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Parties filed comments on Phase 1 study from third-party consultant Energy and Environmental Economics, Inc. or E3 in response to an Executive Order from the Governor Mikie Sherrill related to energy affordability.  The Executive Order directed “the New Jersey Board of Public Utilities shall complete and issue a study regarding modernization of the traditional electric distribution utility business model.”

The NJBPU engaged Energy and Environmental Economics, Inc. (E3) to conduct the EO-1 study across two phases. This report is the deliverable for Phase 1, which focuses on understanding how electricity bills in New Jersey are determined today, examining the implications of the existing utility business model for customer costs, and assessing the potential of utility business model reforms. Phase 2 will build on these findings to develop a regulatory and policy evaluation framework, including quantitative analyses for candidate reforms, and explore their opportunities and challenges for advancing customer affordability alongside the state’s other policy priorities.

This Phase 1 report is intended to support stakeholder review and inform the next stage of the study. It provides a qualitative assessment of potential utility business model modernization and reform options focused on the distribution component of the customer bill that the NJBPU can directly influence, including how each option could affect utility incentives, investment decisions, cost recovery, transparency, customer outcomes, implementation complexity, and risk allocation. Most importantly, the Phase 1 report establishes a common framework for comparing options and packages of options so that the potential benefits, costs, trade-offs, barriers, and data needs are clear before Phase 2. Phase 2 will build on this foundation through more detailed quantitative analysis of options and reform packages, with the goal of supporting a more informed roadmap for long-term bill reduction, bill stabilization, transparency, accountability, and customer value.

NJBPU staff was also directed to establish stakeholder working groups to further explore: 1) Utility Business Model and regulatory reform goals, customer outcomes and associated metrics (Goals and Metrics Working Group); and 2) technical considerations of Utility Business Model reform options (Technical Working Group).

NJBPU staff anticipates each working group will meet at least twice in the fall and winter of 2026. Towards that end, NJBPU held  a virtual stakeholder meeting on Thursday, September 17, 2026, covering the scope of Phase 2 and the scope, timing, and next steps.

Among other things Staff will be considering approaches that could lower and stabilize electric bills long-term.

Highlights from Stakeholder Comments:

Division of Rate Counsel – (i) emphasized that “any proposed reforms being considered should be compared to the status quo” and “must make sense for New Jersey, be likely to substantially reduce customer rates and bills, and have clearly succeeded in other jurisdictions with little or no adverse consequences”; and (ii) recommended “that future reports provide sufficient documentation and descriptions for stakeholders to fully evaluate the findings and recommendations,” as “This step is critical to assessing potential reforms because, as Rate Counsel’s prior comments demonstrate, potential utility model reforms either do not work, create unintended consequences, or are extremely difficult to implement as designed”

New Jersey Utility Association – (i) said that it “supports further evaluation of [multi-year rate plans (MRPs)] and believes that Phase 2 should consider them within the broader range of holistic base rate mechanisms available”; (ii) objected to the study’s claim that MRPs “are set independently of a utility’s costs,” and recommended revising the study’s “characterization of MRPs as less transparent than other base rate mechanisms,” arguing that “forward-looking rate plans, and MRPs in particular, can provide increased transparency by giving parties an opportunity to evaluate anticipated utility spending before those expenditures occur,” with the “level of transparency… ultimately depend[ing] upon its design and the review and reporting processes”; and (iii) said that it supports the study’s “recognition that different reforms may require different implementation pathways,” recommending making “an explicit component of the Phase 2 stakeholder process” assessment of whether reforms “can proceed under existing [BPU] authority,” require “additional proceedings or rulemaking,” or potentially “require legislative action.”

E3 presentation from September 17th Phase 2 stakeholder meeting is now available.