Direct Install Program (New Jersey Clean Energy Program)

Direct Install Program (New Jersey Clean Energy Program) is sponsored by New Jersey Board of Public Utilities (BPU). This program offers financial incentives for commercial, industrial, and governmental customers to retrofit and upgrade to new energy-efficient technologies on new and existing buildings. It helps small businesses with energy efficiency upgrades.

72. 5 Scored out of 50 Updated 12/2022 State Government Score: 9 out of 9 State Government Summary List All The state offers grants and loans for energy efficiency investments, as well as PACE financing. The state government leads by example by requiring the benchmarking of energy use in public buildings and encouraging the use of energy savings performance contracts.

Research focused on energy-efficient vehicles and building components is conducted at several institutions. Financial Incentives List All New Jersey has two rebate programs under development which will be rolled out in 2025: Further financial incentive information can be found in the Database of State Incentives for Renewables and Efficiency ( DSIRE New Jersey ).

The state does enable Property Assessed Clean Energy Financing (PACE) but does not yet have any active programs. For additional information on PACE, visit PACENation . Last Reviewed: November 2024 Equity Metrics and Workforce Development List All New Jersey began the process to rejoin the Regional Greenhouse Gas Initiative (RGGI) in 2018 and participated in its first auction in 2020.

Each participating state in RGGI establishes a state-specific CO2 budget trading program that puts limits on CO2 emissions, issues allowances for CO2, and establishes participation in regional auctions. The Board is one of three agencies that receives funding to implement programs, along with the New Jersey Department of Environmental Protection and the New Jersey Economic Development Authority.

All of the funds that the Board receives through RGGI are put towards programs that will serve low- and moderate-income residents in New Jersey. Specific initiatives are identified through the Strategic Funding Plan, which is published in three year increments.

According to the Strategic Funding Plan for 2023-2025, the Board is expected to use its RGGI funds to accelerate healthy homes and building decarbonization and catalyze clean and equitable transportation. The Board has also received funds through the U.S. Department of Energy's Energy Efficiency and Conservation Block Grant (EECBG) program.

EECBG funds will be used to support the Community Energy Plan Implementation (CEPI) grant program, which provides grants to municipalities to implement energy efficiency and renewable energy projects. At least 40% of total CEPI funds is set to be disbursed to overburdened municipalities, deemed to be the municipalities in New Jersey that are most in need.

The Clean Energy Act calls for the Board to adopt programs that “ensure universal access to energy efficiency measures, and serve the needs of low-income communities,” and the Energy Master Plan establishes that the State’s priorities in developing its statewide EE structure are affordability, equity, environmental justice, economic development, decarbonization, and public health.

On June 10, 2020 the NJBPU adopted the first regulatory framework for energy efficiency programs in the state, which sought to reduce the inequity currently experienced by groups and individuals across New Jersey who disproportionately lack access to energy-efficient housing, appliances, and technologies. There are several approaches that the framework provided for addressing energy equity.

The NJBPU created an Office of Clean Energy Equity and established an Equity Working Group (EWG) that comprises stakeholders from representative organizations across the state familiar with the intersection of energy, equity, and health issues.

This working group developed initial recommendations for integrating equity metrics and approaches in energy efficiency and peak demand reduction programs for utility-run, State-run, and co-managed programs. Other approaches have included the expansion of eligibility criteria for participation in low- and moderate-income programs based on geography and streamlining eligibility criteria among state programs.

Additionally, the targets and incentive/penalty structure applicable to utility programs in the upcoming program cycle (2025 through mid-2027) considers lifetime energy savings by low- to moderate-income and overburdened community residents as part of its evaluation criteria.

On August 24, 2020, the NJBPU adopted the New Jersey Cost Test (NJCT) as the primary cost-effectiveness test for State and utility administered energy efficiency programs. The initial NJCT included a 10% low-income benefits adder to account for the additional non-energy benefits to low-income program participants, such as improved health and safety.

