On behalf of our member companies that make NJBIA the largest and most impactful association representing job creators in New Jersey, I write regarding S-731 R3/A-796 concerning large-load electric customers and respectfully request consideration of several amendments intended to improve implementation, provide greater regulatory certainty, and avoid unintended consequences while preserving the bill's core objective of protecting utility ratepayers.
NJBIA recognizes the sponsors' intent to address issues associated with integrating large new electric loads into New Jersey's electric system. However, we have significant concerns with the legislation as drafted and believe it would create substantial barriers to investment, economic growth, and the development of critical infrastructure in New Jersey. We believe several amendments could mitigate the bill's unintended consequences, provide greater regulatory certainty, and avoid negatively impacting facilities and institutions that were not intended to be captured by the legislation.
First, we respectfully request that the bill maintain the 100-megawatt threshold contained in earlier versions of the legislation. Lowering the threshold to 50 megawatts may unintentionally capture other commercial or institutional facilities that operate significant data storage or server infrastructure but are not the type of data center developments that the legislation is intended to address. Maintaining the 100-megawatt threshold would provide a clearer distinction between traditional institutional users and the large data centers that are the focus of this legislation.
In addition, we request consideration of amendments that would clarify the treatment of customer-procured generation and capacity resources. As currently drafted, customers that independently procure sufficient new generation capacity to satisfy their PJM obligations or directly finance required grid upgrades may nevertheless remain subject to the bill's full tariff obligations, including minimum purchase requirements and financial security provisions. We believe the legislation should recognize these investments and provide appropriate exemptions, credits, or modifications where customers have already addressed the underlying cost-allocation concerns through direct investment. The bill would benefit from expressly recognizing "Bring Your Own New Capacity" arrangements in a manner similar to the treatment of co-located generation resources.
We also encourage clarification regarding the scope of the bill's tariff obligations. Certain provisions could be interpreted as extending beyond transmission and distribution costs to encompass generation and capacity-related costs that may already be addressed through PJM market structures or customer-procured resources. Additional statutory clarity would help avoid duplicative obligations and provide greater certainty for future infrastructure investments. If the legislative intent is to focus on transmission and distribution-related costs, the bill should expressly limit the minimum purchase obligation to transmission and distribution service.
Further, we recommend revising the ratepayer protection standard to better align with established cost-causation principles. Specifically, NJBIA recommends that rates, terms, and conditions established by the Board of Public Utilities reasonably protect other utility customers against increased transmission and distribution costs directly attributable to serving large-load customers. This approach would help ensure that project-specific costs are appropriately assigned while avoiding the allocation of broader system costs that are not caused by a particular project.
We also recommend modifications to the proposed 85 percent minimum payment requirement. While NJBIA recognizes the importance of providing utilities with confidence that infrastructure investments will be recovered, the current requirement may exceed what is necessary to protect ratepayers over the life of a project. Consideration should be given to reducing the requirement and implementing a step-down mechanism that gradually reduces payment obligations as infrastructure investments are recovered and project-related risks decline. Once underlying infrastructure costs have been substantially repaid, continued minimum payment obligations may become duplicative, particularly where separate financial security mechanisms remain in place.
Similarly, the bill should address the relationship between customer-funded interconnection and facilities agreements and the tariff obligations imposed under the legislation. Without clarification, customers that directly fund grid upgrades through existing interconnection processes could remain subject to overlapping financial obligations under the tariff framework. The legislation should provide exemptions, credits, or consideration for customers that already bear these infrastructure costs directly.
We also encourage clarification of the Legislature's intent regarding financial security requirements under the bill. Specifically, the legislation should make clear that the Board of Public Utilities retains the authority to approve commercially reasonable forms of financial security as part of its implementation of the tariff framework. Given the diversity of large-load projects and financing structures, providing the Board with flexibility to evaluate and approve appropriate financial security mechanisms would help ensure that ratepayer protections are maintained while avoiding unnecessary barriers to investment and infrastructure development.
Given the rapidly evolving nature of large-load electric customers and the complexity of electric system operations, it is important that the Board retain sufficient flexibility to establish standards and procedures through its regulatory process. Several provisions of the bill, as currently drafted, remain open to varying interpretations, which could create uncertainty for the Board, utilities, customers, and prospective investors. Providing clearer statutory direction while empowering the BPU to develop implementation standards would help ensure consistent application of the law, maintain regulatory certainty, and avoid unintended consequences that may arise from legislative language that cannot anticipate every technical scenario.
Finally, several provisions regarding customer curtailment obligations and waste heat recovery expectations would benefit from additional clarification. The bill currently contains provisions that could create uncertainty regarding whether customers that invest in generation, storage, or demand reduction resources remain subject to the same curtailment requirements as other large-load customers during system emergencies. Additional guidance regarding how these provisions interact would help avoid conflicting interpretations and provide greater certainty regarding reliability obligations. Likewise, while NJBIA appreciates the bill's encouragement of waste heat capture and reuse, practical deployment opportunities remain limited due to the absence of district heating infrastructure in most areas of New Jersey. Recognizing these limitations would improve implementation clarity while preserving the legislation's policy goals.
NJBIA remains supportive of policies that protect ratepayers, promote grid reliability, and provide certainty for utilities and electric customers alike. We believe the amendments outlined above would strengthen the legislation, improve implementation, and ensure that New Jersey remains competitive in attracting investment while safeguarding existing utility customers.
We respectfully request your consideration of these amendments as S-731 R3/A-796 continues through the legislative process. If you would like to discuss this further, please contact me at jramirez@njbia.org. Thank you for your time and consideration.
