ASSEMBLY, No. 5267 STATE OF NEW JERSEY 221st LEGISLATURE INTRODUCED FEBRUARY 10, 2025
ASSEMBLY, No. 5267
STATE OF NEW JERSEY
221st LEGISLATURE
INTRODUCED FEBRUARY 10, 2025
Sponsored by: Assemblyman WAYNE P. DEANGELO District 14 (Mercer and Middlesex) Assemblyman DAVID BAILEY, JR. District 3 (Cumberland, Gloucester and Salem) Assemblyman KEVIN P. EGAN District 17 (Middlesex and Somerset) Co-Sponsored by: Assemblyman Miller SYNOPSIS Requires BPU to procure and incentivize transmission-scale energy storage. CURRENT VERSION OF TEXT As introduced.
Sponsored by:
Assemblyman WAYNE P. DEANGELO
District 14 (Mercer and Middlesex)
Assemblyman DAVID BAILEY, JR.
District 3 (Cumberland, Gloucester and Salem)
Assemblyman KEVIN P. EGAN
District 17 (Middlesex and Somerset)
Co-Sponsored by:
Assemblyman Miller
SYNOPSIS
Requires BPU to procure and incentivize transmission-scale energy storage.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning transmission-scale energy storage, supplementing Title 48 of the Revised Statutes, and amending P.L.1999, c.23. Be It Enacted by the Senate and General Assembly of the State of New Jersey: 1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill): "Board" means the Board of Public Utilities. "Electric public utility" means a public utility, as that term is defined in R.S.48:2-13, that transmits and distributes electricity to end users within the State. "Eligible project" means a transmission-scale energy storage system that meets the criteria for an incentive award pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). "Energy storage" means a device that is capable of absorbing energy from the grid or from a Distributed Energy Resource; storing it for a period of time using mechanical, chemical, or thermal processes; and, thereafter, discharging the energy back to the grid or directly to an energy-using system to reduce the use of power from the grid. "Energy storage program" means a program designed to encourage the growth of energy storage capacity in the State in order to strengthen storage capacity for the electric grid. "Energy storage program" includes the board's Successor Solar Incentive Program, including the Competitive Solar Incentive Program; the program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill); and the board's New Jersey Energy Storage Incentive Program, or its replacement or successor, in its final form. "Incentive award" means a set of payments awarded by the board for an eligible project, which payments are conditioned upon the completion and commercial operation of the eligible project in compliance with P.L. , c. (C. ) (pending before the Legislature as this bill) and any conditions required by the board. An "incentive award" shall be a fixed series of annual payments, to be issued over the 15-year award period, based on the maximum usable installed capacity of an eligible project, measured in dollars per megawatt, and paid upon commercial operation of the eligible project, unless the board provides for an alternative payment timeline. "Incentive award" may include, at the discretion of the board, a performance-based adjustment based on the availability of the eligible project or the benefits created through the commercial operation of the eligible project, provided that the board shall confirm the reliability of any proposed metrics on which to base a performance-based adjustment prior to being used in the calculation of an incentive award. "Installed capacity" means the nameplate output of an eligible project, measured in megawatts of alternating current (MW AC), that is available to the electric grid. "PJM" means "PJM Interconnection, L.L.C." or "PJM," as those terms are defined in section 3 of P.L.1999, c.23 (C.48:3-51). "Successor program" means an energy storage program established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). "Tranche 1" means the initial procurement for the energy storage program established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). "Transmission-scale energy storage system" means an energy storage system, capable of energy storage of at least 5 megawatts, that is interconnected with the PJM Transmission Network and situated inside a Transmission Zone in New Jersey or is otherwise located in New Jersey and qualified to provide energy, capacity, or ancillary services in the wholesale markets established by PJM. 2. a. (1) The Board of Public Utilities shall establish a program to procure and provide incentive awards for the development of transmission-scale energy storage systems with a reasonable likelihood of successful and timely completion. The board shall solicit applications for the program established pursuant to this section in an initial Tranche 1 pursuant to this section. (2) If the board determines in the report required pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) that it will extend the procurement of transmission-scale energy storage through additional tranches in accordance with subparagraph (a) of paragraph (6) of subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall administer future tranches in a similar manner to Tranche 1, modifying as appropriate for each subsequent tranche: (a) the amount of megawatts to be solicited; (b) the application requirements or eligibility criteria; (c) the timeline for an eligible project, including, but not limited to, application deadlines or the contract term; and (d) any other administrative modification the board deems appropriate following its report issued pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill). b. For Tranche 1, the board shall solicit applications for eligible projects, which projects shall collectively have an installed capacity totaling at least 500 MW AC. (1) To qualify for an incentive award pursuant to this section, a transmission-scale energy storage system shall: (a) not participate in any other energy storage program; (b) have an anticipated commercial operations date of no later than December 31, 2030, unless the board permits an exception; (c) have completed the PJM interconnection process up to, at minimum, the completion of a System Impact Study or equivalent study, as well as a draft or fully-executed Large Generator Interconnection Agreement through PJM at the time of application for Tranche 1; and (d) meet any other eligibility criteria the board may establish through board order or rulemaking. (2) Any application pursuant to this section shall include: (a) evidence reasonably satisfactory to the board of site control, including all rights of way to the proposed point of interconnection; (b) evidence reasonably satisfactory to the board that an applicant has or will obtain all required permits, which evidence shall include an execution plan to obtain all required permits; (c) as-built drawings of a transmission-scale energy storage system comprised of new equipment; (d) evidence reasonably satisfactory to the board that the applicant has submitted all interconnection applications and fees necessary to obtain permission from the appropriate electric public utility or grid operator to operate the transmission-scale energy storage system; (e) evidence reasonably satisfactory to the board of the applicant's financial means to construct the transmission-scale energy storage system and capacity to obtain revenues through electricity markets or non-ratepayer funding, including, but not limited to, energy arbitrage, ancillary services, and capacity revenues in PJM; (f) evidence reasonably satisfactory to the board of the status of the transmission-scale energy storage system in the PJM interconnection process; (g) assurances reasonably satisfactory to the board that the transmission-scale energy storage system will adhere to nationally recognized minimum safety requirements, including, but not limited to, appropriate laboratory testing, and comply with all manufacturers' installation requirements, applicable laws, regulations, codes, licensing, and permit requirements; (h) an application fee as set by the board; and (i) any other information required by the board. c. The board shall review Tranche 1 applications consistently with the requirements of this section. At its discretion, the board may instruct an applicant on curing minor defects in a Tranche 1 application. The board shall include in its application review process a system of scoring, established prior to its review of any project, which scoring system shall, at a minimum, be based on price factors; maturity and likelihood of success; and environmental justice, redevelopment, and community benefits. (1) In designing scoring for the price factors of an application, the board shall: (a) consider costs and values throughout the application as measured in dollars per megawatt capacity per year; (b) establish a maximum percentage of scoring that shall be price-based; and (c) appropriately compare bid prices, at the board's discretion, based on the measure of the capacity of a transmission-scale energy storage system by the lesser of its installed capacity or its energy storage capacity divided by four hours. (2) An application shall receive a higher score for maturity and likelihood of success if the transmission-scale energy storage system: (a) has a fully executed Large Generator Interconnection Agreement through PJM or requires limited network upgrades; (b) has completed non-ministerial permits; and (c) is proposed by an applicant with experience in energy storage development, construction, and finance. (3) An application shall receive a higher score for environmental justice, redevelopment, and community benefits if it includes brownfield redevelopment, existing or former fossil fuel plant replacement, or demonstrated benefits to environmental justice in communities where a transmission-scale energy storage system is proposed to be located. (4) The board may place an eligible project that does not receive an incentive award for Tranche 1 on a waiting list and consider the eligible project for an incentive award during a subsequent tranche or successor program pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). d. The board shall approve incentive awards totaling a collective minimum of $60,000,000 in annual payments for each year of the 15-year award period of each eligible project approved under Tranche 1. The board shall provide funding for this annual collective amount of incentive award payments for Tranche 1, which payments shall be fully funded pursuant to subsection a. