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Important Changes in State and Federal Energy Laws that will Measurably Impact 2019 Utility Budgets

There have been a number of changes instituted by the Murphy administration and FERC that result in pass through charges from third party suppliers and other increases in utility tariff rates that will have a measurable impact on 2019 energy budgets.

NJ Governor Murphy signed a multi-faceted energy bill into law that went into effect on June 1, 2018. The most impactful part of the new law was the increase in the NJ RPS (Renewable Portfolio Standard) which mandates a percentage of all power sold through LDCs & 3rd party suppliers include a predetermined amount of renewable energy. In order to comply, suppliers must either invest in, in state renewable assets or purchase NJ SRECS (Solar Renewable Energy Certificates). Another part of the new law is the establishment of a subsidy to aid the underperforming nuclear generation fleet which will go into effect sometime in 2019.   In addition to the NJ State RPS increase & nuclear subsidy, FERC (Federal Energy Regulatory Commission) issued order 494 which changed the formula for allocating the cost of certain transmission components.

Based on our energy tracking analysis for some of our clients invoices, we have identified a pattern where both of these issues have a larger impact on 3rd party supply vs the LDC default supply.

In some cases this has resulted in the underperformance of 3rd party supply contracts.  The new NJ RPS law unfairly mandates immediate increases on 3rd party supply contracts while grandfathering the utility default BGS rates. This has created a competitive disadvantage for 3rd party suppliers’ vs the local utility default supply rates. For those customers already enrolled with a 3rd party supplier, there is not much that can be done, however for contracts that are nearing the end of their term it is imperative to conduct a thorough rate analysis to determine whether renewing with a 3rd party supplier in will deliver a favorable financial result or would it be best to return to the local utility default service. There are several factors to consider before making this type of decision.

Call NJGEC today at 973-287-7797 to schedule a complimentary energy analysis to determine the impact these changes will have on your budget and explore energy management strategies that can minimize the budgetary impact to your bottom line.

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