New Jersey

Restructuring Overview  |  Public Benefits  |  Restructuring Resources  |  Consumer Protection

Legislation Passed
Electric Y Gas Y (allowed by electric restructuring)

1999, A 16; The Electric Discount and Energy Competition Act

Electric
Overview

• 1999: Competition began in November. The restructuring legislation provided for an immediate 5% rate reduction to be followed by another 5% reduced phase-in over three years. Rate reductions totaling 15% by 2003 are scheduled for all New Jersey consumers. The law also includes shopping credits to encourage customers to switch to alternative suppliers, and consumer protections.
• December 2001: The New Jersey Board of Public Utilities approved a February 2002 Internet electricity auction. The eight-day auction attracted 20 electric suppliers, bidding for 100 MW "slices" of a total 18,000 MW. Fifteen suppliers won the bids to supply energy to New Jersey's four incumbent electric utilities. The energy will be used to serve customers who do not select an alternative electric supplier and will be supplied from August 1, 2002 through July 31, 2003.
• August 2002: Governor McGreevey vetoed a bill that would have allowed the four New Jersey utilities to recover money lost when the state deregulated its electricity market. Instead, the governor created a panel to study how those losses were accrued, what steps utilities took to mitigate costs, and what the merits are of recouping those costs through issuing bonds and increasing rates, as the utilities have proposed.
• November 2002: The BPU hired two accounting companies to perform audits of nearly $1 billion in expenses that New Jersey's four electric utilities say they are entitled to recover from customers. The money represents the difference between what the companies paid for electricity from outside suppliers and what they were allowed to charge while rates were capped during the four-year transition period into a deregulated market that ends Aug. 1, 2003.
• February 2003: Gov. James McGreevey signed a bill designed to make it easier for municipalities to represent their residents and negotiate for them to get lower gas and electric rates. The bill requires energy companies to notify customers when a municipality is seeking to form an energy-buying pool.
• July 2003: New Jersey is facing an end to rate caps in August, and there is little competition among electricity providers in New Jersey. Green Mountain Energy Co., an environmentally conscious electricity supplier based in Austin, Texas, is the sole alternative to New Jersey's incumbent power companies.
• August 2003: Most New Jersey residents see electric bills increase by more than 15 percent, with the one-two punch of a rate increase and the end of price controls returning rates to 1999 levels. The Board of Public Utilities approved a rate increase that, combined with increases already scheduled, will cost the average Public Service Electric and Gas Co. customer an extra $96 a year.

Choice Status

• All consumers began having choice of electric suppliers in January 2000, and the transition to deregulation is scheduled for completion by August 2003.  As of January 2003, 1,836 of the state's 3,187,879 residential consumers (about 0.06%) had chosen a competitive electric supplier.

Natural Gas
Overview

• Competitive options are still quite limited as only three licensed marketers are offering services to residential customers. No marketers are serving customers in the NUI Elizabethtown service area, and only one is active in the Public Service Electric and Gas (PS&E) area. Three marketers are active in the service territories of New Jersey Natural Gas (NJNG) and South Jersey Gas.
• The energy deregulation law mandates that every customer's bill must be cut by at least 5% by August 1999 and by 15% by 2003.

Choice Status

• Since January 1, 2000, all residential gas customers of the four local distribution companies (LDCs) in New Jersey have been able to choose their own gas supplier.  As of May 2003, 125,519 of the state's 2,385,051 residential natural gas consumers (about 5.3%) had chosen a competitive supplier.

Suppliers
www.state.nj.us/bpu/

Public Benefits

Under the state’s restructuring law, electric and gas utilities are authorized to collect a societal benefits charge (SBC) to recover the costs of social programs, nuclear plant decommissioning, demand-side management and renewable energy programs, and consumer education programs. In May 2001, the state launched Clean Energy for New Jersey, a comprehensive energy efficiency and renewables initiative funded through the SBC for three-years, with a total budget of $358 million, including about $15 million yearly for low-income energy efficiency. About 75% of total funding is for efficiency programs for all customer classes; the remaining 25% is for renewable energy projects. The legislation also established a universal service fund with funding levels and programs to be determined by the Board of Public Utilities. The Board established a $15 million interim low-income rate assistance program for the winter of 2002, while continuing plans to implement a statewide permanent program. (Click here for details on the state’s low-income energy and general residential energy programs.)

Aggregation - buying coops

Private Aggregation

• A private aggregator may enter into a contract with a licensed electric power supplier or a licensed gas supplier to provide any combination of electric generation service, electric related service, gas supply service or gas related services.
• A private aggregator must register with the Board of Public Utilities. The registration must include evidence of financial integrity and evidence that the private aggregator has knowledge of the energy industry. Any residential customer that elects to purchase electric generation service through a private aggregator must do so affirmatively and voluntarily.

Government Aggregation

• A government aggregator may obtain electric generation service, electric related service, gas supply service or gas related service, either separately or bundled, for its own facilities or with other government aggregators. A county or municipality may aggregate electric generation service or gas supply service, either separately or bundled, for business and residential customers, along with its own facilities.
• Government energy aggregation programs are subject to numerous provisions, including specific items that must be included in a contract, standards for awarding contracts, and limiting a government aggregator to one contract at a time for electric generation service.
• A government aggregator that serves residential or business customers must allow them to participate voluntarily.
• An alternative procedure for establishing a government energy aggregation program. This requires a municipality to adopt an ordinance indicating its intent to solicit bids for electric and/or gas supply service. Residential customers who do not wish to participate can opt-out by notifying the governing body in writing. Any contract for the government aggregator must be reviewed by the Division of the Ratepayer Advocate and approved by the BPU.

