New Jersey § 48:3-58

§ 48:3-58.

a. After the implementation of retail electric choice pursuant to subsection a. of

section 5 of this act, the board shall order each gas public utility to unbundle its

rate schedules such that discrete services provided, which were previously included

in the bundled utility rate, are separately identified and charged in its tariffs. Billing for unbundled services also shall include charges for regulatory assets

and may include restructuring related costs. The board shall order each gas public utility to submit a rate unbundling filing

no later than May 1, 1999, in a form and of a content to be determined by the board. The board shall review such filings and, after hearing and an opportunity for public

comment, render a determination as to the appropriate unbundled rates consistent with

the provisions of this act. Notwithstanding any other provisions of this act, an unbundling of gas public utility

rates implemented as a result of this section shall not result in a reallocation of

utility cost responsibility between or among different classes of customers. The board shall continue to allow commercial and industrial customers to choose

a gas supplier and shall order that all retail customers of a gas public utility shall

be able to choose a gas supplier by no later than December 31, 1999, except that the

board may approve an accelerated schedule for retail gas customer choice. b. Subject to the approval of the board pursuant to subsection d. of this section,

a gas public utility or a related competitive business segment of that gas public

utility may provide the following competitive services: (1) Metering, billing and related administrative services that are deemed competitive

by the board pursuant to this section; (2) Services related to safety and reliability of utility businesses; (3) Competitive services that have been offered by any electric or gas public utility

since prior to January 1, 1993 or that have been approved by the board prior to the

effective date of this act to be offered by any electric public utility or gas public

utility. A gas public utility that has offered a competitive service since prior to January

1, 1993 or a competitive service that was approved prior to the effective date of

this act is not required to obtain board approval pursuant to subsection d. of this

section, but any gas public utility that has not offered a competitive service prior

to January 1, 1993 or has not received previous board approval for such a competitive

service shall apply for approval pursuant to subsection d. of this section. Except as otherwise provided by this paragraph, a competitive service that is permitted

by this paragraph shall be subject to all requirements of this act for competitive

services and to any standards or other rules or regulations adopted pursuant to this

act; (4) Services that are substantially similar to competitive services that are permitted

under paragraph (3) of this subsection; and (5) Competitive services to non-residential customers using utility employees and

assets. c. A gas public utility or a related competitive business segment of that gas public

utility may provide other services that are offered for nominal or no consideration

to existing non-residential customers in the ordinary course of business. d. A gas public utility shall not offer any competitive service to retail customers

without the express prior written approval of the board. The board may require that a gas public utility file and maintain tariffs for competitive

services, which tariffs shall be subject to review and approval by the board. The board shall approve a competitive service only upon a finding that: (1) The provision of a competitive service by a gas public utility or its related

competitive business segment shall not adversely impact the ability of the gas public

utility to offer its non-competitive services to customers in a safe, adequate and

proper manner, and in all instances where resources are jointly deployed by the utility

to provide competitive and non-competitive services and resource constraints arise,

the provision of non-competitive services shall receive a higher priority; and (2) The price that a gas public utility charges for a competitive service shall not

be less than the fully allocated cost of providing such service, as determined by

the board, which cost shall include an allocation of the cost of all equipment, vehicles,

labor, related fringe benefits and overheads, and administration utilized, and all

other assets utilized and costs incurred, directly or indirectly, in providing such

competitive service. e. Tariffs for competitive services filed with the board shall be in the public records,

except that if the board determines that the rates are proprietary, they shall be

filed under seal and made available under the terms of an appropriate protective agreement,

as provided by board order. A public utility shall have the burden of proof by affidavit and motions to demonstrate

the need for proprietary treatment. The rates shall become public upon board approval. f. A gas public utility shall not use regulated rates to subsidize its competitive

services or competitive services offered by a related competitive business segment

of the public utility holding company of which the public utility is an affiliate,

and expenses incurred in conjunction with its competitive services shall not be borne

by its regulated rate customers. The regulated rates of a gas public utility shall be subject to the review and approval

of the board to determine that there is no subsidization of its related competitive

business segment. Each such public utility shall maintain books and records, and provide accounting

entries of its regulated business to the board as required by the board, to show that

there is strict separation and allocation of the utility's revenues, costs, assets,

risks and functions, between the gas public utility and its related competitive business

segment. g. Except as otherwise provided in this act, and notwithstanding any provisions of R.S.48:2-18 , R.S.48:2-21 , section 31 of P.L.1962, c. 198 ( C.48:2-21.2 ), R.S.48:3-1 or any other law to the contrary, the board shall not regulate, fix or prescribe

the rates, tolls, charges, rate structures, rate base, or cost of service of competitive

services. h. The board is authorized to determine, after notice and hearing, whether any service

offered by a gas public utility is a competitive service. In making such a determination, the board shall develop standards of competitive

service which, at a minimum, shall include: evidence of ease of market entry; presence

of other competitors; and the availability of like or substitute services in the

relevant geographic area. Notwithstanding the presence of these factors, the board may determine that any

service shall remain regulated for purposes of the public safety and welfare. i. The board shall have the authority to reclassify as regulated any gas service or

segment thereof that it has previously found to be competitive, if, after notice and

hearing, and after appropriate review by the Legislature pursuant to subsection v.

