Bill Text: NJ A1462 | 2024-2025 | Regular Session | Introduced
Bill Title: Directs BPU to establish program concerning renewable natural gas; provides gas public utilities with customer rate recovery mechanism for costs associated with program.
Spectrum: Slight Partisan Bill (Democrat 6-2)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Telecommunications and Utilities Committee [A1462 Detail]
Download: New_Jersey-2024-A1462-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman ROBERT J. KARABINCHAK
District 18 (Middlesex)
Assemblyman LOUIS D. GREENWALD
District 6 (Burlington and Camden)
Assemblywoman NANCY F. MUNOZ
District 21 (Middlesex, Morris, Somerset and Union)
Co-Sponsored by:
Assemblywoman Swain, Assemblymen Spearman, Conaway and Assemblywoman Reynolds-Jackson
SYNOPSIS
Directs BPU to establish program concerning renewable natural gas; provides gas public utilities with customer rate recovery mechanism for costs associated with program.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning renewable natural gas 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. The Legislature finds and declares that:
(1) renewable natural gas can provide benefits to gas public utility customers and to the public;
(2) the development of renewable natural gas resources should be encouraged to support a smooth transition to a low carbon energy economy in New Jersey;
(3) the societal benefits that may be achieved through the development and use of renewable natural gas warrant the State's support for investment in renewable natural gas; and
(4) gas public utilities can reduce greenhouse gas emissions from the direct use of natural gas by procuring renewable natural gas and investing in renewable natural gas infrastructure.
b. The Legislature therefore determines that:
(1) regulatory guidelines should be established for the procurement of renewable natural gas and investments in renewable natural gas infrastructure in order to enable that procurement and investment while also protecting New Jersey ratepayers; and
(2) renewable natural gas should be included in the broader set of low carbon resources that may leverage the natural gas system to reduce greenhouse gas emissions.
2. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Biogas" means a mixture of carbon dioxide and hydrocarbons, primarily methane gas, released from the biological decomposition of organic materials.
"Board" means the Board of Public Utilities or any successor agency.
"Class I renewable energy" shall have the same meaning as provided in section 3 of P.L.1999, c.23 (C.48:3-51).
"Class II renewable energy" shall have the same meaning as provided in section 3 of P.L.1999, c.23 (C.48:3-51).
"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 this State.
"Qualified investment" means any capital investment in renewable natural gas infrastructure incurred by a gas public utility for the purpose of providing natural gas service under a renewable natural gas program pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
"Renewable natural gas" means any of the following products processed to meet pipeline quality standards or transportation fuel grade requirements: (1) biogas that is upgraded to meet natural gas pipeline quality standards such that it may blend with, or substitute for, geologic natural gas; (2) hydrogen gas derived from Class I renewable energy or Class II renewable energy; or (3) methane gas derived from any combination of biogas, hydrogen gas or carbon oxides derived from renewable energy sources, or waste carbon dioxide.
"Renewable natural gas infrastructure" means the equipment and facilities located in this State for the production, processing, pipeline interconnection, and distribution of renewable natural gas to natural gas customers in the State.
3. a. Notwithstanding any provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the board shall initiate a proceeding upon the filing of a petition by a gas public utility with the board for approval of a program for the procurement of renewable natural gas and investment in renewable natural gas infrastructure and an associated cost recovery mechanism, and the board shall adopt, after notice and opportunity for public comment and public hearing, a program for the procurement of renewable natural gas and investment in renewable natural gas infrastructure by a gas public utility.
b. A gas public utility that participates in the renewable natural gas program adopted by the board, pursuant to subsection a. of this section, may make qualified investments and procure renewable natural gas from third parties, including affiliates of the gas public utility.
c. The board shall adopt a ratemaking mechanism that ensures the recovery of and on all prudently incurred costs pursuant to subsection b. of this section. Under a ratemaking mechanism adopted by the board pursuant to this subsection:
(1) any qualified investment and operating cost approved by the board incurred pursuant to subsection b. of this section may be recovered from ratepayers by means of a periodic recovery mechanism established by the board; and
(2) any cost of procurement of renewable natural gas from a third party, including from an affiliate of the gas public utility, approved by the board incurred pursuant to subsection b. of this section may be recovered from ratepayers by means of a periodic recovery mechanism established by the board.
d. When a gas public utility makes a qualified investment pursuant to subsection b. of this section, the costs associated with the qualified investment shall include the cost of capital established by the board in the gas public utility's most recent rate case as well as other incremental costs associated with those qualified investments.
e. When a gas public utility procures renewable natural gas from a third party, the gas public utility shall purchase the renewable natural gas supply at prices and on terms consistent with market conditions in the market for renewable natural gas. A charge assessed to customers for the supply of renewable natural gas shall be regulated by the board and shall be based on the cost to the gas public utility of providing that supply, including the cost of renewable natural gas commodity and capacity, purchased at prices consistent with market conditions in the market for renewable natural gas, and related ancillary and administrative costs, as determined by the board.
4. No later than 180 days
after the enactment
of P.L. , c. (C. )
(pending before the Legislature as this bill), the board shall adopt rules and
regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.), necessary to implement the provisions of
P.L. , c. (C. ) (pending before the Legislature as this bill).
5. This act shall take effect immediately.
STATEMENT
This bill directs the Board of Public Utilities (BPU) to establish a renewable natural gas program to encourage gas public utilities (utilities) to procure renewable natural gas and invest in renewable natural gas infrastructure. As part of this program, the bill also requires the BPU to adopt a ratemaking mechanism to allow for the recovery of all costs prudently incurred by a utility under the program.
Specifically, the ratemaking mechanism would allow utilities to periodically recover the following costs from ratepayers, subject to approval by the BPU: (1) any capital investments in renewable natural gas infrastructure incurred by the utility for the purpose of providing renewable natural gas service under the program, including the cost of capital, as determined in the utility's most recent rate case, and any other incremental costs associated with these investments; (2) any operating costs incurred by the utility associated with the program; and (3) any costs of procuring renewable natural gas from a third party, including affiliates of the utility.
When a utility procures renewable natural gas from a third party, the bill requires the utility to purchase the renewable natural gas supply at prices and on terms consistent with market conditions. The bill also requires the BPU to regulate the charges assessed to customers of the utility for the supply of renewable natural gas, which charges would be based on the utility's cost of providing such supply, including renewable natural gas commodity and capacity costs, as well as any related ancillary and administrative costs.