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), in order to ensure that the collective installed capacity of eligible projects receiving an incentive award totals at least 500 megawatts for Tranche 1. An incentive award shall be conditioned upon a developer's compliance with the board order determining the incentive award and with any conditions the board shall reasonably require. e. A board order that issues an incentive award for Tranche 1 shall be binding and enforceable. A Tranche 1 incentive award board order shall: (1) define the eligible project receiving an incentive award and the eligible project's megawatt capacity; (2) define the incentive award, including a payment schedule for the 15-year award period of the incentive award, which term shall commence no earlier than July 1, 2028 or upon the commercial operations date of an eligible project, and during which term an eligible project shall receive an annual incentive award on each anniversary of the first payment date; (3) determine the amount of funding to be allocated for payment of the incentive award beginning either in the fiscal year beginning on July 1, 2028 or on the commercial operations date of the eligible project, whichever is later; (4) include a participation fee as the board shall require from the developer; (5) require, for an eligible project awarded an incentive award, a pre-development security not to exceed $100,000 per megawatt and not to exceed in total $10,000,000; (6) outline the conditions under which the board may, in the event of a developer's failure to operate an eligible project by the deadline stated in the board order or to meet deadlines included in the board order, revoke an incentive award or retain a portion of the pre-development security; (7) provide that receipt of an incentive award for an eligible project shall be contingent on achievement of baseline performance requirements, including, but not limited to, the availability of energy storage for dispatch in a percentage of hours daily, which percentage shall be decided by the board. The board may use the PJM Equivalent Forced Outage Rate or another metric determined appropriate by the board to measure energy storage availability. The board order shall require that the developer report data for the purpose of this paragraph at regular intervals and shall provide for a reduction of an incentive award in proportion to the percentage of required availability that is unmet by the eligible project; and (8) require that a developer provide additional information to the board during the term of the incentive award, as the board may reasonably require. The board may set additional requirements at its discretion, including, but not limited to, a requirement that the developer report major development and construction milestones to the board, maintain financial security throughout the term of the incentive award, or any other requirement the board determines necessary to ensure continued progress and operational viability of an eligible project. f. (1) Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), or any other law or rule to the contrary, the board shall: (a) within 120 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), develop application requirements and eligibility criteria for Tranche 1; and (b) permit applications for Tranche 1, pursuant to paragraphs (2) and (3) of this subsection, without regard to the publication status of the rules and regulations to be issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). (2) The board shall permit an applicant, within 45 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), to submit an early application for Tranche 1 prior to the formal establishment of an application process or the promulgation of Tranche 1 rules and regulations. (3) Within 30 days following the effective date of a board order either approving the rules and regulations proposed for publication pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) or approving the proposed application requirements and eligibility criteria for Tranche 1 in accordance with this section, the board shall: (a) begin formally accepting applications for Tranche 1; and (b) advise any applicant that submitted an early application for Tranche 1 pursuant to paragraph (2) of this subsection of any defects in its existing application pursuant to the rules and regulations or the application requirements and eligibility criteria approved by board order issued pursuant to this paragraph. (4) The board shall accept Tranche 1 applications for a maximum of 60 days after the beginning of the formal application period for Tranche 1 pursuant to paragraph (3) of this subsection. Within 90 days following the closure of the Tranche 1 application period, the board shall evaluate projects in accordance with this section, any rules or regulations proposed pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), and any application requirements and eligibility criteria approved pursuant to this subsection. g. Tranche 1 incentive awards shall receive funding pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill). 3. a. No later than one calendar year following the date of the final Tranche 1 procurement approval issued pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall initiate a proceeding to examine the impact of the State's energy storage programs, collectively and individually, and to assess progress toward the 2030 energy storage target established pursuant to section 1 of P.L.2018, c.17 (C.48:3-87.8). b. The board shall issue a report detailing its conclusions and submit the report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. In its report issued pursuant to this subsection, the board shall, at a minimum: (1) examine the State's energy storage programs; (2) account for projected electric bill savings and costs to ratepayers, as well as societal benefits of reduced emissions, due to increased installed capacity or energy storage capacity; (3) report the progress of the projects under each energy storage program, including progress toward construction completion; (4) compare relative costs per capacity awarded for each project based on its installed capacity; (5) produce estimates of the most cost-effective means to achieve the 2030 energy storage target established pursuant to section 1 of P.L.2018, c.17 (C.48:3-87.8) or any other energy storage target established by the Legislature; and (6) determine, at the discretion of the board, whether to extend the procurement of transmission-scale energy storage pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) based on the results of Tranche 1. The board may procure additional tranches either: (a) pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) with funding through the societal benefits charge pursuant to subsection a. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill); or (b) pursuant to a successor program established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) with funding through rate recovery as set forth in subsection b. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill). 4. a. Following a determination, pursuant to subparagraph (b) of paragraph (6) of subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), to establish a successor program, the board shall issue rules and regulations pursuant to the requirements of subsection c. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill). b. The board shall, in any successor program, require each electric public utility to submit proposed tariffs for board review and approval, which tariffs shall be designed to fund the successor program through base rate recovery. Each electric public utility's tariff submitted pursuant to this subsection shall include, apportioned according to the relative electric load of the electric public utility in this State, the total cost of: (1) the outstanding costs of the incentives awarded to eligible projects under Tranche 1; and (2) the costs, as the board determines necessary, for incentive awards under the successor program. c. In addition to rules and regulations issued pursuant to subsection c. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall be authorized to continue any rule, regulation, or policy used to administer Tranche 1 as the board determines necessary and appropriate to administer a successor program. If the board determines in the report required pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) that it will extend the procurement of transmission-scale energy storage through additional tranches in accordance with subparagraph (b) of paragraph (6) of subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall administer future tranches in a similar manner to Tranche 1, modifying as appropriate for each subsequent tranche: (1) the amount of megawatts to be solicited; (2) the application requirements or eligibility criteria; (3) the timeline for an eligible project, including, but not limited to, application deadlines or the contract term; and (4) any other administrative modification the board deems appropriate following its report issued pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill). d. The board may amend a Tranche 1 incentive award, upon written consent from the developer of the eligible project, solely to change the funding mechanism of the incentive award pursuant to subsection b. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill). Any incentive award for an eligible project and the conditions for receiving funding pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall remain effective for the full duration of the 15-year award period specified in the board's Tranche 1 order awarding the incentive, notwithstanding any change to the funding mechanism of the incentive award. 5. a. An incentive award issued pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be funded through the societal benefits charge established pursuant to subsection a. of section 12 of P.L.1999, c.23 (C.48:3-60). In the fiscal year beginning on July 1, 2028, and in each fiscal year thereafter, the board shall allocate a minimum of $60,000,000 from the funds collected through the societal benefits charge to fully fund the incentive awards issued by the board pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). b. (1) An incentive award issued pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be funded through ratepayer tariffs recovered through an electric public utility's base rate case, in accordance with subsection b. