New Jersey Governor Mikie Sherrill has signed three bills aimed at lowering electricity costs, increasing oversight of utility spending, and ensuring data centers pay for the infrastructure needed to serve them. The new laws, combined with other recent actions on energy affordability, are expected to save ratepayers more than $1 billion per year.
The first of these bills, the Repeal ROE Adder, removes an added financial incentive that utilities had received for participating in PJM. Because participation in PJM is now required, utilities will no longer be eligible for the additional return on equity, which had previously contributed to higher wholesale transmission costs passed on to customers.
A second law, the Advanced Grid Technologies Act, strengthens state review of certain utility-led transmission investments, including upgrades to substations, poles, and power lines. Under the new law, utilities will typically need state approval before moving forward with these projects, and proposals that use advanced transmission technologies may be eligible for faster review. The law is intended to ensure that investments are justified, cost-effective, and designed to make better use of existing grid infrastructure before making more expensive investments in new infrastructure.
Finally, the Data Center Fair Share Act creates a separate rate category for data centers and other very large electricity users to prevent the cost of serving these facilities from being passed on to households and small businesses. Data centers may also be required to reduce electricity use during grid emergencies before residential customers are affected. In addition, the law creates a pathway for large customers to support demand reductions or distributed energy resources elsewhere on the system.
In addition to these laws, the state announced a near-term bill assistance initiative, through which every residential utility customer will receive a $25 credit, while qualifying low- and moderate-income households may receive an additional $150 payment. The Board of Public Utilities recently extended summer shutoff protections for eligible households during extreme heat and expanded the Community Solar Energy Program by 3,000 MW.
Together, the measures are intended to address both immediate affordability concerns and longer-term system needs by improving utility oversight, encouraging cost-effective grid investments, and ensuring that future load growth does not unfairly burden other ratepayers.