48:3-58. Gas public utilities, unbundled rate schedules
10. a. After the implementation of retail electric choice pursuant to subsection a. of section 5 of this act, the board shall order each gas public utility to unbundle its rate schedules such that discrete services provided, which were previously included in the bundled utility rate, are separately identified and charged in its tariffs. Billing for unbundled services also shall include charges for regulatory assets and may include restructuring related costs. The board shall order each gas public utility to submit a rate unbundling filing no later than May 1, 1999, in a form and of a content to be determined by the board. The board shall review such filings and, after hearing and an opportunity for public comment, render a determination as to the appropriate unbundled rates consistent with the provisions of this act. Notwithstanding any other provisions of this act, an unbundling of gas public utility rates implemented as a result of this section shall not result in a reallocation of utility cost responsibility between or among different classes of customers. The board shall continue to allow commercial and industrial customers to choose a gas supplier and shall order that all retail customers of a gas public utility shall be able to choose a gas supplier by no later than December 31, 1999, except that the board may approve an accelerated schedule for retail gas customer choice.
b. Subject to the approval of the board pursuant to subsection d. of this section, a gas public utility or a related competitive business segment of that gas public utility may provide the following competitive services:
(1) Metering, billing and related administrative services that are deemed competitive by the board pursuant to this section;
(2) Services related to safety and reliability of utility businesses;
(3) Competitive services that have been offered by any electric or gas public utility since prior to January 1, 1993 or that have been approved by the board prior to the effective date of this act to be offered by any electric public utility or gas public utility. A gas public utility that has offered a competitive service since prior to January 1, 1993 or a competitive service that was approved prior to the effective date of this act is not required to obtain board approval pursuant to subsection d. of this section, but any gas public utility that has not offered a competitive service prior to January 1, 1993 or has not received previous board approval for such a competitive service shall apply for approval pursuant to subsection d. of this section. Except as otherwise provided by this paragraph, a competitive service that is permitted by this paragraph shall be subject to all requirements of this act for competitive services and to any standards or other rules or regulations adopted pursuant to this act;
(4) Services that are substantially similar to competitive services that are permitted under paragraph (3) of this subsection; and
(5) Competitive services to non-residential customers using utility employees and assets.
c. A gas public utility or a related competitive business segment of that gas public utility may provide other services that are offered for nominal or no consideration to existing non-residential customers in the ordinary course of business.
d. A gas public utility shall not offer any competitive service to retail customers without the express prior written approval of the board. The board may require that a gas public utility file and maintain tariffs for competitive services, which tariffs shall be subject to review and approval by the board. The board shall approve a competitive service only upon a finding that: (1) The provision of a competitive service by a gas public utility or its related competitive business segment shall not adversely impact the ability of the gas public utility to offer its non-competitive services to customers in a safe, adequate and proper manner, and in all instances where resources are jointly deployed by the utility to provide competitive and non-competitive services and resource constraints arise, the provision of non-competitive services shall receive a higher priority; and
(2) The price that a gas public utility charges for a competitive service shall not be less than the fully allocated cost of providing such service, as determined by the board, which cost shall include an allocation of the cost of all equipment, vehicles, labor, related fringe benefits and overheads, and administration utilized, and all other assets utilized and costs incurred, directly or indirectly, in providing such competitive service.
e. Tariffs for competitive services filed with the board shall be in the public records, except that if the board determines that the rates are proprietary, they shall be filed under seal and made available under the terms of an appropriate protective agreement, as provided by board order. A public utility shall have the burden of proof by affidavit and motions to demonstrate the need for proprietary treatment. The rates shall become public upon board approval.
f. A gas public utility shall not use regulated rates to subsidize its competitive services or competitive services offered by a related competitive business segment of the public utility holding company of which the public utility is an affiliate, and expenses incurred in conjunction with its competitive services shall not be borne by its regulated rate customers. The regulated rates of a gas public utility shall be subject to the review and approval of the board to determine that there is no subsidization of its related competitive business segment. Each such public utility shall maintain books and records, and provide accounting entries of its regulated business to the board as required by the board, to show that there is strict separation and allocation of the utility's revenues, costs, assets, risks and functions, between the gas public utility and its related competitive business segment.
g. Except as otherwise provided in this act, and notwithstanding any provisions of R.S.48:2-18, R.S.48:2-21, section 31 of P.L.1962, c.198 (C.48:2-21.2), R.S.48:3-1 or any other law to the contrary, the board shall not regulate, fix or prescribe the rates, tolls, charges, rate structures, rate base, or cost of service of competitive services.