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). (2) Any amendment to a Tranche 1 incentive award board order to change the funding mechanism of the incentive award pursuant to subsection d. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall replace the funding mechanism of the incentive award with funding pursuant to paragraph (1) of this subsection. Pending any order for replacement funding for a Tranche 1 incentive award order, the Tranche 1 incentive award shall continue to be funded pursuant to subsection a. of this section. 6. a. (1) The board shall adopt, as expeditiously as possible, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations consistent with the purposes of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). The rules and regulations issued for Tranche 1 shall be similar to the board's rules concerning Grid Supply projects for the New Jersey Energy Storage Incentive Program, or its replacement or successor, in its final form, but shall reflect the unique nature of transmission-scale energy storage systems. (2) Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), or any other law or rule to the contrary, the board shall: (a) within 60 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), engage with stakeholders and interested parties and solicit comments on the rules and regulations for publication in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.); and (b) within 120 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), submit the proposed Tranche 1 rules and regulations for publication in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). b. Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), or any other law or rule to the contrary, the board may procure transmission-scale energy storage systems and award incentives for Tranche 1 pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), notwithstanding the status of board rules or regulations pursuant to subsection a. of this section. c. In the event that the board decides to implement a successor program pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), following the issuance of its report pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations consistent with the purposes of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), and determine therein, at a minimum: (1) the minimum amount of energy storage to be procured in total among eligible projects during any solicitation subsequent to Tranche 1; (2) any eligibility criteria; (3) the minimum performance standards for an eligible project; and (4) the amount and structure of a performance-based adjustment. 7. Section 12 of P.L.1999, c.23 (C.48:3-60) is amended to read as follows: 12. a. Simultaneously with the starting date for the implementation of retail choice as determined by the board pursuant to subsection a. of section 5 of P.L.1999, c.23 (C.48:3-53), the board shall permit each electric public utility and gas public utility to recover some or all of the following costs through a societal benefits charge that shall be collected as a non-bypassable charge imposed on all electric public utility customers and gas public utility customers, as appropriate: (1) [The] the costs for the social programs for which rate recovery was approved by the board prior to April 30, 1997. For the purpose of establishing initial unbundled rates pursuant to section 4 of P.L.1999, c.23 (C.48:3-52), the societal benefits charge shall be set to recover the same level of social program costs as is being collected in the bundled rates of the electric public utility on the effective date of P.L.1999, c.23 (C.48:3-49 et al.). The board may subsequently order, pursuant to its rules and regulations, an increase or decrease in the societal benefits charge to reflect changes in the costs to the utility of administering existing social programs. Nothing in P.L.1999, c.23 (C.48:3-49 et al.) shall be construed to abolish or change any social program required by statute or board order or rule or regulation to be provided by an electric public utility. Any such social program shall continue to be provided by the utility until otherwise provided by law, unless the board determines that it is no longer appropriate for the electric public utility to provide the program, or the board chooses to modify the program; (2) [Nuclear] nuclear plant decommissioning costs; (3) [The] the costs of demand side management programs that were approved by the board pursuant to its demand side management regulations prior to April 30, 1997. For the purpose of establishing initial unbundled rates pursuant to section 4 of P.L.1999, c.23 (C.48:3-52), the societal benefits charge shall be set to recover the same level of demand side management program costs as is being collected in the bundled rates of the electric public utility on the effective date of P.L.1999, c.23 (C.48:3-49 et al.). Within four months of the effective date of P.L.1999, c.23 (C.48:3-49 et al.), and every four years thereafter, the board shall initiate a proceeding and cause to be undertaken a comprehensive resource analysis of energy programs, and within eight months of initiating such proceeding and after notice, provision of the opportunity for public comment, and public hearing, the board, in consultation with the Department of Environmental Protection, shall determine the appropriate level of funding for energy efficiency, light, medium, and heavy-duty plug-in electric vehicles, including school buses, and associated plug-in electric vehicle charging infrastructure, and Class I renewable energy programs that provide environmental benefits above and beyond those provided by standard offer or similar programs in effect as of the effective date of P.L.1999, c.23 (C.48:3-49 et al.); provided that the funding for such programs be no less than 50 percent of the total Statewide amount being collected in electric and gas public utility rates for demand side management programs on the effective date of P.L.1999, c.23 (C.48:3-49 et al.) for an initial period of four years from the issuance of the first comprehensive resource analysis following the effective date of P.L.1999, c.23 (C.48:3-49 et al.), and provided that 25 percent of this amount shall be used to provide funding for Class I renewable energy projects in the State. In each of the following fifth through eighth years, the Statewide funding for such programs shall be no less than 50 percent of the total Statewide amount being collected in electric and gas public utility rates for demand side management programs on the effective date of P.L.1999, c.23 (C.48:3-49 et al.), except that as additional funds are made available as a result of the expiration of past standard offer or similar commitments, the minimum amount of funding for such programs shall increase by an additional amount equal to 50 percent of the additional funds made available, until the minimum amount of funding dedicated to such programs reaches $140,000,000 total. After the eighth year the board shall make a determination as to the appropriate level of funding for these programs. Such programs shall include a program to provide financial incentives for the installation of Class I renewable energy projects in the State, and the board, in consultation with the Department of Environmental Protection, shall determine the level and total amount of such incentives as well as the renewable technologies eligible for such incentives which shall include, at a minimum, photovoltaic, wind, and fuel cells. The board shall simultaneously determine, as a result of the comprehensive resource analysis, the programs to be funded by the societal benefits charge, the level of cost recovery and performance incentives for old and new programs and whether the recovery of demand side management programs' costs currently approved by the board may be reduced or extended over a longer period of time. The board shall make these determinations taking into consideration existing market barriers and environmental benefits, with the objective of transforming markets, capturing lost opportunities, making energy services more affordable for low income customers and eliminating subsidies for programs that can be delivered in the marketplace without electric public utility and gas public utility customer funding. The board shall set the societal benefits charge, in addition to the determinations above, to include full funding of the costs, as determined by the board, of providing incentive award payments for transmission-scale energy storage systems that are eligible projects pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill); (4) [Manufactured] manufactured gas plant remediation costs, which shall be determined initially in a manner consistent with mechanisms in the remediation adjustment clauses for the electric public utility and gas public utility adopted by the board; and (5) [The] the cost, of consumer education, as determined by the board, which shall be in an amount that, together with the consumer education surcharge imposed on electric power supplier license fees pursuant to subsection h. of section 29 of P.L.1999, c.23 (C.48:3-78) and the consumer education surcharge imposed on gas supplier license fees pursuant to subsection g. of section 30 of P.L.1999, c.23 (C.48:3-79), shall be sufficient to fund the consumer education program established pursuant to section 36 of P.L.1999, c.23 (C.48:3-85). b. There is established in the Board of Public Utilities a nonlapsing fund to be known as the "Universal Service Fund." The board shall determine: the level of funding and the appropriate administration of the fund; the purposes and programs to be funded with monies from the fund; which social programs shall be provided by an electric public utility as part of the provision of its regulated services which provide a public benefit; whether the funds appropriated to fund the "Lifeline Credit Program" established pursuant to P.L.1979, c.197 (C.48:2-29.15 et seq.), the "Tenants' Lifeline Assistance Program" established pursuant to P.L.1981, c.210 (C.48:2-29.30 et seq.), the funds received pursuant to the Low Income Home Energy Assistance Program established pursuant to 42 U.S.C. s.8621 et seq., and funds collected by electric and gas public utilities, as authorized by the board, to offset uncollectible electricity and natural gas bills should be deposited in the fund; and whether new charges should be imposed to fund new or expanded social programs. (cf: P.L.2022, c.86, s.2) 