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. 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 BPU'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 the utility's property valuation, expenses, and rate of return, which includes the ROE. The introduction of this bill aims to provide a more structured approach to evaluating ROE, ensuring that it is not only fair but also reflective of broader standards. The bill will take effect six months after enactment and will apply to petitions submitted after that date.