h. The board is authorized to determine, after notice and hearing, whether any service offered by a gas public utility is a competitive service. In making such a determination, the board shall develop standards of competitive service which, at a minimum, shall include: evidence of ease of market entry; presence of other competitors; and the availability of like or substitute services in the relevant geographic area. Notwithstanding the presence of these factors, the board may determine that any service shall remain regulated for purposes of the public safety and welfare.
i. The board shall have the authority to reclassify as regulated any gas service or segment thereof that it has previously found to be competitive, if, after notice and hearing, and after appropriate review by the Legislature pursuant to subsection v. of this section, it determines that sufficient competition is no longer present, upon application of the criteria set forth in subsection h. of this section. Upon such a reclassification, subsection g. of this section shall no longer apply and the board shall determine such rates for that gas service as it finds to be just and reasonable. The board, however, shall continue to monitor the gas service or segment thereof and, whenever the board shall find that the gas service has again become sufficiently competitive pursuant to subsection h. of this section, the board shall again apply the provisions of subsection g. of this section.
j. Nothing in this act shall limit the authority of the board, pursuant to Title 48 of the Revised Statutes, to ensure that gas public utilities do not make or impose unjust preferences, discriminations, or classifications for any services provided to customers.
k. (1) The board shall adopt, by rule, regulation or order, such fair competition standards, affiliate relation standards, accounting standards and reports as are necessary to ensure that gas public utilities or their related competitive business segments do not enjoy an unfair competitive advantage over other non-affiliated purveyors of competitive services and in order to monitor the allocation of costs between competitive and non-competitive services offered by a gas public utility, and within 60 days after the date for implementation of retail choice pursuant to this section, shall commence the process of conducting audits, at the expense of the gas public utilities, to ensure compliance with this section and with the board's rules, regulations or orders adopted pursuant to this section. The board shall hire an independent contractor to perform such audits.
(2) Subsequent audits shall take place no less than every two years after the date of the decision rendered pursuant to subsection q. of this section.
(3) The public utility and an intervenor shall have the right to contest the methodology and rebut the findings of an audit performed pursuant to this subsection, in a filing with the board. The board shall take no action to functionally separate, structurally separate or require the divestiture of any portion of a public utility's operations pursuant to this subsection until the public utility, and any intervenors have been afforded timely opportunity to make such filing and until the board has issued a decision thereon.
(4) If the board finds as a result of any such audit, that substantial violations of this act or of the board's rules, regulations or orders adopted pursuant to this section have occurred which result in unfair competitive advantages for a gas public utility, it shall: order the gas public utility to establish and provide such services through a business unit which is functionally separated from the gas public utility business unit as a related competitive business segment of the utility, such that, other than shared administration and overheads, employees of the competitive services business unit shall not also be involved in the provision of non-competitive utility and safety services, and the competitive services are provided utilizing separate assets than those utilized to provide non-competitive utility and safety services; order the gas public utility to establish and provide such services through a structurally separate business unit or units including, but not limited to, a related competitive business segment of the public utility holding company; or order the gas public utility to divest itself of any business units that provide such services.
(5) If the board determines, as a result of the audit performed pursuant to this subsection that a gas public utility has unfairly allocated costs between its competitive and non-competitive services, the board is authorized to require such utility to return to the ratepayers an amount, equivalent to the amount of the costs determined to be unfairly allocated, with interest, during the time that the unfair allocation of costs occurred. In addition, the board is authorized to order such utility to pay a fine of up to $10,000 as a result of the violation or violations determined to have occurred pursuant to this subsection.
l. The board shall determine, by rule or order, what reports are necessary to monitor the competitiveness of any service offered to a customer of a gas public utility.
m. The board shall have the authority to take appropriate action, including the issuance of an order that a gas public utility or its related competitive business segment cease the offering of a competitive service, functionally separate its competitive service offering from non-competitive business functions, structurally separate or divest itself of such services, in the event that the board determines, after hearing, that recurring and significant violations of its rules, regulations or orders adopted pursuant to subsection k. of this section have occurred.
n. Any other provision of this act to the contrary notwithstanding, commencing on the effective date of this act, a gas public utility or a related competitive business segment of that gas public utility shall not offer any competitive service except those approved or pending approval as of July 1, 1998 pursuant to subsections b. and d. of this section; provided, however, that in the event that a gas public utility is not part of a holding company legal structure, competitive services may be offered by a related competitive business segment of that gas public utility as long as that related competitive business segment is structurally separated from the gas public utility, and provided that the interactions between the gas public utility and the related competitive business segment are subject to the affiliate relation standards adopted by the board pursuant to subsection k. of this section.