The current statewide evaluation structure includes a triennial review process to continually evaluate and update the NJCT to ensure that it is properly capturing low-income non-energy benefits.

For Triennium 2 (January 2025 through June 2027), the NJBPU adopted an updated NJCT that includes a 30% low-income benefits adder applied to avoided wholesale energy costs to account for additional benefits, including health and safety, to low-income participants and community, including 15% non-energy benefits and 15% additional low-income benefits.

NJBPU strives to conduct stakeholder processes that are inclusive of underserved communities and marginalized groups to develop New Jersey's energy programs.

For example, in developing its proposal for the Training for Residential Energy Contractors (TREC) formula grant from the U.S. Department of Energy in 2024, the NJBPU engaged the Energy Efficiency Workforce Development Working Group, which includes environmental justice groups, other community organizations, workforce development boards, training organizations, educational institutions, energy efficiency employers, union organizations, and other New Jersey agencies to collaboratively develop the proposal.

NJBPU also invited these organizations to participate in the first Business and Industry Leadership Team meeting in June 2024 which is focused on energy efficiency workforce development in New Jersey and which has as its goal implementing the TREC program but also, more broadly, collaborating to build a more effective, diverse, and inclusive energy efficiency workforce development pipeline in the state.

In June 2020, the NJBPU established a Workforce Development Working Group (WFD WG) to inform energy efficiency program design and evaluation. The WFD WG comprises Staff, Rate Counsel, the utilities, energy efficiency suppliers, job training institutions and organizations, equity stakeholders, and other agencies and organizations.

This working group is developing recommendations for establishing coordinated and collaborative workforce development and job training pathways and pipelines statewide, with a focus on providing economic opportunities for underrepresented and socially or economically disadvantaged individuals.

Underrepresented and socially or economically disadvantaged individuals may include women, people of color, veterans, disabled, and formerly incarcerated individuals, as well as those who are unemployed, underemployed, or low- and moderate-income. Programs may include contractor and subcontractor coaching and mentoring of underrepresented, disadvantaged, and small business enterprises.

The WFD WG is collaborating with the New Jersey Department of Labor and Workforce Development, other state agencies, the utilities, and other entities, as applicable, on the development of statewide workforce development pathways, training, coaching/mentoring, and other initiatives, including for underrepresented and disadvantaged individuals, communities, and business enterprises.

Last Reviewed: November 2024 Carbon Pricing Policies List All New Jersey is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030. Per state legislation N.

J. S. A 26:2C-37, New Jersey does have a statewide emissions reduction goal in place, specifically to reduce emissions 80% by 2050 (baseline year 2006).

Last Reviewed: November 2024 Building Energy Disclosure List All The Clean Energy Act of 2018 (P. L. 2018 c.

17 “Clean Energy Act”) provides that within five years the NJBPU require benchmarking by owners and operators of commercial buildings over 25,000 sq. ft. using the USEPA Portfolio Manager tool.

Public Building Requirements List All The 2019 New Jersey Energy Master Plan's Goal 3. 3. 5 calls for state buildings to improve energy efficiency and retrofit to high performance standards where applicable; the EMP also calls for all state buildings to undergo an ASHRAE Level 3 energy audit and establish plans to implement energy efficiency projects.

New Jersey's Clean Energy Program (NJCEP) now offers free benchmarking for specific commercial and industrial sectors, including hospitals and healthcare, municipalities, industries, hospitality, multifamily, higher education, K-12 public schools, retail, and others.

Beginning in FY20, the cap on energy audits on hospitals increased from $100,000 to $300,000, which was designed to increase program participation and energy savings among potential participants that tend to have large, complex facilities. Since 2008, NJCEP has performed 4,549 audits and benchmarks across all sectors.

New Jersey leads by example with an initiative to increase the energy efficiency of state owned or operated facilities and buildings. In 2023 the State began benchmarking all state owned buildings over 25,000 sq ft in EPA's Portfolio Manager.