8. This act shall take effect immediately. STATEMENT The Board of Public Utilities (board) is required to establish a program to procure and provide incentive awards for the development of transmission-scale energy storage systems with a reasonable likelihood of successful and timely completion. The board is required to solicit applications for the program in an initial Tranche 1. After the conclusion of Tranche 1, the board is to engage in a review of the impact of the State's energy storage programs to make certain determinations, including whether to continue procuring and incentivizing transmission-scale energy storage. As outlined in the bill, the board is permitted to procure additional tranches by either continuing under the same program as Tranche 1 or implementing a successor program, with the board authorized to make changes based on its determinations in a report issued following its review. For the bill's purposes, "transmission-scale energy storage system" means an energy storage system, capable of energy storage of at least 5 megawatts, that is interconnected with the PJM Transmission Network and situated inside a Transmission Zone in New Jersey or is otherwise located in New Jersey and qualified to provide energy, capacity, or ancillary services in the wholesale markets established by PJM Interconnection, L.L.C. (PJM). Tranche 1 Procurement The bill requires the board to solicit Tranche 1 applications for eligible projects whose collective installed capacity totals at least 500 megawatts of alternating current (MW AC). The bill provides certain deadlines for the proposal of rules and regulations; the development of application requirements and eligibility criteria; and the process of application, processing, and approval. The board is required to permit an applicant, within 45 days following the bill's effective date, to submit an early application for Tranche 1 prior to the formal establishment of an application process or the promulgation of Tranche 1 rules and regulations. Within 30 days following the effective date of a board order either approving the rules and regulations proposed for publication or approving the proposed application requirements and eligibility criteria for Tranche 1, the board is required to: (1) begin formally accepting applications for Tranche 1; and (2) advise any applicant that submitted an early application for Tranche 1 of any defects in its existing application pursuant to the rules and regulations or the application requirements and eligibility criteria approved by board order. To qualify for a Tranche 1 incentive award, a transmission-scale energy storage system is required to: (1) not participate in any other energy storage program; (2) have an anticipated commercial operations date of no later than December 31, 2030, unless the board permits an exception; (3) have completed the PJM interconnection process up to, at minimum, the completion of a System Impact Study, or equivalent study, as well as a draft or fully-executed Large Generator Interconnection Agreement through PJM at the time of application for Tranche 1; and (4) meet any other eligibility criteria the board may establish through board order or rulemaking. A Tranche 1 application is required to include certain information and a fee, as provided in the bill. At its discretion, the board may instruct an applicant on curing minor defects in a Tranche 1 application. The board is required to include in its application review process a system of scoring, established prior to its review of any project, which scoring system is to be based on price factors; maturity and likelihood of success; and environmental justice, redevelopment, and community benefits. The bill provides certain requirements for the scoring process and permits the board to place an eligible project that does not receive an incentive award for Tranche 1 on a waiting list and consider the eligible project for an incentive award during a subsequent tranche or successor program. Tranche 1 Incentives Under the bill, the board is required to approve incentive awards totaling a collective minimum of $60 million for Tranche 1. An incentive award is to be conditioned upon a developer's compliance with the board order determining the incentive award and with any conditions the board requires. Tranche 1 Board Orders The bill outlines certain requirements for a board order issuing an incentive award to an eligible project, including that the board order is required to: (1) define the eligible project receiving an incentive award and the eligible project's megawatt capacity; (2) define the incentive award, including a payment schedule for the 15-year award period of the incentive award, which term is to commence no earlier than July 1, 2028 or upon the commercial operations date of an eligible project, and during which term an eligible project is to receive an annual incentive award on each anniversary of the first payment date; (3) determine the amount of funding to be allocated for payment of the incentive award beginning either in the fiscal year beginning on July 1, 2028 or on the commercial operations date of the eligible project, whichever is later; (4) include a participation fee as the board is to require from the developer; (5) require, for an eligible project awarded an incentive, a pre-development security not to exceed $100,000 per megawatt and not to exceed in total $10,000,000; (6) outline the conditions under which the board may, in the event of a developer's failure to operate an eligible project by the deadline stated in the board order or to meet deadlines included in the board order, revoke an incentive award or retain a portion of the pre-development security; (7) provide that receipt of an incentive award for an eligible project is to be contingent on achievement of baseline performance requirements, including, but not limited to, the availability of energy storage for dispatch in a percentage of hours daily, which percentage is to be decided by the board. The board is permitted to use the PJM Equivalent Forced Outage Rate or another metric deemed appropriate by the board to measure energy storage availability. The board order is to require that the developer report data for this purpose at regular intervals and is to provide for a reduction of an incentive award in proportion to the percentage of required availability that is unmet by the eligible project; and (8) require that a developer provide additional information to the board during the term of the incentive award, as the board may require. The board may set additional requirements at its discretion, including, but not limited to, a requirement that the developer report major development and construction milestones to the board, maintain financial security throughout the term of the incentive award, or any other requirement the board determines necessary to ensure continued progress and operational viability of an eligible project. Ratepayer Impact Review No later than one calendar year following the date of the final Tranche 1 procurement approval, the board is required to initiate a proceeding to examine the impact of the State's energy storage programs, collectively and individually, and to assess progress toward the 2030 energy storage target of 2,000 megawatts. The board is required to issue a report that, at a minimum: (1) examines the State's energy storage programs; (2) accounts for projected electric bill savings and costs to ratepayers, as well as societal benefits of reduced emissions, due to increased installed capacity or energy storage capacity; (3) reports the progress of the projects under each energy storage program; (4) compares relative costs per capacity awarded for each project based on its installed capacity; (5) produces estimates of the most cost-effective means to achieve the 2030 energy storage target or any other energy storage target established by the Legislature; and (6) determines, at the discretion of the board, whether to extend the procurement of transmission-scale energy storage pursuant to this bill based on the results of Tranche 1. Future Procurement If the board determines in the report required by the bill that it will extend the procurement of transmission-scale energy storage through additional tranches, the board is permitted either to continue the program under which Tranche 1 was conducted or to establish a successor program, as outlined in the bill. The primary difference between these options for continued procurement of transmission-scale energy storage is the funding mechanism for incentive awards, as described below. If the board administers future tranches pursuant to either option in the bill, the board is required to do so in a similar manner to how it administered Tranche 1, modifying as appropriate for each subsequent tranche: (1) the amount of megawatts to be solicited; (2) the application requirements or eligibility criteria; (3) the timeline for an eligible project, including, but not limited to, application deadlines or the contract term; and (4) any other administrative modification the board deems appropriate following its report. Incentive Award Funding Mechanisms The bill requires the board to fund incentive awards issued for Tranche 1 and any subsequent tranches issued under the same program through the societal benefits charge. Beginning in Fiscal Year 2029, the board is required to annually allocate a minimum of $60 million from the funds collected through the societal benefits charge to fully fund incentive awards issued for Tranche 1 and any subsequent tranches issued under the same program. If the board instead establishes a successor program, it is required to fund incentive awards issued under the successor program through changes to each electric public utility's base rate case. As apportioned according to the relative electric load of each, the electric public utilities are to recover the total cost of (1) the outstanding costs of the incentives awarded to eligible projects under Tranche 1; and (2) the costs as the board determines necessary for incentive awards under the successor program. The funding mechanism of a Tranche 1 incentive award is not to be changed without the consent of the developer, permitting Tranche 1 incentive awards to continue to be funded through the societal benefits charge if a developer does not agree to the change in funding mechanism, even if the board elects to establish a successor program with a different funding mechanism.
