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<title>March 2003: New Jersey Legislation Would Amend Government Energy
Aggregation Scheme</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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</center><p align="left"><b><u><br>
March 2003<br>
</u></b><font size="6"><b>New Jersey Legislation Would Amend Government Energy
Aggregation Scheme<br>
</b></font><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>3/06/14)</font></p>
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<p ALIGN="JUSTIFY">On January 23, 2003, both houses of the New Jersey Legislature passed
Assembly Bill No. 2165 (the "Bill") and sent the Bill to the governor for
signature. If the Bill becomes law, it will amend the government energy
aggregation provisions of New Jersey’s Electric Discount and Energy
Competition Act (P.L. 1999, c.23) ("EDECA"). In general, government energy
aggregation programs are intended to reduce the price of energy by allowing
customers to improve their bargaining power by pooling their energy
purchases through local governments. The EDECA allows for aggregation of
both electric generation and gas supply services. According to the Assembly
Appropriations Committee Statement, dated September 19, 2002, the existing
statutory process is too complex, with the result that "there has been no
successful government aggregation of residential customers." The Bill is
intended to streamline the process. </p>
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<p ALIGN="JUSTIFY">Among other things, the Bill (1) allows government
aggregators to obtain certain customer information from public utilities
without prior customer consent, (2) includes all residential customers in
government aggregation programs unless they specifically opt-out, (3) gives
local government the option of allowing non-residential customers who
specifically opt-in to participate in the program, and (4) allows government
aggregators to contract with more than one supplier, although each customer
must receive service from only one supplier. The Bill also directs the New
Jersey Board of Public Utilities to develop an alternate procedure under
which local governments could obtain the assistance of public utilities in
developing the aggregation program, provided that the utility would recover
its costs from the local government body rather than from the utility’s
ratepayers.</p>
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<p ALIGN="JUSTIFY">The procedure detailed in the Bill requires any local
government body wishing to develop an energy aggregation program to adopt an
ordinance or resolution that indicates its intent to solicit bids from
electric generation or gas service suppliers. If the aggregation program is
to include non-residential customers, such customers have thirty days from
the adoption of the ordinance or resolution within which to elect to
participate in the aggregation program. Due to various deadlines established
in the Bill, solicitations for bids by prospective suppliers will not be
issued until after the thirty-day opt-in period elapses, with the result
that non-residential suppliers must make their election before the terms of
the applicable supplier contract(s) are known. The governing body, however,
is only allowed to accept bids where the rate is the same or lower than the
price of "basic generation service," i.e. regulated, non-competitive
service, subject to certain adjustments based on the cost of compliance with
renewable energy portfolio standards. It is unclear whether prospective
suppliers would know the extent of non-residential customer participation
before submitting their bids.</p>
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<p ALIGN="JUSTIFY">After contracting with the chosen supplier(s), the
governing body is required to provide residential customers thirty days
notice within which to opt-out of the aggregation program. The notice is to
provide price and other information for use in comparing the aggregation
program with other alternatives. Thus, unlike non-residential customers,
residential customers will know the essential terms of their participation
in the aggregation program before making an election. Although participation
on an opt-out basis rather than an opt-in basis would presumably increase
the number of residential customers who participate in the program, there
would be no way for prospective suppliers to know the extent of residential
customer participation before submitting their bids. </p>
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<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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