Energy Savings Improvement Program (ESIP) funds will be used for energy efficiency and energy conservation improvements, renewable energy, upgrades, and the expansion of other green-oriented programs, particularly demand response and combined heat and power. The FY25 proposed budget includes total funding for State Facilities of over $60 million to go to various energy efficiency programs.

Through the NJBPU, the State Facilities Initiative identifies and implements energy efficiency projects in State-owned facilities with the objective of producing energy and cost savings. The Energy Capital Committee (ECC), consisting of members from Treasury and the NJBPU Division of State Energy Services, coordinates and recommends approval of these projects based on evaluation of capital costs and anticipated energy savings.

The list of planned projects includes those identified through energy audits completed, in progress or proposed for various State facilities, as well as projects requested by State agencies on an annual basis and in support of policy goals identified in the EMP. Over $65 million has been committed since 2017.

Additionally, state agencies are encouraged to utilize NJCEP’s Local Government Energy Audit program which provides, 100% of the costs of audits to local and state facilities. The NJBPU established the Division of State Energy Services/State Energy Office in order to advance energy efficiency and renewable energy in state facilities. This office has access to the suite of energy efficiency and renewable energy incentives in NJCEP.

Through this program, the State offers free energy audits and benchmarking for public facilities, including state, county, and local government facilities. Benchmarking reports for these facilities are posted online.

The New Jersey Department of Community Affairs and the Rutgers Center for Green Building have developed a green building manual for owners and builders interested in designing, constructing, and operating their buildings above code. In addition, Rutgers has developed a Municipal Guidance for Promoting Energy Efficiency in the Private Sector, which describes policies and local planning/zoning tools available for local governments.

Municipalities and schools can use this manual to achieve certification under the Sustainable Jersey program. In January 2008, New Jersey enacted legislation mandating the use of high-performance green building standards in new state construction.

The standard requires that new buildings larger than 15,000 square feet constructed for the sole use of State entities achieve US Green Building Council LEED* Silver certification, a two-globe rating on the Green Building Initiative Green Globe rating system, or a comparable numeric rating from another accredited sustainable building certification program. In addition, the Energy Master Plan's Goal 3. 3.

4 states that all State-funded buildings and projects should be built to the highest attainable, above-code building performance standard. Last Reviewed: November 2024 All state government fleets and certain businesses are subject to regulation under the 1992 Energy Policy Act (EPAct). Under the DOE website EPAct Transportation Regulatory Activities , State vehicles are required to operate with increased energy efficiency standards.

State vehicles are to utilize fuel types most appropriate for the vehicle by promoting alternative fuels such as compressed natural gas, propane, biodiesel, and ethanol to reduce the use of petroleum based fuels.

State conduct under the following fleets will follow this regulation: Rutgers, The State University of New Jersey Port Authority of New York and New Jersey Electric and gas utilities, and propane providers The above regulations require fleet operators of light duty AFVs to maintain a pre-determined percentage of vehicles annually. Development of AFV infrastructure will serve as an improved compliance measure.

Increasing fleet efficiency will reduce our carbon footprint in the State of New Jersey. In the winter of 2019, NJ Department of Treasury issued a significant bid solicitation for passenger battery electric and hybrid vehicles, which will enable state government agencies to purchase vehicles for the first time.

The Energy Master Plan sets forth a goal of seeking to transition its light-duty fleet to electrification as vehicles reach the end of their useful life, beginning in July 2020, if not sooner.

Through funding from NJBPU, non-profit Sustainable Jersey is also working with their Electric Vehicle Working Group to review their guidance for municipalities that participate in their programs (450 “Participating” municipalities and 203 “Certified” municipalities partner with Sustainable Jersey to advance various initiatives including energy efficiency).