An Act concerning transmission-scale energy storage, supplementing Title 48 of the Revised Statutes, and amending P.L.1999, c.23.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Board" means the Board of Public Utilities.
"Electric public utility" means a public utility, as that term is defined in R.S.48:2-13, that transmits and distributes electricity to end users within the State.
"Eligible project" means a transmission-scale energy storage system that meets the criteria for an incentive award pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
"Energy storage" means a device that is capable of absorbing energy from the grid or from a Distributed Energy Resource; storing it for a period of time using mechanical, chemical, or thermal processes; and, thereafter, discharging the energy back to the grid or directly to an energy-using system to reduce the use of power from the grid.
"Energy storage program" means a program designed to encourage the growth of energy storage capacity in the State in order to strengthen storage capacity for the electric grid. "Energy storage program" includes the board's Successor Solar Incentive Program, including the Competitive Solar Incentive Program; the program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill); and the board's New Jersey Energy Storage Incentive Program, or its replacement or successor, in its final form.
"Incentive award" means a set of payments awarded by the board for an eligible project, which payments are conditioned upon the completion and commercial operation of the eligible project in compliance with P.L. , c. (C. ) (pending before the Legislature as this bill) and any conditions required by the board. An "incentive award" shall be a fixed series of annual payments, to be issued over the 15-year award period, based on the maximum usable installed capacity of an eligible project, measured in dollars per megawatt, and paid upon commercial operation of the eligible project, unless the board provides for an alternative payment timeline. "Incentive award" may include, at the discretion of the board, a performance-based adjustment based on the availability of the eligible project or the benefits created through the commercial operation of the eligible project, provided that the board shall confirm the reliability of any proposed metrics on which to base a performance-based adjustment prior to being used in the calculation of an incentive award.
"Installed capacity" means the nameplate output of an eligible project, measured in megawatts of alternating current (MW AC), that is available to the electric grid.
"PJM" means "PJM Interconnection, L.L.C." or "PJM," as those terms are defined in section 3 of P.L.1999, c.23 (C.48:3-51).
"Successor program" means an energy storage program established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Tranche 1" means the initial procurement for the energy storage program established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Transmission-scale energy storage system" means an energy storage system, capable of energy storage of at least 5 megawatts, that is interconnected with the PJM Transmission Network and situated inside a Transmission Zone in New Jersey or is otherwise located in New Jersey and qualified to provide energy, capacity, or ancillary services in the wholesale markets established by PJM.
2. a. (1) The Board of Public Utilities shall establish a program to procure and provide incentive awards for the development of transmission-scale energy storage systems with a reasonable likelihood of successful and timely completion. The board shall solicit applications for the program established pursuant to this section in an initial Tranche 1 pursuant to this section.
(2) If the board determines in the report required pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) that it will extend the procurement of transmission-scale energy storage through additional tranches in accordance with subparagraph (a) of paragraph (6) of subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall administer future tranches in a similar manner to Tranche 1, modifying as appropriate for each subsequent tranche:
(a) the amount of megawatts to be solicited;
(b) the application requirements or eligibility criteria;
(c) the timeline for an eligible project, including, but not limited to, application deadlines or the contract term; and
(d) any other administrative modification the board deems appropriate following its report issued pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. For Tranche 1, the board shall solicit applications for eligible projects, which projects shall collectively have an installed capacity totaling at least 500 MW AC.
(1) To qualify for an incentive award pursuant to this section, a transmission-scale energy storage system shall:
(a) not participate in any other energy storage program;
(b) have an anticipated commercial operations date of no later than December 31, 2030, unless the board permits an exception;
(c) have completed the PJM interconnection process up to, at minimum, the completion of a System Impact Study or equivalent study, as well as a draft or fully-executed Large Generator Interconnection Agreement through PJM at the time of application for Tranche 1; and
(d) meet any other eligibility criteria the board may establish through board order or rulemaking.
(2) Any application pursuant to this section shall include:
(a) evidence reasonably satisfactory to the board of site control, including all rights of way to the proposed point of interconnection;
(b) evidence reasonably satisfactory to the board that an applicant has or will obtain all required permits, which evidence shall include an execution plan to obtain all required permits;
(c) as-built drawings of a transmission-scale energy storage system comprised of new equipment;
(d) evidence reasonably satisfactory to the board that the applicant has submitted all interconnection applications and fees necessary to obtain permission from the appropriate electric public utility or grid operator to operate the transmission-scale energy storage system;
(e) evidence reasonably satisfactory to the board of the applicant's financial means to construct the transmission-scale energy storage system and capacity to obtain revenues through electricity markets or non-ratepayer funding, including, but not limited to, energy arbitrage, ancillary services, and capacity revenues in PJM;
(f) evidence reasonably satisfactory to the board of the status of the transmission-scale energy storage system in the PJM interconnection process;
(g) assurances reasonably satisfactory to the board that the transmission-scale energy storage system will adhere to nationally recognized minimum safety requirements, including, but not limited to, appropriate laboratory testing, and comply with all manufacturers' installation requirements, applicable laws, regulations, codes, licensing, and permit requirements;
(h) an application fee as set by the board; and
(i) any other information required by the board.
c. The board shall review Tranche 1 applications consistently with the requirements of this section. At its discretion, the board may instruct an applicant on curing minor defects in a Tranche 1 application. The board shall include in its application review process a system of scoring, established prior to its review of any project, which scoring system shall, at a minimum, be based on price factors; maturity and likelihood of success; and environmental justice, redevelopment, and community benefits.
(1) In designing scoring for the price factors of an application, the board shall:
(a) consider costs and values throughout the application as measured in dollars per megawatt capacity per year;
(b) establish a maximum percentage of scoring that shall be price-based; and
(c) appropriately compare bid prices, at the board's discretion, based on the measure of the capacity of a transmission-scale energy storage system by the lesser of its installed capacity or its energy storage capacity divided by four hours.
(2) An application shall receive a higher score for maturity and likelihood of success if the transmission-scale energy storage system:
(a) has a fully executed Large Generator Interconnection Agreement through PJM or requires limited network upgrades;
(b) has completed non-ministerial permits; and
(c) is proposed by an applicant with experience in energy storage development, construction, and finance.
(3) An application shall receive a higher score for environmental justice, redevelopment, and community benefits if it includes brownfield redevelopment, existing or former fossil fuel plant replacement, or demonstrated benefits to environmental justice in communities where a transmission-scale energy storage system is proposed to be located.