State Restructuring Resources

Utility Regulatory Commission
New Jersey Board of Public Utilities
1-877-NJ5-5678
www.state.nj.us/bpu/

Consumer advocate
Division of the Ratepayer Advocate
www.rpa.state.nj.us/

Grassroots groups
New Jersey Citizen Action
201-488-2804
www.njcitizenaction.org/
A citizen watchdog group that monitors consumer issues. It includes a page on utility rates and energy education.

ACORN
201-222-0100
www.acorn.org
ACORN, the Association of Community Organizations for Reform Now, is the nation's largest community organization of low- and moderate-income families. Energy is among its priorities. The group has demonstrated in New Jersey to protest high energy rates and to lobby for a shutoff moratorium. 

Consumer Protection

Disconnection policy

• Residential gas or electric customers who meet one of the following criteria cannot have their service discontinued between November 15 and March 15 as long as they make good faith payments if they have the ability to do so: receive Senior Citizen Utility Assistance, Home Energy Assistance, Temporary Assistance to Needy Families, Federal Supplemental Security Income, Pharmaceutical Assistance to the Aged and Disabled, General Assistance, or are unable to make payments because of unemployment, illness, medically related expenses or recent death of a spouse.
• Residential customers eligible for the Winter Termination Program are placed on a Winter Termination Budget and cannot be disconnected as long as they make good faith payments. During the heating season, a utility may not ask for a security deposit.
• Customers must receive written notice at least 30 days in advance that a supplier intends to terminate service and be told, as part of the customer contract, the circumstances under which service can be terminated. Customers who receive their natural gas and electric supply from a single supplier cannot have the service for one type of supply terminated if they fail to make payments on the other type of supply, unless their contract explicitly permits it.

Deferred payments

• All gas and electric utilities are required to offer deferred payment arrangements.

Deposits/fees

• If a deposit is required, the money must be held in escrow, and customers must receive a receipt. No fee can be charged for commencement or termination of electric service

Right to Cancel

• Customers have the right to choose a new supplier, at any time, subject to their contract terms. Business customers who return to basic generation service may be prohibited under certain conditions from switching again for a one-year period; residential customers are not subject to the one-year minimum.
• The electric or gas distribution company must confirm, in writing, the customer's decision to choose a new supplier. Residential customers have 14 days to notify suppliers that they have changed their mind.

• Customers cannot be charged a fee to switch to or from a new supplier.

Credit standards

• "Unreasonable income or credit requirements" cannot be imposed.

Billing and collections

• A customer can elect to receive one bill from the distribution company, one bill from the alternative supplier, or two bills, one from the distribution company and one from the supplier.
• Customers will receive a "shopping credit" on their electric bill. The shopping credit is also known as the "price to compare" and is the amount on a customer’s bill that will be credited to the customer if he chooses an alternate supplier and does not receive basic generation service from the distribution utility.

Supplier licensing

• Electric: Applicants must post a bond of $250,000 and outline how they intend to communicate their electric service offer, consumer protections and obligations and billing policies to potential residential customers.
• Gas: Applicants must post a bond of $250,000, demonstrate competence in providing natural gas and meet all federal, state and local reliability standards.

Slamming

• Customers cannot have their supplier changed without their express consent, as slamming is prohibited by law. Customers who are slammed must pay only what they would have paid the supplier they authorized to provide their electric or natural gas service.

Telemarketing

• The supplier shall comply with all FTC telemarketing rules, including the restriction on telemarketing between the hours of 9 p.m. and 8 am.

Dispute resolution

• Customers have the right to call upon the New Jersey Board of Public Utilities (BPU) to investigate their complaints or inquiries. Customer service may not be terminated for non-payment of disputed charges during a BPU investigation.

Discrimination/redlining

• Customers cannot be denied electric or natural gas service because of their race, color, national origin, age, gender, religion, source of income, receipt of public benefits, family status, sexual preference or geographic location within the service territory of an electric or natural gas distribution company.

Disclosure

• Each electricity supplier or basic generation service provider serving retail customers in the state is required to disclose to such customers a uniform, common set of information about the environmental characteristics -- fuel mix, air emissions and energy efficiency -- of the energy purchased by the customer.

Advertising/marketing/trade practices

• Customers have the right to be told, both in advertising and in contracts, the price per kWh or per therm over the term of the contract, projected savings (excluding state-mandated discounts) and the period of time for which the price is valid. If the supplier does not offer a fixed price, customers have the right to receive price comparisons between the supplier's price and the price to compare/basic generation charge.
• Customer contracts must include a complete list of fees, including contract termination penalties, late fees and interest charges, including the amount and circumstances for which they can be imposed. The contract must explicitly show prices for services other than electric and natural gas supply and must identify those prices separately.
• Any advertisement that offers optional services and specifically targets residential customers for electric generation service or gas supply service must clearly and conspicuously state that such optional services are provided at an additional charge that is not reflected in the advertised cost per kWh or per therm, or the advertised percentage savings. Marketing materials attempting to persuade residential customers to authorize a switch to the TPS for electric generation service or gas supply service must provide 1) the average price per kWh or average price per therm over the term of a contract; 2) the period of time during which the advertised price is valid; 3) the average price per kWh or the average price per therm being charged by the electricity or gas generator or distributor, and 4) the estimated percentage savings on the total bill that a customer will realize under the advertised price relative to the basic generation service or basic gas supply service from the supplier.

Privacy

• Customers have the right to have their personal or business records kept confidential by the supplier and by the distribution company unless they have given written consent to have them disclosed.