The Sustainable Jersey Purchase Alternative Fuel Vehicle Action (aka guidance) is now updated to reflect technology changes and options for fleet procurement. They are also in contact with Sawatch, Electrification Coalition, and Nissan regarding potential outreach projects to promote municipal fleet adoption of electric vehicles.

In January 2020, Governor Phil Murphy signed legislation that requires the following for the State fleet: At least 25% of State-owned non-emergency light duty vehicles shall be plug-in electric by December 31, 2025; thereafter, 100% of these vehicles shall be plug-in electric by the end of 2035.

By the end of 2024, at least 10% of new bus purchases made by NJ Transit will be zero emission busses, which will increase to 50% by the end of 2026 and 100% by the end of 2032. The Board of Public Utilities and Department of Environmental Protection are currently working to establish additional goals for medium-duty and heavy-dulty on-road diesel vehicals and associated charging infrastructure.

The legislation also directs the DEP to report on the state of the plug-in electrical vehical market, the State's progress toward achieving the goals, identify barriers to achievement of the goals, and make recommendations for legislative or regulatory action to address barriers in New Jersey every five years.

Last Reviewed: November 2024 Energy Savings Performance Contracting List All New Jersey’s ESPC policies stem from a 2009 law which allows New Jersey government entities to enter into energy savings performance contracts through the New Jersey Energy Savings Improvement Program (ESIP). The program complements the New Jersey Clean Energy Program and provides some model ESIP documents.

The ESIP allows public facilities to enter into long-term energy savings agreements without utilizing their capital budgets. There are currently sixteen Treasury-approved Energy Services Contractors in the state who can publicly bid for these energy efficiency construction projects. New Jersey has 127 approved ESIP projects as of August 2020, with $1.

06 billion in total contracts worth $1. 30 billion in annual savings. The NJ Board of Public Utilities’ Division of State Energy Services manages the performance contracting process for all local public facilities.

The State of New Jersey’s Department of Property Management and Construction within the Department of Treasury manages performance contracting for state facilities. ESPC has assisted both school districts and municipalities in making comprehensive energy efficiency upgrades to facilities without impacting taxpayers.

Last Reviewed: October 2020 Research & Development List All The Rutgers Center for Green Building (RCGB) is contracted by New Jersey’s Office of Clean Energy to serve as an independent evaluator and provide regular analyses of NJCEP energy efficiency programs as well as develop research and recommendations related to new programs. RCGB promotes green building through research, advocacy and education.

The Center conducts applied research utilizing planned and existing green building projects, works with industry and government to promote these concepts, and develops undergraduate, graduate and professional education programs.

It seeks to establish itself as the pre-eminent interdisciplinary center for green building excellence in the Northeast, while serving as a single accessible locus for fostering collaboration among green building practitioners and policy-makers.

The proposed FY2020 budget also includes $4,000,000 for Research and Development Energy Tech hub which will include energy efficiency measures, $4,000,000 to support innovation in clean energy including energy efficiency and $8,152,103 for incentives for Smart technology devices that allow ratepayers to reduce their own energy consumption (i.e. smart thermostats).

In June 2019, the BPU will initiate a proceeding to establish a process and mechanism for achieving the state’s goals of energy storage, allowing for more efficient use of energy and addressing peak demand issues.

Working with other partner agencies and stakeholders, the Clean Energy Program will also provide critical curriculum funding in the amount of $3,000,000 to support the development of curricula around energy savings for elementary, middle school and high school students.

Oak Ridge National Laboratory: New Jersey ESPC Legislation Edison Innovation Clean Energy Fund New Jersey Energy Master Plan Buildings Score: 16 out of 24 Buildings Summary List All As of September 2022, New Jersey adopted without amendments the 2021 International Energy Conservation Code (IECC) for residential structures, the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90.

1-2019 for commercial structures, and the zero energy code provisions in the 2021 IECC-Appendix CC as optional at the discretion of the permit applicant for commercial structures. It also recently completed a sweeping code compliance study. Residential Codes List All On September 5, 2022, New Jersey adopted without amendments the 2021 International Energy Conservation Code (IECC) for residential structures.

