New Jersey Establishes Framework to Achieve Energy Efficiency Goals

The New Jersey Board of Public Utilities on June 10 issued an order directing the state’s utilities to establish energy efficiency and peak demand reduction programs, taking a significant step towards clean energy transition. The board set a five-year goal to reduce energy usage by 2.15 percent for electric distribution companies and 1.1 percent for gas distribution companies in the state. Utilities will operate core programs that serve the residential, commercial and industrial, and multifamily sectors. The order also includes requirements to ensure equity throughout energy efficiency.

The program is in response to the Clean Energy Act signed by Governor Murphy in 2018, which requires each utility to implement energy efficiency measures to reduce electricity usage by 2 percent and natural gas usage by 0.75 percent within the prior three years of five-year implementation period. The program will also benefit underserved communities by reducing utility bills, creating green jobs, and improving health.

The order issued details the administration of the energy efficiency programs by specifying the mechanism of cost recovery, performance metrics, and verification framework. The board also sets a series measures to address equity including creating an Office of Clean Energy Equity to oversee the equitable deployment of clean energy technologies and serving as a liaison to low and moderate income communities.

Under the order:

• The utilities will administer core, consistent energy efficiency programs that serve the residential, commercial and industrial, and multifamily sectors, including the moderate-income and small commercial customers.
• The state will continue to administer large energy users, except hospitals, combined heat and power projects, and state and local government programs. The utilities and the state will continue to co-manage the low-income Comfort Partners program.
• Program expenses will be amortized over ten years. An alternative mechanism is expected to be developed within the next few months to recover the utilities’ lost revenue. A system of incentives and penalties have also been instituted by the Board to encourage the program performance.
• The board staff recommends using a “multifactor metric approach” to use seven metrics to ensure meeting the core policy objectives beyond annual energy saving reductions.
• The board will conduct a triennial review process to examine key energy efficiency decisions, including performance metrics and targets, and budgets to ensure the best operation of the programs.