Bill Summary – FastDemocracy

LEGISLATIVE FISCAL ESTIMATE
                              [First Reprint]
                                SENATE, No. 431
                             STATE OF NEW JERSEY
                              220th LEGISLATURE
                                            DATED: AUGUST 4, 2022
                                                  SUMMARY
    Synopsis:                   Directs BPU to update interconnection standards for Class I renewable
                                energy sources and develop fixed fee structure for interconnection
                                costs.
    Type of Impact:             Annual State and local expenditure increases.
    Agencies Affected:          Board of Public Utilities; local governments.
                                       Office of Legislative Services Estimate
    Fiscal Impact                                                     Annual
    State Expenditure Increase                                     Indeterminate
    Local Expenditure Increase                                     Indeterminate
    The Office of Legislative Services (OLS) determines that this bill would result in a marginal one-
     time State expenditure increase from the General Fund by the Board of Public Utilities (BPU) to
     update interconnection standards for Class I renewable energy sources and develop a fixed fee
     structure for interconnection costs.
    The OLS also determines that the bill would result in indeterminate annual expenditure increases
     by the State and local government units in the form of increased electricity/utility costs, as certain
     interconnection costs for a renewable energy project above a certain cost threshold would be
     authorized by the bill to be recovered from their customers.
                                            BILL DESCRIPTION
    This bill directs the BPU to update the safety and power quality interconnection standards for
certain renewable energy systems in the State and to establish a fixed fee structure for the costs of
interconnection of those projects to the electric grid.
    The bill directs the BPU to adopt rules and regulations, no later than 18 months after the bill's
enactment, which establish interconnection standards for Class I renewable energy source systems.
      Office of Legislative Services                                    Legislative Budget and Finance Office
           State House Annex                                                    Phone (609) 847-3105
              P.O. Box 068                                                       Fax (609) 777-2442
      Trenton, New Jersey 08625                                                  www.njleg.state.nj.us
                                            FE to S431 [1R]
                                                   2
The bill directs the BPU to adopt standards that conform to the Interstate Renewable Energy
Council in its Model Interconnection Procedures (2019) document, unless there is a compelling
reason why a provision in that document is infeasible to adopt in New Jersey.
    The bill also directs the BPU to establish a fixed fee schedule for interconnection fees, which
are paid by the owners or developers of renewable energy systems to electric utilities to defray the
costs of interconnection, including administrative tasks or studies carried out by the utility, and
infrastructure upgrades necessary for the safe operation of the renewable energy system. The bill
designates these fees as grid modernization fees and authorizes the BPU to develop tiers for the
fees, which may be based on the size of the system, the source of the energy (e.g. solar or wind),
or any other category deemed appropriate by the board. The bill authorizes the BPU to update the
fee structure every three years.
    The bill directs the BPU to establish a schedule of maximum interconnection costs, and
authorizes the BPU to adjust this schedule every three years. Utilities that incur interconnection
costs for a renewable energy project above this cost threshold would only be authorized by the bill
to recover an amount up to the maximum cost from their customers.
    The bill also directs the BPU to establish provisions in the interconnection standards that
provide for greater enforceability of interconnection timelines promulgated by electric utilities,
including monetary penalties for utilities that fail to meet the timelines.
                                        FISCAL ANALYSIS
EXECUTIVE BRANCH
   None received.
OFFICE OF LEGISLATIVE SERVICES
    The OLS determines that this bill would result in a marginal one-time State expenditure increase
from the General Fund by the BPU to update interconnection standards for Class I renewable energy
sources and develop a fixed fee structure for interconnection costs. The program is required to
follow the model standards promulgated by the Interstate Renewable Energy Council in its Model
Interconnection Procedures (2019) including the pre-application process and interconnection
standards described in the model standards, so it is likely that the bill's enactment would not
necessitate hiring additional staff or significant additional expenditures.
    The OLS determines that the bill would also result in annual expenditure increases by the State and
local government units in the form of increased electricity/utility costs, as certain interconnection
costs for a renewable energy project above a certain cost threshold would be authorized by the bill
to be recovered from their customers.
  Section:      Environment, Agriculture, Energy, and Natural Resources
  Analyst:      Neha Patel
                Senior Fiscal Analyst
  Approved:     Thomas Koenig
                Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).