New Jersey adopted the zero energy code provisions in the 2021 IECC-Appendix RC as optional at the discretion of the permit applicant. For existing buildings, the Rehabilitation subcode (NJAC 5:23-6) applies certain energy conservation provisions of the new code based on the scope of the project.

Last reviewed: November 2024 On September 5, 2022, New Jersey adopted without amendments the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90. 1-2019 for commercial structures. New Jersey adopted the zero energy code provisions in the 2021 IECC-Appendix CC as optional at the discretion of the permit applicant.

For existing buildings, the Rehabilitation subcode (NJAC 5:23-6) applies certain energy conservation provisions of the new codes based on the scope of the project. Last Reviewed: November 2024 Gap Analysis/Strategic Compliance Plan: NJ has an Evaluation Plan which was last made public in May 2017.

The BPU’s Office of Clean Energy, in conjunction with the independent evaluator, Rutgers Center for Green Buildings, continually updates an Evaluation Plan in order to track previous evaluation activities, provide an indicator regarding planned, future evaluations and solicit input from stakeholders on what future evaluations are needed.

In addition to highlighting current priorities, the Evaluation Plan is an important record of regular and cyclical evaluation work, such as cost-benefit analyses and baseline studies, which are used towards more effective policy making. Baseline & Updated Compliance Studies: A baseline study of the multifamily sector in New Jersey was completed in April 2019, available here . In June 2022, a study across building types was published.

Utility Involvement: The Clean Energy Act requires the NJ Board of Public Utilities to develop “quantitative performance indicators” (QPI) via public rulemaking that establishes targets and takes into account each utility’s “support (for) the development and implementation of building code changes…” The Board establishes QPIs regularly with utility input.

Additionally, utilities may participate on the NJDCA mechanical/energy subcode committee and support the enactment of energy codes as a cost-effective means to reduce energy usage. They can participate on the advisory board but participation is not mandated. Stakeholder Advisory Group: The Uniform Construction Code Act establishes a Uniform Construction Code Advisory Board.

And under the Uniform Construction Code Advisory Board, there is a mechanical/energy subcode committee which includes code officials, engineers and other stakeholders. This board meets three to four times per year. Training/Outreach: The Department of Community Affairs offers spring and fall semesters of training each year.

Licensed code officials are required to complete continuing education to maintain their licensed. There are 50+ different Code Official training courses offered, some of which are energy subcode specific. Last reviewed: November 2024 EERE Building Energy Codes Program Division of Codes and Standards New Jersey includes CHP in its energy efficiency resource standard and offers several incentives and financing programs for CHP projects.

Seventeen new CHP installations were completed in 2018. Interconnection Standards List All Policy: New Jersey Administrative Code 14:4-9 Description: As required by the Board of Public Utilities, each electric utility in the state has approved interconnection standards applicable to CHP and other forms of generation.

The interconnection standards have 3 levels: Level 1 for projects <= 10kW; Level 2 for projects <= 2 MW; and Level 3 for projects < 2MW. There are varying fees that scale up in accordance with system size, and varying degrees of review that must occur before a system can interconnect.

Last Updated: August 2019 Encouraging CHP as a Resource List All CHP in energy efficiency standards: New Jersey adopted an EERS in May 2018 with 2% electric and 0. 75% gas savings goals. The policy specifically excludes natural gas used for CHP from gas savings goals.

The state also adopted a budget of $29 million in FY 2018 for CHP incentives. Last Updated: August 2019 Deployment Incentives List All Incentives, grants, or financing: New Jersey provides incentives for CHP deployment through several programs. New Jersey’s Clean Energy Program (NJCEP) offers financial incentives for several types of CHP facilities, including non-renewable, renewable, fuel cell, and waste heat to power systems.

