Proposed Bill Would Ease SBC Surcharges for Commercial Customers

Legislation would establish clean energy credit to be applied against societal benefits charge

For the past few years, businesses, especially those using a lot of energy, have complained long and loudly about the societal benefits charge (SBC), a surcharge on their gas and electric bills that can run more than a million dollars a year in a few cases.

Relief of a sort is being proposed under a bill that has begun to advance in the legislature.
A-2528, sponsored by Assemblyman Upendra Chivukula, the chairman of the Assembly’s Telecommunications and Utilities Committee, would establish a credit for commercial and industrial customers that would be applied against the SBC if they implement energy efficiency and renewable energy projects.

Backed by wide array of business groups, the bill is opposed by the New Jersey Division of Rate Counsel, state Board of Public Utilities (BPU) and state chapter of AARP. These organization fear it will spike gas and electric bills for residential customers at a time when they can ill afford it.

Opponents also worry that A-2528 might jeopardize programs financed by the surcharge, which helps needy families, seniors and others pay their utility bills. The SBC was created in 1991, after the legislature passed an energy deregulation law, as a way to fund programs that otherwise would be unfunded because of other priorities.

What the Surcharge Buys

The biggest chunk of the money raised by the surcharge, which brought in $740 million last year, goes to pay for energy efficiency and renewable energy projects. It also pays for cleanup of contaminated coal gasification sites, decommissioning of nuclear power plants and consumer education programs.

Stefanie Brand, director of the rate counsel division, argued the bill would force residential customers to bear the full cost not only of residential clean energy programs but also residential assistance programs. The result could be a huge increase in residential bills, Brand said.

“The net result of this bill will be to maintain the high cost of the SBC, but shift the burden and substantially lower the benefit to the lowest of ratepayers,” Brand said. She also noted commercial and industrial customers already have other programs to which they can apply for assistance with renewable energy and energy efficiency projects, citing a regional program to reduce greenhouse gas emissions.

Splitting the SBC into Three

Joseph Sullivan, BPU’s ombudsman, said the agency could not support the bill because it splits the current SBC fund into three separate accounts for residential, commercial and industrial customers, a provision that would add to the agency’s administrative costs. He also noted that business customers, which consume 63 percent of the energy in New Jersey, now receive nearly 60 percent of the funds allocated by the Office of Clean Energy.

But Sara Bluhm, an assistant vice president of the New Jersey Business & Industry Association, said the bill addresses a need, noting the commercial and industrial sectors have contributed substantial funds into the SBC.

“We’re looking at creative ways to encourage energy efficiency projects and conservation retrofits,” Bluhm said. “This will allow bigger projects to happen.”

Chivukula defended the measure, noting it provides a way for commercial and industrial customers to do energy-saving projects, which he said get a much bigger return on investment than residential ones. He also said it is one way to stop the diversion of surcharge money to help balance the state budget. This past year, the Christie administration diverted more than $400 million in clean energy funds to plug a hole in the state budget.