New Jersey Opens Major Utility Business Model Review Amid Rising Power Bills

The New Jersey Board of Public Utilities on May 5 announced plans to launch a comprehensive review of how the state’s electric utilities operate, recover costs, and earn revenue, opening one of the most significant regulatory examinations undertaken in New Jersey in decades. The effort follows the agency’s April 22 approval of an independent consultant to study modernization of the electric distribution company business model under Governor Mikie Sherrill’s Executive Order No. 1.

The review comes as consumers face rising electricity costs and growing utility investment tied to grid modernization, reliability upgrades, electrification, and clean energy goals. Regulators are expected to examine whether New Jersey’s current ratemaking framework remains appropriate for the state’s changing energy system and whether reforms could better protect customers from long-term bill increases.

The consultant’s study will evaluate several regulatory approaches, including performance-based ratemaking, multi-year rate plans, and alternative utility earnings structures. The review will assess whether those reforms could improve cost stability, strengthen reliability, and deliver greater long-term value for customers while reducing reliance on capital-driven rate increases.

The board will formally launch the proceeding during a public stakeholder meeting on May 7. Organized with support from the Regulatory Assistance Project, the session will outline the scope of the review, provide an overview of the state’s existing utility cost recovery structure, and introduce stakeholders to performance-based regulation concepts.

The meeting will also feature a roundtable with former utility commissioners from Hawaii, Indiana, Massachusetts, and Illinois who previously led similar regulatory reform efforts in their states. Discussions are expected to focus on lessons from implementing new utility incentive structures and balancing customer protections with infrastructure investment needs.

Although the proceeding will not trigger immediate rate changes, the review could shape future utility regulation in New Jersey and influence long-term strategies aimed at stabilizing customer energy bills.