Trenton, NJ—July 26, 2023—The New Jersey Board of Public Utilities (NJBPU) today completed its approval of the framework for the plans the utilities will submit to the Board to implement the second three-year cycle of the State’s energy efficiency programs. These second-cycle programs will be implemented from July 1, 2024 through June 30, 2027. The first energy efficiency cycle will end on June 30, 2024.

The new framework focuses on goals, targets, a performance incentive mechanism, and energy savings carryover; building decarbonization start-up programs; and demand response programs. Through the incentives that will be offered by the utilities under this framework, the Board seeks to maximize energy efficiency and energy conservation in buildings while also reducing emissions from the building sector, in line with the State’s new clean energy and electrification goals.

“Today’s action sets the course for New Jersey’s energy efficiency future,” said NJBPU President Joseph L. Fiordaliso. “We are also taking a step forward in implementing our building decarbonization program, which will ultimately reduce energy use and lower emissions emanating from a major source of greenhouse gases, and advance the Governor’s goal of electrifying hundreds of thousands of New Jersey homes and businesses by 2030. We must take this step as we continue to combat climate change.”

“New Jersey’s utility-led energy efficiency programs save customers millions of dollars in energy costs and avoid hundreds of thousands of metric tons of carbon and other emissions every year,” said Catherine Klinger, Executive Director of the Governor’s Office of Climate Action and the Green Economy. “In looking to the future of these successful programs, BPU has proposed updates that reflect the reality of our climate future while maximizing energy savings and lowering costs. Importantly, the newly proposed program allows customers who want to adopt high-efficiency electric home heating and cooling technology to make that switch, and to access their fair share of a huge pool of federal home efficiency and electrification incentives. Through these programs, New Jersey utility customers will get money back into their pockets for switching to cleaner, greener home heating and cooling solutions.”

The framework approved today established the guidelines for the state’s utilities to develop energy efficiency programs that build on the successes of the first program cycle. The framework was developed with significant public input, including two public meetings that were conducted last month and a public comment period.  The utilities’ new plans are due to the Board by October 2, 2023, and program implementation is expected on July 1, 2024.

New Jersey’s building decarbonization start-up programs will be part of the portfolios of energy efficiency programs implemented pursuant to the New Jersey Clean Energy Act of 2018. The building decarbonization start-up programs will also contribute toward the State’s goals of installing zero-carbon-emission space heating and cooling systems in 400,000 homes and 20,000 commercial properties and making 10 percent of all low-to-moderate income (LMI) properties electrification-ready by 2030 as outlined in Governor Murphy’s Executive Order 316.

Utility building decarbonization programs developed pursuant to the Board’s guidance will offer financial incentives for residential and multi-family customers to switch from space heating and water heating with fossil fuels to electric heat pumps, install electric heat pumps as part of hybrid heating systems and make buildings electrification-ready. They may also offer financial incentives for fuel-switching and district geothermal heating for commercial and industrial customers.

The programs will be designed to enable participation by LMI and multifamily customers who are not eligible for the low-income Comfort Partners program and thereby encourage equitable conversion.  Utilities will design building decarbonization programs to leverage Inflation Reduction Act tax credits and electrification rebates, as well as align with energy efficiency programs.

With new demand response programs, the Board embarks on the initial steps to develop an open market for third-party suppliers along with the utilities to offer demand response. Demand response is signaling to customers to reduce their energy consumption when the grid is stressed during a peak demand event, such as a hurricane, 100-degree day or polar vortex. Customers who choose to participate are compensated for adjusting their demand.  When peak demand is managed, not only does the ratepayer save, the electrical and natural gas distribution networks become more reliable and carbon dioxide emissions are avoided.

The Board is directing the electric and gas distribution companies to propose new demand response programs.  For the electric demand response programs, the Board seeks program designs consistent with open, modular, and portable grid flexibility services, where a customer may easily choose or switch from a company offering demand response services.  These programs will be based on non-generation assets, such as air conditioners and water heaters. These programs may rely on smart thermostats and smart meters to automatically adjust participating customers’ energy consumption.

Gas distribution companies’ demand response programs must also be portable and may leverage smart thermostats or other communication technologies for load management of gas appliances.

The Board is also allowing the utilities to propose demand response pilot programs based on generation assets – such as fuel cells, vehicle-to-grid, and solar combined with batteries – to develop the infrastructure, pricing schemes, and protocols for a smart, interactive grid.

The ultimate goal of the State’s energy efficiency program as established in the Clean Energy Act of 2018 is for the utilities to achieve energy savings of 0.75% for the natural gas utilities and 2% for the electric utilities of the average annual usage in the prior three years within five years of implementation of their energy efficiency programs.

About the New Jersey Board of Public Utilities (NJBPU)

NJBPU is a state agency and regulatory authority mandated to ensure safe, adequate and proper utility services at reasonable rates for New Jersey customers. Critical services regulated by NJBPU include natural gas, electricity, water, wastewater, telecommunications and cable television. The Board has general oversight and responsibility for monitoring utility service, responding to consumer complaints, and investigating utility accidents. To find out more about NJBPU, visit our website at www.nj.gov/bpu. 

About New Jersey’s Clean Energy Program (NJCEP)

NJCEP, established on January 22, 2003, in accordance with the Electric Discount and Energy Competition Act (EDECA), provides financial and other incentives to the State’s residential customers, businesses and schools that install high-efficiency or renewable energy technologies, thereby reducing energy usage, lowering customers’ energy bills and reducing environmental impacts. The program is authorized and overseen by the New Jersey Board of Public Utilities (NJBPU), and its website is www.NJCleanEnergy.com