Bill > A5655

Introduced Session

This bill directs the Board of Public Utilities (BPU) to establish a program to encourage the procurement of renewable natural gas and investment in renewable natural gas infrastructure by a gas public utility (utility). The bill establishes portfolio targets for the distribution of renewable natural gas to the utility's retail natural gas customers in the State, for energy years 2022 through 2050. The portfolio target begins as a target of up to five percent in each of the energy years 2022 through 2024, and increases up to 30 percent in each of the energy years 2045 through 2050. The bill defines "renewable natural gas" as the following products, processed to meet pipeline quality standards or transportation fuel grade requirements: 1) biogas that meets natural gas pipeline quality standards such that it may blend with, or substitute for, geologic natural gas; 2) hydrogen gas derived from Class I renewable energy or Class II renewable energy; or 3) methane gas derived from any combination of biogas, hydrogen gas, or carbon oxides derived from renewable energy sources, or waste carbon dioxide. The bill requires the BPU to adopt a ratemaking mechanism that ensures the recovery of and on all prudently incurred costs that contribute to a utility's meeting the program's renewable natural gas portfolio targets established in the bill. Under a ratemaking mechanism adopted by the BPU by means of a periodic rate recovery mechanism: 1) any BPU-approved qualified investment and operating cost associated with a qualified investment that contributes to a utility's meeting the program's requirements may be recovered from ratepayers; and 2) any BPU-approved cost of procurement of renewable natural gas from a third party, including from an affiliate of the utility, that contributes to the utility meeting the program's requirements may be recovered from ratepayers. When a utility makes a qualified investment, the costs associated with the qualified investment are to include the cost of capital established in the utility's most recent rate case as well as other incremental costs associated with those qualified investments. The bill requires that when a utility procures renewable natural gas from a third party, the utility is to purchase the renewable natural gas supply at prices and on terms consistent with market conditions in the market for renewable natural gas. A charge assessed to customers for the supply of renewable natural gas is to be regulated by the BPU and be based on the cost to the utility of providing that supply, including the cost of renewable natural gas commodity and capacity, purchased at prices consistent with market conditions in the market for renewable natural gas, and related ancillary and administrative costs. If a utility's total incremental annual cost to meet the requirements of the renewable natural gas program exceeds five percent of the utility's total revenue requirement for an individual year, the utility is no longer authorized to make additional qualified investments under the renewable natural gas program for that year without the approval of the BPU. The bill provides that the total incremental annual cost to meet the portfolio targets of the program are to account for: 1) any value received by the utility upon any resale of renewable natural gas, including any environmental credits that the renewable natural gas producer chooses to include with the sale of the renewable natural gas to the utility; and 2) any savings achieved through avoidance of conventional gas purchases or development, such as avoided pipeline costs or carbon costs. The bill allows the BPU to permit a utility to exceed the program's portfolio targets and, in that instance, the remaining provisions of the bill are to continue to apply.

Committee Categories

Lou Greenwald (D)*,  Robert Karabinchak (D)*,  Nancy Muñoz (R)*,  Lisa Swain (D), 

Reported out of Assembly Comm. with Amendments, 2nd Reading (on 12/06/2021)