of this section, it determines that sufficient competition is no longer present, upon

application of the criteria set forth in subsection h. of this section. Upon such a reclassification, subsection g. of this section shall no longer apply

and the board shall determine such rates for that gas service as it finds to be just

and reasonable. The board, however, shall continue to monitor the gas service or segment thereof

and, whenever the board shall find that the gas service has again become sufficiently

competitive pursuant to subsection h. of this section, the board shall again apply

the provisions of subsection g. of this section. j. Nothing in this act shall limit the authority of the board, pursuant to Title 48

of the Revised Statutes, to ensure that gas public utilities do not make or impose

unjust preferences, discriminations, or classifications for any services provided

to customers. k. (1) The board shall adopt, by rule, regulation or order, such fair competition

standards, affiliate relation standards, accounting standards and reports as are necessary

to ensure that gas public utilities or their related competitive business segments

do not enjoy an unfair competitive advantage over other non-affiliated purveyors of

competitive services and in order to monitor the allocation of costs between competitive

and non-competitive services offered by a gas public utility, and within 60 days after

the date for implementation of retail choice pursuant to this section, shall commence

the process of conducting audits, at the expense of the gas public utilities, to ensure

compliance with this section and with the board's rules, regulations or orders adopted

pursuant to this section. The board shall hire an independent contractor to perform such audits. (2) Subsequent audits shall take place no less than every two years after the date

of the decision rendered pursuant to subsection q. of this section. (3) The public utility and an intervenor shall have the right to contest the methodology

and rebut the findings of an audit performed pursuant to this subsection, in a filing

with the board. The board shall take no action to functionally separate, structurally separate or

require the divestiture of any portion of a public utility's operations pursuant to

this subsection until the public utility, and any intervenors have been afforded timely

opportunity to make such filing and until the board has issued a decision thereon. (4) If the board finds as a result of any such audit, that substantial violations

of this act or of the board's rules, regulations or orders adopted pursuant to this

section have occurred which result in unfair competitive advantages for a gas public

utility, it shall: order the gas public utility to establish and provide such services

through a business unit which is functionally separated from the gas public utility

business unit as a related competitive business segment of the utility, such that,

other than shared administration and overheads, employees of the competitive services

business unit shall not also be involved in the provision of non-competitive utility

and safety services, and the competitive services are provided utilizing separate

assets than those utilized to provide non-competitive utility and safety services;

order the gas public utility to establish and provide such services through a structurally

separate business unit or units including, but not limited to, a related competitive

business segment of the public utility holding company; or order the gas public utility

to divest itself of any business units that provide such services. (5) If the board determines, as a result of the audit performed pursuant to this subsection

that a gas public utility has unfairly allocated costs between its competitive and

non-competitive services, the board is authorized to require such utility to return

to the ratepayers an amount, equivalent to the amount of the costs determined to be

unfairly allocated, with interest, during the time that the unfair allocation of costs

occurred. In addition, the board is authorized to order such utility to pay a fine of up to

$10,000 as a result of the violation or violations determined to have occurred pursuant

to this subsection. l . The board shall determine, by rule or order, what reports are necessary to monitor

the competitiveness of any service offered to a customer of a gas public utility. m. The board shall have the authority to take appropriate action, including the issuance

of an order that a gas public utility or its related competitive business segment

cease the offering of a competitive service, functionally separate its competitive

service offering from non-competitive business functions, structurally separate or

divest itself of such services, in the event that the board determines, after hearing,

that recurring and significant violations of its rules, regulations or orders adopted

pursuant to subsection k. of this section have occurred. n. Any other provision of this act to the contrary notwithstanding, commencing on

the effective date of this act, a gas public utility or a related competitive business

segment of that gas public utility shall not offer any competitive service except

those approved or pending approval as of July 1, 1998 pursuant to subsections b. and

d. of this section; provided, however, that in the event that a gas public utility

is not part of a holding company legal structure, competitive services may be offered

by a related competitive business segment of that gas public utility as long as that

related competitive business segment is structurally separated from the gas public

utility, and provided that the interactions between the gas public utility and the

related competitive business segment are subject to the affiliate relation standards

