New Jersey Senate Bill S4304

New Jersey 2024-2025 Regular Session

• Introduced: 5/12/25
• Refer: 5/12/25
• Report Pass: 6/12/25

Caption

Requires BPU to determine and consider lowest reasonable return on equity before approving electric, gas, and water public utility base rate cases.

Impact

The bill impacts existing state laws by instituting a requirement for the BPU to adopt an analytical model that reflects applicable state, federal, and industry standards for determining fair ROE. This change is significant as it adds a structured approach to evaluating utility rate requests, potentially leading to more informed decisions that weigh the interests of both utilities and consumers. By emphasizing the lowest reasonable ROE, the legislation aims to introduce greater financial scrutiny into the rate-setting process, thus safeguarding consumer interests against arbitrary or excessively high rate increases.

Summary

Senate Bill S4304 aims to modify the regulatory framework that governs how the Board of Public Utilities (BPU) approves rate increases for electric, gas, and water public utilities in New Jersey. The primary provision of the bill mandates that the BPU must determine and consider the lowest reasonable return on equity (ROE) before approving any proposed rate adjustments. The intention behind this legislation is to ensure that rate increases are just and reasonable, thereby protecting consumers from excessive charges while still allowing utilities to cover their necessary costs and achieve a fair return on investment.

Contention

There may be points of contention regarding how the BPU defines and implements the lowest reasonable ROE, as stakeholders may have differing views on what constitutes a fair and reasonable return. Utilities may argue that limiting ROE could hinder their ability to attract investment necessary for infrastructure improvements and service reliability. In contrast, consumer advocacy groups could express concern that a lack of stringent oversight could allow utilities to impose unjustified rate hikes. Consequently, the bill could fuel debates over balancing the financial viability of utility companies with the economic pressures faced by consumers, particularly in the context of rising energy costs.