Gov. Mikie Sherrill on Tuesday signed an “energy affordability” package and announced $90 million in immediate relief for ratepayers — including a $25 August bill credit for 3.6 million New Jersey residential electric customers and an additional $150 for low-income families.
The bill signing took place at the Salem County home of retired nurse Eileen Bailey, the mother of Assemblyman Dave Bailey Jr. (D-3), one of the sponsors of the legislation. Sherrill said Mrs. Bailey, like many seniors living on a fixed income, cannot afford continued electricity rate hikes.
The bills will roll back incentives that utilities have received for belonging to the regional grid operator PJM, tighten oversight of costly transmission and infrastructure projects, and require utilities to prioritize advanced, lower-cost grid technologies, the governor said. The most controversial of the three bills would impose tariffs on large data centers.
"This bill puts data centers in a new class of ratepayers; they'll pay a separate rate and cover their own costs,” Sherrill said. “And when the grid gets strained, like we saw this weekend, this bill makes sure we put people like Eileen first, requiring data centers to cut back before residential ratepayers lose power. Instead of asking New Jerseyans to subsidize big tech, we'll use their investments to level up our grid and lower costs for your families.”
NJBIA President and CEO Michele Siekerka said Tuesday that tariffs were the wrong solution.
“While we understand Governor Sherrill’s prioritization of an affordability agenda and rising energy bills are of continuing concern, a tariff on an emerging industry is not the answer,” Siekerka said. “This is especially the case when it is not as clear, as some data center critics contend, that data centers are the major driver of utility rate increases.”
Siekerka said NJBIA would be releasing a report soon that would “set the record straight” on data centers.
Her full statement can be found here.
The bills signed Tuesday were:
Bill S-1673/A-2757, sponsored by Sen. Andrew Zwicker (D-16) and Assemblywoman Andrea Katz (D-8) ends what Sherrill described as “free money” utilities have been receiving simply for belonging to the regional grid operator, PJM.
Under current federal regulations, utilities that are voluntary members of a regional transmission organization (RTO) are allowed to add 50 basis points to their return on equity, which leads to higher transmission rates. By making RTO participation mandatory, utilities would lose eligibility for this incentive.
“Grid membership is the bare minimum, and companies shouldn’t be getting handouts for it,” Sherrill said. “The bill rolls back unnecessary incentives and is expected to save customers up to $60 million annually.”
Bill S-4411/A-5188, sponsored by Zwicker and Assemblyman Alexander "Avi" Schnall (D-30), will close a longstanding “regulatory gap” around costly utility infrastructure investments that expand capacity such as wires, poles and substations, Sherrill said.
“For too long, utility companies have taken advantage of a regulatory gap to build what and how they saw fit, with no state oversight of whether it was the right thing to build,” Sherrill said. “We’re paying the price for it with the highest electricity transmission cost in the country.
“From now on, utility companies will have to show their work on infrastructure projects, and we'll fast track projects that use advanced grid technologies to move more power more efficiently. If there's a smarter, cheaper way to get the job done, we want companies to use it.”
The third bill, S-731/A-796, sponsored by Senator John Burizichelli (D-3) and Assemblyman Bailey, would impose tariffs on large load data centers. The bill would also create a retail program—outside the PJM market—through which a new large load offsets its capacity obligation by paying to reduce demand elsewhere on the system
“New data centers use enormous amounts of power,” Sherrill said. “Our grid operator, PJM said they drove 70% of new electricity demands last year. PJM isn't stopping them from driving up everyone else's cost, and I'm not going to wait for them to figure it out.”
Sherrill said the three bills would save New Jersey ratepayers over $1 billion annually, according to Synapse Energy Economics, a research and consulting firm.