adopted by the board pursuant to subsection k. of this section. o . A public utility holding company may offer a gas competitive service to retail customers

of a gas public utility that is owned by the holding company, but only through a related

competitive business segment of the holding company that is not a related competitive

business segment of the gas public utility; provided, however, that in the event

that a gas public utility is not part of a holding company legal structure, competitive

services may be offered by a related competitive business segment of that gas public

utility as long as that related competitive business segment is structurally separated

from the gas public utility, and provided that interactions between the gas public

utility and the related competitive business segment are subject to the affiliate

relation standards adopted by the board pursuant to subsection k. of this section. p. Nothing in this act shall exempt a gas public utility from obtaining all applicable

local, State and federal licenses or permits associated with the offering of competitive

services and complying with all applicable laws and regulations regarding the provision

of such services. q. Notwithstanding any other provisions of this section, by no later than December

31, 2000, the board shall render a decision, after notice and hearing, on any further

restrictions required for any or all non-safety related competitive services offered

by a gas public utility in addition to the provisions of this section, including whether

a gas public utility offering non-safety related services must establish and provide

such services through a business unit which is functionally separated from the gas

public utility business unit. (1) Upon the completion of the audit process required by paragraph (1) of subsection

k. of this section, the board shall initiate the process of organizing and conducting

hearings to examine the use of utility assets in providing retail competitive services

as permitted in subsection f. of this section. The board shall evaluate and balance the following factors: the prevention of cross

subsidization, the issues attendant to separation and relative to the board's affiliate

relation and fair competition standards as provided in subsection k. of this section,

the effect on ratepayers of the use of utility assets in the provision of non-safety

related competitive services, the effect on utility workers, and the effect of utility

practices on the market for such services. (2) The relationship between the gas public utility and its related competitive service

business unit shall be subject to affiliate relations standards to be promulgated

by the board pursuant to subsection k. of this section. r. For at least three years subsequent to the starting date of 100 percent retail

competition as provided in subsection a. of this section and thereafter until the

board specifically finds it to be no longer in the public interest, each gas public

utility shall provide basic gas supply service. Gas supply procured for basic gas supply service by a gas public utility shall be

purchased at prices consistent with market conditions. The charges assessed to customers for basic gas supply service shall be regulated

by the board and shall be based on the cost to the utility of providing such service,

including the cost of gas commodity and capacity purchased at prices consistent with

market conditions by the gas public utility in the competitive wholesale marketplace

and related ancillary and administrative costs, as determined by the board. A gas supply service offered by a gas public utility under a tariff approved by

the board as of the effective date of this act shall qualify for the provision of

basic gas supply service required hereunder. s. By no later than January 1, 2002, the board shall issue a decision as to whether

to make available basic gas service on a competitive basis to any gas supplier, any

gas public utility, or both. t. Gas procured for basic gas supply service by a gas supplier shall be purchased

at prices consistent with market conditions. The charges assessed to customers for basic gas service shall be regulated by the

board and shall be based on the cost to the supplier of providing such service, including

the cost of gas commodity and capacity purchased at prices consistent with market

conditions by the supplier in the competitive wholesale marketplace and related ancillary

and administrative costs, as determined by the board or shall be based upon the result

of a competitive bid. u. Each gas public utility or gas supplier that provides basic gas supply service

pursuant to subsections r., s. and t. of this section shall be permitted to recover

in its basic gas supply charges on a full and timely basis all reasonable and prudently

incurred costs incurred in the provision of basic gas supply services pursuant to

this section, except to the extent that certain costs related to the provision of

basic gas supply service are already being recovered in other elements of a gas public

utility's charges. The board may approve ratemaking and other pricing mechanisms that provide incentives,

including financial risks and rewards, for the gas public utility or gas supplier

to procure a portfolio of gas supply that provides maximum benefit to basic gas supply

service customers. v. Prior to reclassifying as regulated, pursuant to subsection i. of this section,

any service previously found to be competitive, the board shall make recommendations

to the Legislature concerning the proposed reclassification. The recommendations shall be deemed to be approved unless the Legislature adopts

a concurrent resolution stating that the Legislature is not in agreement with all

or any part of the recommendations within 90 days following the date of transmittal

of the recommendations to the Legislature. The concurrent resolution shall advise the board of the Legislature's specific objections

to the recommendations and shall direct the board to submit revised recommendations

which respond to those objections within 45 days of the date of transmittal of the

concurrent resolution to the board. w. If the board finds, as a result of any audit conducted pursuant to this section,

that violations of the board's rules, regulations or orders adopted pursuant to this

section have occurred, which are not substantial violations, the board is authorized

to impose a fine of up to $10,000 against the gas public utility.