o. A public utility holding company may offer a gas competitive service to retail customers of a gas public utility that is owned by the holding company, but only through a related competitive business segment of the holding company that is not a related competitive business segment of the gas public utility; provided, however, that in the event that a gas public utility is not part of a holding company legal structure, competitive services may be offered by a related competitive business segment of that gas public utility as long as that related competitive business segment is structurally separated from the gas public utility, and provided that interactions between the gas public utility and the related competitive business segment are subject to the affiliate relation standards adopted by the board pursuant to subsection k. of this section.
p. Nothing in this act shall exempt a gas public utility from obtaining all applicable local, State and federal licenses or permits associated with the offering of competitive services and complying with all applicable laws and regulations regarding the provision of such services.
q. Notwithstanding any other provisions of this section, by no later than December 31, 2000, the board shall render a decision, after notice and hearing, on any further restrictions required for any or all non-safety related competitive services offered by a gas public utility in addition to the provisions of this section, including whether a gas public utility offering non-safety related services must establish and provide such services through a business unit which is functionally separated from the gas public utility business unit.
(1) Upon the completion of the audit process required by paragraph (1) of subsection k. of this section, the board shall initiate the process of organizing and conducting hearings to examine the use of utility assets in providing retail competitive services as permitted in subsection f. of this section. The board shall evaluate and balance the following factors: the prevention of cross subsidization, the issues attendant to separation and relative to the board's affiliate relation and fair competition standards as provided in subsection k. of this section, the effect on ratepayers of the use of utility assets in the provision of non-safety related competitive services, the effect on utility workers, and the effect of utility practices on the market for such services.
(2) The relationship between the gas public utility and its related competitive service business unit shall be subject to affiliate relations standards to be promulgated by the board pursuant to subsection k. of this section.
r. For at least three years subsequent to the starting date of 100 percent retail competition as provided in subsection a. of this section and thereafter until the board specifically finds it to be no longer in the public interest, each gas public utility shall provide basic gas supply service. Gas supply procured for basic gas supply service by a gas public utility shall be purchased at prices consistent with market conditions. The charges assessed to customers for basic gas supply service shall be regulated by the board and shall be based on the cost to the utility of providing such service, including the cost of gas commodity and capacity purchased at prices consistent with market conditions by the gas public utility in the competitive wholesale marketplace and related ancillary and administrative costs, as determined by the board. A gas supply service offered by a gas public utility under a tariff approved by the board as of the effective date of this act shall qualify for the provision of basic gas supply service required hereunder.
s. By no later than January 1, 2002, the board shall issue a decision as to whether to make available basic gas service on a competitive basis to any gas supplier, any gas public utility, or both.
t. Gas procured for basic gas supply service by a gas supplier shall be purchased at prices consistent with market conditions. The charges assessed to customers for basic gas service shall be regulated by the board and shall be based on the cost to the supplier of providing such service, including the cost of gas commodity and capacity purchased at prices consistent with market conditions by the supplier in the competitive wholesale marketplace and related ancillary and administrative costs, as determined by the board or shall be based upon the result of a competitive bid.
u. Each gas public utility or gas supplier that provides basic gas supply service pursuant to subsections r., s. and t. of this section shall be permitted to recover in its basic gas supply charges on a full and timely basis all reasonable and prudently incurred costs incurred in the provision of basic gas supply services pursuant to this section, except to the extent that certain costs related to the provision of basic gas supply service are already being recovered in other elements of a gas public utility's charges. The board may approve ratemaking and other pricing mechanisms that provide incentives, including financial risks and rewards, for the gas public utility or gas supplier to procure a portfolio of gas supply that provides maximum benefit to basic gas supply service customers.
v. Prior to reclassifying as regulated, pursuant to subsection i. of this section, any service previously found to be competitive, the board shall make recommendations to the Legislature concerning the proposed reclassification. The recommendations shall be deemed to be approved unless the Legislature adopts a concurrent resolution stating that the Legislature is not in agreement with all or any part of the recommendations within 90 days following the date of transmittal of the recommendations to the Legislature. The concurrent resolution shall advise the board of the Legislature's specific objections to the recommendations and shall direct the board to submit revised recommendations which respond to those objections within 45 days of the date of transmittal of the concurrent resolution to the board.
w. If the board finds, as a result of any audit conducted pursuant to this section, that violations of the board's rules, regulations or orders adopted pursuant to this section have occurred, which are not substantial violations, the board is authorized to impose a fine of up to $10,000 against the gas public utility.
L.1999,c.23,s.10.