The program provides an incentive ($/W) depending on system type and size for projects that meet a 60% HHV CHP efficiency standard. A bonus incentive of 25% of the total system incentive for a system incorporating blackstart technology at a critical facility is now available. The state’s Cogeneration Tax Exemption provides a sales and use tax exemption on natural gas purchases for customers using gas to fuel on-site energy generation.

Additionally, the Act amended the definition of “contiguous property” to include those buildings attached to or served by a district thermal energy system. This definition allows electricity generated by the system to be delivered to other facilities served by the same thermal district energy system, using existing infrastructure and at prevailing wheeling tariffs.

Last Updated: August 2019 Additional Supportive Policies List All Some additional supportive policies exist to encourage CHP in New jersey. The state’s Superstorm Sandy Action Plan includes funding specifically for CHP and recommends that critical infrastructure use CHP in order to increase the system resiliency.

New Jersey also changed the definition of contiguous property to help promote CHP system incorporation with district energy systems. The state's CHP incentive program provides additional bonus incentives to CHP systems with blackstart capabilities at critical infrastrucutre, and supports renewable-fueled systems.

New Jersey has also streamlined its air permitting process by offering a general permit for some eligible CHP systems, allowing a range of facilities to more quickly and easily install CHP technology. The New Jersey Department of Environmental Protection (DEP) developed two GPs: one for internal combustion engines (General Permit CHP-022) and one for turbines (General Permit CHP-021).

Each GP contains four different sets of fuel and emission limits, depending on the size of the equipment and how the source plans to operate the equipment. Last Updated: August 2019 Utilities Score: 23. 5 out of 29 Utilities Summary List All Since 2003, the Office of Clean Energy within the Board of Public Utilities has administered the New Jersey Clean Energy Program, which has offered statewide customer energy efficiency programs.

In May 2018, New Jersey adopted an EERS when the governor signed clean energy bill A3723, which requires that electric and gas utilities achieve a minimum of 2% electric and 0.

75% annual gas savings of the average annual usage in the prior three years, within five years of implementation of their energy efficiency and peak demand reduction programs, and until such time as all cost-effective energy efficiency is achieved in each utility territory.

The NJBPU has adopted utility and state savings targets and quantitative performance indicators (QPIs) based on a 2023 New Jersey BPU Goal Setting Study applicable for Triennium 2 (January 2025 through June 2027).

The Board has established a triennial review process ahead of each utility filing cycle, which reviews and establishes for the next five program years: targets for utility and state annual energy use reductions, metrics, weighing structure of metrics, cost recovery mechanisms, performance incentive and penalty structure, cost to achieve ranges, and program administration and design.

Following many months of work by stakeholders, the commission, and staff, the Board of Public Utilities produced a June 2020 Order setting ambitious goals to ramp up annual electric savings to 2. 15% and gas savings to 1. 1%, exceeding goals first set out in the state's Clean Energy Act.

The Order also transitions the utilities to a more central role in program delivery, establishes a performance-based recovery mechanism to encourage utilities to maximize customer savings, and strengthens stakeholder engagement processes with added focus on equity and workforce development.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables. Customer Energy Efficiency Programs List All Prior to 2007, utilities were required to administer and implement energy efficiency programs with oversight from the NJBPU.

In 2002, the NJBPU began a re-assessment of this administrative structure, and in 2007 program administration was turned over to the Division of Clean Energy (DCE). DCE meets regularly with New Jersey's Clean Energy Program (NJCEP), the NJ Division of Rate Counsel, and the state's utilities to plan and coordinate programs. The DCE also chairs monthly public meetings with stakeholders to solicit input on programs and budgets.

All utilities provide financial incentives that complement NJCEP or administer energy efficiency programs that do not compete with those offered through NJCEP. For example, several utilities offer incentives for highly efficient hot water heaters, boilers, and furnaces. All utilities offer financing options to customers in their service territory who wish to participate in residential and commercial programs.

