This bill mandates that the Board of Public Utilities (BPU) must determine and consider the lowest reasonable return on equity (ROE) when evaluating proposed rate increases for electric, gas, and water public utilities. Specifically, the BPU is required to develop or adopt an analytic model that aligns with state, federal, and industry standards to assess what constitutes a fair and reasonable authorized ROE. This model will serve as a critical factor in the board's decision-making process regarding whether any proposed changes to existing rates are just and reasonable.

Currently, the BPU has the discretion to approve rate changes based on a determination of their justness and reasonableness, taking into account factors such as property valuation, expenses, and the rate of return, which includes ROE. The introduction of this bill aims to enhance the regulatory framework by ensuring that the lowest reasonable ROE is explicitly considered, thereby promoting fairness and accountability in utility rate adjustments. The act will take effect six months after its enactment and will apply to petitions submitted thereafter.