that exceed some of the largest firms on Wall Street. When families are paying more for less reliable service, something is not working. It’s time to hold utilities accountable and put customers, not shareholder profits, at the center of New Jersey’s energy system.” 

Vote Solar | https://votesolar.org/