(4) The board may place an eligible project that does not receive an incentive award for Tranche 1 on a waiting list and consider the eligible project for an incentive award during a subsequent tranche or successor program pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
d. The board shall approve incentive awards totaling a collective minimum of $60,000,000 in annual payments for each year of the 15-year award period of each eligible project approved under Tranche 1. The board shall provide funding for this annual collective amount of incentive award payments for Tranche 1, which payments shall be fully funded pursuant to subsection a. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), in order to ensure that the collective installed capacity of eligible projects receiving an incentive award totals at least 500 megawatts for Tranche 1. An incentive award shall be conditioned upon a developer's compliance with the board order determining the incentive award and with any conditions the board shall reasonably require.
e. A board order that issues an incentive award for Tranche 1 shall be binding and enforceable. A Tranche 1 incentive award board order shall:
(1) define the eligible project receiving an incentive award and the eligible project's megawatt capacity;
(2) define the incentive award, including a payment schedule for the 15-year award period of the incentive award, which term shall commence no earlier than July 1, 2028 or upon the commercial operations date of an eligible project, and during which term an eligible project shall receive an annual incentive award on each anniversary of the first payment date;
(3) determine the amount of funding to be allocated for payment of the incentive award beginning either in the fiscal year beginning on July 1, 2028 or on the commercial operations date of the eligible project, whichever is later;
(4) include a participation fee as the board shall require from the developer;
(5) require, for an eligible project awarded an incentive award, a pre-development security not to exceed $100,000 per megawatt and not to exceed in total $10,000,000;
(6) outline the conditions under which the board may, in the event of a developer's failure to operate an eligible project by the deadline stated in the board order or to meet deadlines included in the board order, revoke an incentive award or retain a portion of the pre-development security;
(7) provide that receipt of an incentive award for an eligible project shall be contingent on achievement of baseline performance requirements, including, but not limited to, the availability of energy storage for dispatch in a percentage of hours daily, which percentage shall be decided by the board. The board may use the PJM Equivalent Forced Outage Rate or another metric determined appropriate by the board to measure energy storage availability. The board order shall require that the developer report data for the purpose of this paragraph at regular intervals and shall provide for a reduction of an incentive award in proportion to the percentage of required availability that is unmet by the eligible project; and
(8) require that a developer provide additional information to the board during the term of the incentive award, as the board may reasonably require. The board may set additional requirements at its discretion, including, but not limited to, a requirement that the developer report major development and construction milestones to the board, maintain financial security throughout the term of the incentive award, or any other requirement the board determines necessary to ensure continued progress and operational viability of an eligible project.
f. (1) Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), or any other law or rule to the contrary, the board shall:
(a) within 120 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), develop application requirements and eligibility criteria for Tranche 1; and
(b) permit applications for Tranche 1, pursuant to paragraphs (2) and (3) of this subsection, without regard to the publication status of the rules and regulations to be issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
(2) The board shall permit an applicant, within 45 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), to submit an early application for Tranche 1 prior to the formal establishment of an application process or the promulgation of Tranche 1 rules and regulations.
(3) Within 30 days following the effective date of a board order either approving the rules and regulations proposed for publication pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) or approving the proposed application requirements and eligibility criteria for Tranche 1 in accordance with this section, the board shall:
(a) begin formally accepting applications for Tranche 1; and
(b) advise any applicant that submitted an early application for Tranche 1 pursuant to paragraph (2) of this subsection of any defects in its existing application pursuant to the rules and regulations or the application requirements and eligibility criteria approved by board order issued pursuant to this paragraph.
(4) The board shall accept Tranche 1 applications for a maximum of 60 days after the beginning of the formal application period for Tranche 1 pursuant to paragraph (3) of this subsection. Within 90 days following the closure of the Tranche 1 application period, the board shall evaluate projects in accordance with this section, any rules or regulations proposed pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), and any application requirements and eligibility criteria approved pursuant to this subsection.
g. Tranche 1 incentive awards shall receive funding pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).
3. a. No later than one calendar year following the date of the final Tranche 1 procurement approval issued pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall initiate a proceeding to examine the impact of the State's energy storage programs, collectively and individually, and to assess progress toward the 2030 energy storage target established pursuant to section 1 of P.L.2018, c.17 (C.48:3-87.8).
b. The board shall issue a report detailing its conclusions and submit the report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. In its report issued pursuant to this subsection, the board shall, at a minimum:
(1) examine the State's energy storage programs;
(2) account for projected electric bill savings and costs to ratepayers, as well as societal benefits of reduced emissions, due to increased installed capacity or energy storage capacity;
(3) report the progress of the projects under each energy storage program, including progress toward construction completion;
(4) compare relative costs per capacity awarded for each project based on its installed capacity;
(5) produce estimates of the most cost-effective means to achieve the 2030 energy storage target established pursuant to section 1 of P.L.2018, c.17 (C.48:3-87.8) or any other energy storage target established by the Legislature; and
(6) determine, at the discretion of the board, whether to extend the procurement of transmission-scale energy storage pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) based on the results of Tranche 1. The board may procure additional tranches either:
(a) pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) with funding through the societal benefits charge pursuant to subsection a. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill); or
(b) pursuant to a successor program established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) with funding through rate recovery as set forth in subsection b. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).
4. a. Following a determination, pursuant to subparagraph (b) of paragraph (6) of subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), to establish a successor program, the board shall issue rules and regulations pursuant to the requirements of subsection c. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. The board shall, in any successor program, require each electric public utility to submit proposed tariffs for board review and approval, which tariffs shall be designed to fund the successor program through base rate recovery. Each electric public utility's tariff submitted pursuant to this subsection shall include, apportioned according to the relative electric load of the electric public utility in this State, the total cost of:
(1) the outstanding costs of the incentives awarded to eligible projects under Tranche 1; and
(2) the costs, as the board determines necessary, for incentive awards under the successor program.
c. In addition to rules and regulations issued pursuant to subsection c. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall be authorized to continue any rule, regulation, or policy used to administer Tranche 1 as the board determines necessary and appropriate to administer a successor program. If the board determines in the report required pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) that it will extend the procurement of transmission-scale energy storage through additional tranches in accordance with subparagraph (b) of paragraph (6) of subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall administer future tranches in a similar manner to Tranche 1, modifying as appropriate for each subsequent tranche:
(1) the amount of megawatts to be solicited;
(2) the application requirements or eligibility criteria;
(3) the timeline for an eligible project, including, but not limited to, application deadlines or the contract term; and
(4) any other administrative modification the board deems appropriate following its report issued pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
d. The board may amend a Tranche 1 incentive award, upon written consent from the developer of the eligible project, solely to change the funding mechanism of the incentive award pursuant to subsection b. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill). Any incentive award for an eligible project and the conditions for receiving funding pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall remain effective for the full duration of the 15-year award period specified in the board's Tranche 1 order awarding the incentive, notwithstanding any change to the funding mechanism of the incentive award.
5. a. An incentive award issued pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be funded through the societal benefits charge established pursuant to subsection a. of section 12 of P.L.1999, c.23 (C.48:3-60). In the fiscal year beginning on July 1, 2028, and in each fiscal year thereafter, the board shall allocate a minimum of $60,000,000 from the funds collected through the societal benefits charge to fully fund the incentive awards issued by the board pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. (1) An incentive award issued pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be funded through ratepayer tariffs recovered through an electric public utility's base rate case, in accordance with subsection b. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
(2) Any amendment to a Tranche 1 incentive award board order to change the funding mechanism of the incentive award pursuant to subsection d. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall replace the funding mechanism of the incentive award with funding pursuant to paragraph (1) of this subsection. Pending any order for replacement funding for a Tranche 1 incentive award order, the Tranche 1 incentive award shall continue to be funded pursuant to subsection a. of this section.
