Sec. 16-243a. Private power producers. Purchase and sale of electricity. Avoided costs. Small renewable power projects. Interconnectivity standards.

(a) As used in this section, “avoided costs” means the incremental costs to an electric public service company, municipal electric energy cooperative organized under chapter 101a or municipal electric utility organized under chapter 101, of electric energy or capacity or both which, but for the purchase from a private power producer, as defined in section 16-243b, such company, cooperative or utility would generate itself or purchase from another source.

(b) Each electric public service company, municipal electric energy cooperative and municipal electric utility shall: (1) Purchase any electrical energy and capacity made available, directly by a private power producer or indirectly under subdivision (4) of this subsection; (2) sell backup electricity to any private power producer in its service territory; (3) make such interconnections in accordance with the regulations adopted pursuant to subsection (h) of this section necessary to accomplish such purchases and sales; (4) upon approval by the Public Utilities Regulatory Authority of an application filed by a willing private power producer, transmit energy or capacity from the private power producer to any other such company, cooperative or utility or to another facility operated by the private power producer; and (5) offer to operate in parallel with a private power producer. In making a decision on an application filed under subdivision (4) of this subsection, the authority shall consider whether such transmission would (A) adversely impact the customers of the company, cooperative or utility which would transmit energy or capacity to the private power producer, (B) result in an uncompensated loss for, or unduly burden, such company, cooperative, utility or private power producer, (C) impair the reliability of service of such company, cooperative or utility, or (D) impair the ability of the company, cooperative or utility to provide adequate service to its customers. The authority shall issue a decision on such an application not later than one hundred twenty days after the application is filed, provided, the authority may, before the end of such period and upon notifying all parties and intervenors to the proceeding, extend the period by thirty days. If the authority does not issue a decision within one hundred twenty days after receiving such an application, or within one hundred fifty days if the authority extends the period in accordance with the provisions of this subsection, the application shall be deemed to have been approved. The requirements under subdivisions (3), (4) and (5) of this subsection shall be subject to reasonable standards for operating safety and reliability and the nondiscriminatory assessment of costs against private power producers, approved by the Public Utilities Regulatory Authority with respect to electric public service companies or determined by municipal electric energy cooperatives and municipal electric utilities.

(c) The Public Utilities Regulatory Authority, with respect to electric public service companies, and each municipal electric energy cooperative and municipal electric utility shall establish rates and conditions of service for: (1) The purchase of electrical energy and capacity made available by a private power producer; and (2) the sale of backup electricity to a private power producer. The rates for electricity purchased from a private power producer shall be based on the full avoided costs of the electric public service company, municipal electric energy cooperative or municipal electric utility, regardless of whether the purchaser is simultaneously making sales to the private power producer. Payment for energy and capacity purchased from a private power producer by any such company, cooperative or utility shall be pursuant to such rates and conditions or the terms of a contract between the parties. The rates and conditions of service for the purchase of energy and capacity established by the authority pursuant to this subsection shall include specific schedules for pricing in long-term contracts for the sale of electricity from small renewable power projects to electric public service companies by private power producers. Such schedules shall not exceed the present worth of the projected avoided costs of the electric public service company over the term of the contract. The authority shall apply to a proposed contract filed with the authority after January 1, 1992, by a private power producer for a small renewable power project the rates and conditions of service, including the pricing schedule, in effect on the date the private power producer submits its proposed contract to the authority, regardless of the subsequent creation of differing schedules or the subsequent amendment of existing schedules.

(d) When any person, firm or corporation proposes to enter into a contract to sell energy and capacity as a private power producer, an electric public service company, municipal electric energy cooperative or municipal electric utility shall respond promptly to all requests and offers and negotiate in good faith to arrive at a contract which fairly reflects the provisions of this section and the anticipated avoided costs over the life of the contract. Upon application by a private power producer, the authority may approve a contract which provides for payment of less than the anticipated avoided costs if, considering all of the provisions, the contract is at least as favorable to the private power producer as a contract providing for the full avoided costs. The contract may extend for a period of not more than thirty years at the option of the private power producer if it has a generating facility with a capacity of at least one hundred kilowatts.

(e) The authority shall consider generating capacity available from cogeneration technology and renewable energy resources in its periodic reviews of electric public service companies and shall require the companies to include the availability of such capacity in applications for rate relief filed in accordance with section 16-19a.

