Societal Benefits Charge

New Jersey’s 1999 electric-utility restructuring legislation created a “societal benefits charge” (SBC) to support investments in energy efficiency and “Class I” renewable energy. The SBC funds New Jersey’s Clean Energy Program (NJCEP), a statewide initiative administered by the New Jersey Board of Public Utilities (BPU). The NJCEP provides technical assistance, financial assistance, information and education for all classes of ratepayers. NJCEP energy-efficiency programs and renewable-energy programs were initially managed and implemented by New Jersey’s seven investor-owned electric public utilities and gas public utilities, but on April 1, 2007 management was turned over to third-party program managers Honeywell Utility Solutions and TRC Energy Solutions. The BPU will continue to act as the administrator of the NJCEP, while contracted program managers will be responsible for managing and implementing these programs. The New Jersey Office of Clean Energy (OCE) and market managers submit annual program plans for approval by the BPU (see website for details).

During 2011 and 2012 several minor changes were made to the originally enacted SBC law. In 2011 a section was added prohibiting gas utilities from imposing an SBC charge (or several other types of charge) on natural gas delivery service or a commodity that is used to generate electricity for resale. Also in 2011, legislation was enacted requiring the BPU to provide equal opportunity for businesses in all areas of the state that pay to SBC to apply for and receive incentives funded by the charge. In 2012, legislation was enacted allowing commercial and industrial customers to take a credit against the SBC of up to one half of the cost incurred during the previous calendar year for independent energy efficiency investments and improvements that would have been eligible for SBC funding.

“Class I” renewable energy is defined as electric energy produced from solar technologies, photovoltaic technologies, wind energy, fuel cells, geothermal technologies, wave or tidal action, and methane gas from landfills or a biomass facility, provided that the biomass is cultivated and harvested in a sustainable manner. NJCEP funding for renewables includes the state’s much publicized customer-sited rebate programs, as well as other initiatives such as offshore wind, large grid-connected renewables, and clean energy systems manufacturing. For energy-efficiency projects, the NJCEP has provided funding for new construction, building retrofits, HVAC systems, Energy Star products (including air conditioners, appliances and lighting), combined heat and power (CHP), energy audits, and energy-efficiency projects for low-income residents.

The SBC is collected as a non-bypassable charge imposed on all customers of New Jersey’s seven investor-owned electric public utilities and gas public utilities. The BPU determines the amount that will be collected. A total of $482 million was collected during 2001-2004 and a total of $745 million was collected from 2005-2008. In September 2008 the BPU approved a 2009-2012 budget of $1.213 billion, with approximately 80% ($950 million) of the budget devoted to energy efficiency programs and 20% ($243 million) allocated for renewable energy programs. Any unused funds from previous years are carried into the next year’s budget. In June 2013, after six-month extension of funding total of $344 million of funds were approved for FY2014.  In June 2014, the Board approved total funds of $344 million for FY2015. Rockland Electric’s 2020 annual SBC filing noted an anticipated over-collection of $668,236 for the previous year at the $0.3582/kWh rate.

It is important to note that these budget numbers do not account for a variety of factors that may have small or large impacts on the actual annual budget. Such factors include:

• Interest earned on the balance of funds that have already been collected
• Budget re-allocations between the energy efficiency and renewable energy
• Alternative compliance payments (ACPs) made under the state renewable portfolio standard, to be used to support renewable energy projects through the NJCEP. For instance, solar ACPs (or SACPs) totaling $38.9 million were deposited into the fund for RPS shortfalls during the June 2008 – May 2009 compliance year. This portion of the law was amended in 2010 to provide that SACPs must be refunded to ratepayers.
• Transfers of money out of the fund to serve other state purposes. Examples of this include a $40 million transfer made in June 2009 as part of the state’s FY 2010 appropriations act, and a further transfer of $158 million from the clean energy fund into a state general fund under the FY2010 Supplemental Appropriations Act in June 2010. The April 2010 Revised 2010 Clean Energy Program Budget contains significant program and funding revisions resulting from this transfer.* According to budget orders for subsequent years, further transfers out of the fund of $77.5 million (FY 2011),  $252.5 million (FY 2012), and $131.5 million (FY 2013) have been made.

These and other budget/funding details are available in various market manager and BPU documents on the program web site listed at the top of this page. Further information on historical activities is available in form of quarterly and annual Clean Energy Program reports.

*Notably, this transfer was challenged in court on the basis that it violated New Jersey law defining how funds raised through the SBC may be used. In March 2011 the Superior Court of New Jersey upheld the validity of this transfer, reasoning among other things that as the legislature authorized the collection and purposes of SBC funds, it retains the authority to change those permitted purposes.