Excess utility profits would be returned to consumers

TRENTON – Aiming to address rising utility costs, the Senate Economic Growth Committee advanced legislation sponsored by Senator Troy Singleton known as the “Public Utility Fair Profit Act” that would provide for consumers to receive direct refunds of excess electric utility profits.

“With rising inflation and soaring utility costs, hardworking families and businesses are struggling to keep cool, keep their lights on, and frankly pay their bills,” said Senator Singleton (D-Burlington). “That is why it is more important than ever to ensure consumers are not being unfairly taken advantage of. The Public Utility Fair Profit Act ensures that excessive profits are directly returned to customers, instead of corporate shareholders and executives.”

The bill, S-4260, would require that, no later than three months from the completion of a public electric utility’s 12-month reporting period, a public utility perform an annual review of the amount that the utility earns on their infrastructure or efficiency investments and utility rates during the reporting period. If the profits exceed the BPU approved total revenue requirement by more than 50 basis points (0.5 percent) the utility would be required to share such excess earnings with ratepayers in accordance with the following earnings sharing mechanism:

• Tier One: For earnings up to 100 basis points (1 percent) above the authorized total revenue requirement, 50 percent would be refunded to ratepayers and 50 percent may be retained by the utility.

• Tier Two: For earnings between 100 and 200 basis points (1 and 2 percent) above the authorized total revenue requirement, 75 percent would be refunded to ratepayers and 25 percent may be retained by the utility.

• Tier Three: For earnings exceeding 200 basis points (2 percent) above the authorized total revenue requirement, 100 percent would be returned to ratepayers.

The BPU would have the authority to adopt additional tiers or revise sharing percentages through rulemaking based on relevant criteria such as ratepayer impact, market conditions, and utility performance. The refund mechanism would be permitted to include bill credits applied to future utility bills, direct payments to customers with unpaid balances, or supplemental payments to customers who are enrolled in a utility assistance program.

If a public utility fails to redistribute excess earnings or knowingly misrepresents information contained in their financial reports submitted to the BPU, they would be subject to a fine determined by the BPU. Any fines collected pursuant to this penalty would be required to be allocated to support existing funding for utility assistance programs administered by the BPU.