(f) If a private power producer believes that an electric distribution company has violated any provision of this section it may submit a written petition alleging such violation to the authority. Upon receipt of the petition, the authority shall fix a time and place for a hearing and mail notice of the hearing to the parties in interest at least one week in advance. Upon the hearing, the authority may, if it finds the company has violated any such provision, prescribe the manner in which it shall comply.

(g) After January 1, 1992, the authority shall approve each proposed contract submitted by a private power producer for a small renewable power project, with any modifications agreed to by the parties to the contract, if the filing meets the standards for exemption from the proposal process and for an approvable contract established pursuant to section 16-6b, and is consistent with the pricing schedules adopted pursuant to subsection (c) of this section. Nothing in this section shall preclude a modification of such a contract if the parties to the contract agree to the modification. Any such modification shall be approved by the authority. The authority shall reconsider each decision issued pursuant to this section between January 1, 1992, and June 29, 1993, regarding such contracts and shall make any modifications to each such decision necessary to ensure that each such decision conforms with the provisions of this section.

(h) Not later than January 1, 2008, the Public Utilities Regulatory Authority shall issue a final decision approving interconnection standards that meet or exceed national standards of interconnectivity. If the authority does not issue a final decision by October 1, 2008, each electric distribution company, municipal electric energy cooperative and municipal electric utility shall meet the standards set forth in Title 4, Chapter 4, Subchapter 9, “Net Metering and Interconnection Standards for Class I Renewable Energy Systems” of the New Jersey Administrative Code.

(P.A. 79-214, S. 2; P.A. 80-167, S. 2; 80-482, S. 4, 40, 345, 348; P.A. 81-439, S. 6, 14; P.A. 82-164; P.A. 85-534, S. 4, 5; P.A. 86-289, S. 2, 5; 86-403, S. 111, 132; P.A. 89-43, S. 1, 2; P.A. 93-299, S. 1, 3; P.A. 07-242, S. 37, 38; P.A. 11-80, S. 1; P.A. 14-134, S. 74.)

History: P.A. 80-167 included municipal electric energy cooperatives under provisions of section; P.A. 80-482 made division of public utility control an independent department and abolished department of business regulation; P.A. 81-439 repealed Subsecs. (a) and (b) and amended and relettered Subsecs. (c) and (d) to make rates and conditions of service applicable to all electricity generated by private power producer, rather than to excess electricity generated by producer of more than one megawatt by cogeneration or use of renewable resources, and to all electricity generated by producer of one megawatt or less by such methods; P.A. 82-164 substantially amended the section, adding provisions concerning avoided costs, interconnections, wheeling, parallel operations, contracting, and petitioning department of public utility control; P.A. 85-534 extended, from 20 to 30 years, the maximum contract period where a private power producer has a generating facility with a capacity of at least 100 kilowatts; P.A. 86-289 made requirement under Subsec. (b)(4) subject to department approval, set forth department considerations and deadlines for such approval proceedings and made technical revisions, effective June 5, 1986, but not applicable to applications filed under the section with the public utility control department before March 1, 1986; P.A. 86-403 changed applicable date in effective date of P.A. 86-289 from March 1 to May 7, 1986; P.A. 89-43 added provision in Subsec. (c) for specific schedules for pricing in long-term contracts; P.A. 93-299 amended Subsec. (c) by adding provision regarding rates and conditions to be applied to proposed contracts for small renewable power projects, deleting reference to producers with a capacity of five megawatts or less and added new Subsec. (g) regarding approval and modification of proposed contracts for small renewable power projects, effective June 29, 1993; P.A. 07-242 amended Subsec. (b)(3) to require interconnections be made in accordance with regulations adopted pursuant to Subsec. (h) and added Subsec. (h) re interconnectivity standards; pursuant to P.A. 11-80, “Department of Public Utility Control” and “department” were changed editorially by the Revisors to “Public Utilities Regulatory Authority” and “authority”, respectively, effective July 1, 2011; P.A. 14-134 amended Subsec. (f) by replacing “electric company” with “electric distribution company”, effective June 6, 2014.

Notation

Cited. 210 C. 349.

Subsec. (c):

Department's conclusion that word “electricity” as used in section means renewable energy was reasonable. 283 C. 672.