6. a. (1) The board shall adopt, as expeditiously as possible, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations consistent with the purposes of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). The rules and regulations issued for Tranche 1 shall be similar to the board's rules concerning Grid Supply projects for the New Jersey Energy Storage Incentive Program, or its replacement or successor, in its final form, but shall reflect the unique nature of transmission-scale energy storage systems.
(2) Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), or any other law or rule to the contrary, the board shall:
(a) within 60 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), engage with stakeholders and interested parties and solicit comments on the rules and regulations for publication in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.); and
(b) within 120 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), submit the proposed Tranche 1 rules and regulations for publication in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
b. Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), or any other law or rule to the contrary, the board may procure transmission-scale energy storage systems and award incentives for Tranche 1 pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), notwithstanding the status of board rules or regulations pursuant to subsection a. of this section.
c. In the event that the board decides to implement a successor program pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), following the issuance of its report pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations consistent with the purposes of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), and determine therein, at a minimum:
(1) the minimum amount of energy storage to be procured in total among eligible projects during any solicitation subsequent to Tranche 1;
(2) any eligibility criteria;
(3) the minimum performance standards for an eligible project; and
(4) the amount and structure of a performance-based adjustment.
7. Section 12 of P.L.1999, c.23 (C.48:3-60) is amended to read as follows:
12. a. Simultaneously with the starting date for the implementation of retail choice as determined by the board pursuant to subsection a. of section 5 of P.L.1999, c.23 (C.48:3-53), the board shall permit each electric public utility and gas public utility to recover some or all of the following costs through a societal benefits charge that shall be collected as a non-bypassable charge imposed on all electric public utility customers and gas public utility customers, as appropriate:
(1) [The] the costs for the social programs for which rate recovery was approved by the board prior to April 30, 1997. For the purpose of establishing initial unbundled rates pursuant to section 4 of P.L.1999, c.23 (C.48:3-52), the societal benefits charge shall be set to recover the same level of social program costs as is being collected in the bundled rates of the electric public utility on the effective date of P.L.1999, c.23 (C.48:3-49 et al.). The board may subsequently order, pursuant to its rules and regulations, an increase or decrease in the societal benefits charge to reflect changes in the costs to the utility of administering existing social programs. Nothing in P.L.1999, c.23 (C.48:3-49 et al.) shall be construed to abolish or change any social program required by statute or board order or rule or regulation to be provided by an electric public utility. Any such social program shall continue to be provided by the utility until otherwise provided by law, unless the board determines that it is no longer appropriate for the electric public utility to provide the program, or the board chooses to modify the program;
(2) [Nuclear] nuclear plant decommissioning costs;
(3) [The] the costs of demand side management programs that were approved by the board pursuant to its demand side management regulations prior to April 30, 1997. For the purpose of establishing initial unbundled rates pursuant to section 4 of P.L.1999, c.23 (C.48:3-52), the societal benefits charge shall be set to recover the same level of demand side management program costs as is being collected in the bundled rates of the electric public utility on the effective date of P.L.1999, c.23 (C.48:3-49 et al.). Within four months of the effective date of P.L.1999, c.23 (C.48:3-49 et al.), and every four years thereafter, the board shall initiate a proceeding and cause to be undertaken a comprehensive resource analysis of energy programs, and within eight months of initiating such proceeding and after notice, provision of the opportunity for public comment, and public hearing, the board, in consultation with the Department of Environmental Protection, shall determine the appropriate level of funding for energy efficiency, light, medium, and heavy-duty plug-in electric vehicles, including school buses, and associated plug-in electric vehicle charging infrastructure, and Class I renewable energy programs that provide environmental benefits above and beyond those provided by standard offer or similar programs in effect as of the effective date of P.L.1999, c.23 (C.48:3-49 et al.); provided that the funding for such programs be no less than 50 percent of the total Statewide amount being collected in electric and gas public utility rates for demand side management programs on the effective date of P.L.1999, c.23 (C.48:3-49 et al.) for an initial period of four years from the issuance of the first comprehensive resource analysis following the effective date of P.L.1999, c.23 (C.48:3-49 et al.), and provided that 25 percent of this amount shall be used to provide funding for Class I renewable energy projects in the State. In each of the following fifth through eighth years, the Statewide funding for such programs shall be no less than 50 percent of the total Statewide amount being collected in electric and gas public utility rates for demand side management programs on the effective date of P.L.1999, c.23 (C.48:3-49 et al.), except that as additional funds are made available as a result of the expiration of past standard offer or similar commitments, the minimum amount of funding for such programs shall increase by an additional amount equal to 50 percent of the additional funds made available, until the minimum amount of funding dedicated to such programs reaches $140,000,000 total. After the eighth year the board shall make a determination as to the appropriate level of funding for these programs. Such programs shall include a program to provide financial incentives for the installation of Class I renewable energy projects in the State, and the board, in consultation with the Department of Environmental Protection, shall determine the level and total amount of such incentives as well as the renewable technologies eligible for such incentives which shall include, at a minimum, photovoltaic, wind, and fuel cells. The board shall simultaneously determine, as a result of the comprehensive resource analysis, the programs to be funded by the societal benefits charge, the level of cost recovery and performance incentives for old and new programs and whether the recovery of demand side management programs' costs currently approved by the board may be reduced or extended over a longer period of time. The board shall make these determinations taking into consideration existing market barriers and environmental benefits, with the objective of transforming markets, capturing lost opportunities, making energy services more affordable for low income customers and eliminating subsidies for programs that can be delivered in the marketplace without electric public utility and gas public utility customer funding. The board shall set the societal benefits charge, in addition to the determinations above, to include full funding of the costs, as determined by the board, of providing incentive award payments for transmission-scale energy storage systems that are eligible projects pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill);
(4) [Manufactured] manufactured gas plant remediation costs, which shall be determined initially in a manner consistent with mechanisms in the remediation adjustment clauses for the electric public utility and gas public utility adopted by the board; and
(5) [The] the cost, of consumer education, as determined by the board, which shall be in an amount that, together with the consumer education surcharge imposed on electric power supplier license fees pursuant to subsection h. of section 29 of P.L.1999, c.23 (C.48:3-78) and the consumer education surcharge imposed on gas supplier license fees pursuant to subsection g. of section 30 of P.L.1999, c.23 (C.48:3-79), shall be sufficient to fund the consumer education program established pursuant to section 36 of P.L.1999, c.23 (C.48:3-85).
b. There is established in the Board of Public Utilities a nonlapsing fund to be known as the "Universal Service Fund." The board shall determine: the level of funding and the appropriate administration of the fund; the purposes and programs to be funded with monies from the fund; which social programs shall be provided by an electric public utility as part of the provision of its regulated services which provide a public benefit; whether the funds appropriated to fund the "Lifeline Credit Program" established pursuant to P.L.1979, c.197 (C.48:2-29.15 et seq.), the "Tenants' Lifeline Assistance Program" established pursuant to P.L.1981, c.210 (C.48:2-29.30 et seq.), the funds received pursuant to the Low Income Home Energy Assistance Program established pursuant to 42 U.S.C. s.8621 et seq., and funds collected by electric and gas public utilities, as authorized by the board, to offset uncollectible electricity and natural gas bills should be deposited in the fund; and whether new charges should be imposed to fund new or expanded social programs.