By offering on-bill repayment options and low- to zero-interest loans to participating customers, these utilities both lessen the cost burden for customers and attract additional participants who may have been otherwise unable to enroll in these programs.

Additionally, several companies offer residential behavioral analysis programs that utilize customer data to provide residents with breakdowns of their energy usage, comparisons to similar homes in the area, and recommendations to optimize their energy use and conserve energy (including enrolling in other energy efficiency programs).

Utilities also offer programs focusing on low- to moderate-income customers, small businesses, and hospitals to ensure that all customer segments have the ability to participate in energy efficiency. Investor-owned utilities are responsible for collecting the Societal Benefit Charge from their customers and then transferring these funds to the State to support the energy efficiency programs.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables. Last reviewed: November 2024 Energy Efficiency as a Resource List All New Jersey's restructuring statute requires the Board of Public Utilities to perform “comprehensive resource assessments” (CRAs) for energy efficiency and renewable energy resources every four years.

These assessments account for system needs and costs. The CRA typically commences with a potential study. The results of the latest CRAs can be found on NJ's Clean Energy Program website .

Last reviewed: November 2024 Energy Efficiency Resource Standards List All In May 2018, New Jersey adopted an EERS when the governor signed into law the Clean Energy Act, P. L. 2018, c.

17, which requires that electric and gas utilities achieve a minimum of 2% electric and 0. 75% annual gas savings of the average annual usage in the prior three years, within five years of implementation of their energy efficiency and peak demand reduction programs and until such time as all cost-effective energy efficiency is achieved in each utility territory.

The NJBPU has adopted utility and state savings targets and quantitative performance indicators (QPIs) based on a 2023 New Jersey BPU Goal Setting Study applicable for Triennium 2 (January 2025 through June 2027).

The Board has established a triennial review process ahead of each utility filing cycle, which reviews and establishes for the next five program years: targets for utility and state annual energy use reductions, metrics, weighing structure of metrics, cost recovery mechanisms, performance incentive and penalty structure, cost to achieve ranges, and program administration and design.

Last reviewed: November 2024 Utility Business Model List All Under the next generation of EE programs launched in July 2021, utilities are able to earn incentives based on performance towards their utility-specific targets. The NJBPU as a state agency does not receive performance incentives for achieving energy savings targets.

Performance incentives and penalties take the form of a return on equity (ROE) adjustment applied to EE and PDR program investment. An incentive is awarded if a utility achieves between 110% and 150% of its target. Achievement of between 90% and 110% of the target represents compliance.

A penalty is assessed if performance of the target is between 50% and 90%, and a utility is deemed non-compliant if achieving 50% or less of its target. The NJBPU currently permits utilities to collect lost revenues related to reduced sales resulting from energy efficiency programs.

Beginning with the transition to the new EE framework adopted by the BPU in June 2020, as per the Clean Energy Act of 2018, each utility shall file to recover on a full and current basis through a surcharge all reasonable and prudent costs incurred as a result of EE and PDR programs, including but not limited to recovery of and on capital investment, and the revenue impact of sales losses resulting from implementation of the programs.

Program costs associated with O&M are expensed and included in a utility's annual cost recovery petition, program investments are amortized over a 10-year period, there is no absolute cap on customer distribution rates or bills associated with EE and PDR investments, and carrying costs for program investments use the capital structure established in each utility's most recent base rate case.

Utilities may either use a lost revenue adjustment mechanism (LRAM) or a Conservation Incentive Program (CIP), which are designed to be applicable to both gas and electric public utilities.

Evaluation, Measurement, & Verification List All Primary cost-effectiveness test(s) used: total resource cost Secondary cost-effectiveness test(s) used: utility cost test, participant cost test, societal cost test, and ratepayer impact measure The NJBPU’s Clean Energy Program evaluation plan is developed and approved annually as part of the establishment of the NJBPU’s Clean Energy