(cf: P.L.2022, c.86, s.2)
8. This act shall take effect immediately.
STATEMENT
The Board of Public Utilities (board) is required to establish a program to procure and provide incentive awards for the development of transmission-scale energy storage systems with a reasonable likelihood of successful and timely completion. The board is required to solicit applications for the program in an initial Tranche 1. After the conclusion of Tranche 1, the board is to engage in a review of the impact of the State's energy storage programs to make certain determinations, including whether to continue procuring and incentivizing transmission-scale energy storage. As outlined in the bill, the board is permitted to procure additional tranches by either continuing under the same program as Tranche 1 or implementing a successor program, with the board authorized to make changes based on its determinations in a report issued following its review.
For the bill's purposes, "transmission-scale energy storage system" means an energy storage system, capable of energy storage of at least 5 megawatts, that is interconnected with the PJM Transmission Network and situated inside a Transmission Zone in New Jersey or is otherwise located in New Jersey and qualified to provide energy, capacity, or ancillary services in the wholesale markets established by PJM Interconnection, L.L.C. (PJM).
Tranche 1 Procurement
The bill requires the board to solicit Tranche 1 applications for eligible projects whose collective installed capacity totals at least 500 megawatts of alternating current (MW AC). The bill provides certain deadlines for the proposal of rules and regulations; the development of application requirements and eligibility criteria; and the process of application, processing, and approval.
The board is required to permit an applicant, within 45 days following the bill's effective date, to submit an early application for Tranche 1 prior to the formal establishment of an application process or the promulgation of Tranche 1 rules and regulations. Within 30 days following the effective date of a board order either approving the rules and regulations proposed for publication or approving the proposed application requirements and eligibility criteria for Tranche 1, the board is required to: (1) begin formally accepting applications for Tranche 1; and (2) advise any applicant that submitted an early application for Tranche 1 of any defects in its existing application pursuant to the rules and regulations or the application requirements and eligibility criteria approved by board order.
To qualify for a Tranche 1 incentive award, a transmission-scale energy storage system is required to: (1) not participate in any other energy storage program; (2) have an anticipated commercial operations date of no later than December 31, 2030, unless the board permits an exception; (3) have completed the PJM interconnection process up to, at minimum, the completion of a System Impact Study, or equivalent study, as well as a draft or fully-executed Large Generator Interconnection Agreement through PJM at the time of application for Tranche 1; and (4) meet any other eligibility criteria the board may establish through board order or rulemaking.
A Tranche 1 application is required to include certain information and a fee, as provided in the bill.
At its discretion, the board may instruct an applicant on curing minor defects in a Tranche 1 application. The board is required to include in its application review process a system of scoring, established prior to its review of any project, which scoring system is to be based on price factors; maturity and likelihood of success; and environmental justice, redevelopment, and community benefits. The bill provides certain requirements for the scoring process and permits the board to place an eligible project that does not receive an incentive award for Tranche 1 on a waiting list and consider the eligible project for an incentive award during a subsequent tranche or successor program.
Tranche 1 Incentives
Under the bill, the board is required to approve incentive awards totaling a collective minimum of $60 million for Tranche 1. An incentive award is to be conditioned upon a developer's compliance with the board order determining the incentive award and with any conditions the board requires.
Tranche 1 Board Orders
The bill outlines certain requirements for a board order issuing an incentive award to an eligible project, including that the board order is required to: (1) define the eligible project receiving an incentive award and the eligible project's megawatt capacity; (2) define the incentive award, including a payment schedule for the 15-year award period of the incentive award, which term is to commence no earlier than July 1, 2028 or upon the commercial operations date of an eligible project, and during which term an eligible project is to receive an annual incentive award on each anniversary of the first payment date; (3) determine the amount of funding to be allocated for payment of the incentive award beginning either in the fiscal year beginning on July 1, 2028 or on the commercial operations date of the eligible project, whichever is later; (4) include a participation fee as the board is to require from the developer; (5) require, for an eligible project awarded an incentive, a pre-development security not to exceed $100,000 per megawatt and not to exceed in total $10,000,000; (6) outline the conditions under which the board may, in the event of a developer's failure to operate an eligible project by the deadline stated in the board order or to meet deadlines included in the board order, revoke an incentive award or retain a portion of the pre-development security; (7) provide that receipt of an incentive award for an eligible project is to be contingent on achievement of baseline performance requirements, including, but not limited to, the availability of energy storage for dispatch in a percentage of hours daily, which percentage is to be decided by the board. The board is permitted to use the PJM Equivalent Forced Outage Rate or another metric deemed appropriate by the board to measure energy storage availability. The board order is to require that the developer report data for this purpose at regular intervals and is to provide for a reduction of an incentive award in proportion to the percentage of required availability that is unmet by the eligible project; and (8) require that a developer provide additional information to the board during the term of the incentive award, as the board may require. The board may set additional requirements at its discretion, including, but not limited to, a requirement that the developer report major development and construction milestones to the board, maintain financial security throughout the term of the incentive award, or any other requirement the board determines necessary to ensure continued progress and operational viability of an eligible project.
Ratepayer Impact Review
No later than one calendar year following the date of the final Tranche 1 procurement approval, the board is required to initiate a proceeding to examine the impact of the State's energy storage programs, collectively and individually, and to assess progress toward the 2030 energy storage target of 2,000 megawatts. The board is required to issue a report that, at a minimum: (1) examines the State's energy storage programs; (2) accounts for projected electric bill savings and costs to ratepayers, as well as societal benefits of reduced emissions, due to increased installed capacity or energy storage capacity; (3) reports the progress of the projects under each energy storage program; (4) compares relative costs per capacity awarded for each project based on its installed capacity; (5) produces estimates of the most cost-effective means to achieve the 2030 energy storage target or any other energy storage target established by the Legislature; and (6) determines, at the discretion of the board, whether to extend the procurement of transmission-scale energy storage pursuant to this bill based on the results of Tranche 1.
Future Procurement
If the board determines in the report required by the bill that it will extend the procurement of transmission-scale energy storage through additional tranches, the board is permitted either to continue the program under which Tranche 1 was conducted or to establish a successor program, as outlined in the bill. The primary difference between these options for continued procurement of transmission-scale energy storage is the funding mechanism for incentive awards, as described below.
If the board administers future tranches pursuant to either option in the bill, the board is required to do so in a similar manner to how it administered Tranche 1, modifying as appropriate for each subsequent tranche: (1) the amount of megawatts to be solicited; (2) the application requirements or eligibility criteria; (3) the timeline for an eligible project, including, but not limited to, application deadlines or the contract term; and (4) any other administrative modification the board deems appropriate following its report.
Incentive Award Funding Mechanisms
The bill requires the board to fund incentive awards issued for Tranche 1 and any subsequent tranches issued under the same program through the societal benefits charge. Beginning in Fiscal Year 2029, the board is required to annually allocate a minimum of $60 million from the funds collected through the societal benefits charge to fully fund incentive awards issued for Tranche 1 and any subsequent tranches issued under the same program.
If the board instead establishes a successor program, it is required to fund incentive awards issued under the successor program through changes to each electric public utility's base rate case. As apportioned according to the relative electric load of each, the electric public utilities are to recover the total cost of (1) the outstanding costs of the incentives awarded to eligible projects under Tranche 1; and (2) the costs as the board determines necessary for incentive awards under the successor program.
The funding mechanism of a Tranche 1 incentive award is not to be changed without the consent of the developer, permitting Tranche 1 incentive awards to continue to be funded through the societal benefits charge if a developer does not agree to the change in funding mechanism, even if the board elects to establish a successor program with a different funding mechanism.