9. a. (1) Simultaneously with the starting date for the implementation of retail choice as determined by the board pursuant to subsection a. of section 5 of P.L.1999, c.23 (C. 48:3-53), until the board specifically finds it to be no longer necessary and in the public interest, each electric public utility shall provide basic generation service. Power procured for basic generation service by an electric public utility shall be purchased, at prices consistent with market conditions. The charges assessed to customers for basic generation service shall be regulated by the board and shall be based on the reasonable and prudent cost to the utility of providing such service, including the cost of power purchased at prices consistent with market conditions by the electric public utility in the competitive wholesale marketplace and related ancillary and administrative costs, as determined by the board. The charges assessed to customers for basic generation service pursuant to this subsection may include a retail margin, as determined by the board. The board shall approve unbundled rates to assure that aggregate rate reductions established pursuant to section 4 of P.L.1999, c.23 (C. 48:3-52) are sustained notwithstanding changes in basic generation charges approved pursuant to this section.

(2) Each electric public utility shall remit to the State Treasurer all monies collected by the utility as a retail margin authorized pursuant to paragraph (1) of this subsection. A Retail Margin Fund shall be established as a non-lapsing, revolving fund in the General Fund for the deposit of all retail margin monies received from the electric public utilities and remitted to the State Treasurer.

(3) The board may use monies paid in connection with the retail margin, from any portion of the amount appropriated pursuant to section 3 of P.L.2009, c.34 that has not been allocated pursuant to subsection d. of section 3 of P.L.2009, c.34, and any other monies in the Retail Margin Fund in excess of the amount appropriated, for the purpose of funding grants by the board only to CIEP class customers to implement alternative programs and measures that are consistent with, and will further the goals of the energy master plan adopted pursuant to section 12 of P.L.1977, c.146 (C. 52:27F-14), to maximize energy conservation and energy efficiency, reduce peak energy demand, and increase renewable energy sources. The grants may also fund supportive measures, such as energy audits, education and outreach programs, and technical assistance, that are deemed necessary to the proper implementation of the alternative programs and measures. The board shall establish the types of measures to receive such financial assistance, the eligibility criteria for such financial assistance, the procedures and criteria for awarding such financial assistance, and the conditions of such financial assistance, by order or orders issued after notice and an opportunity for public comment, notwithstanding any provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C. 52:14B-1 et seq.) to the contrary. The board may change programs and program designs as technologies, markets and customer needs change.

(4) Nothing in this section shall be construed to authorize the board to use the retail margin for any use that does not provide a direct benefit to CIEP class customers, except as the board may determine is necessary pursuant to section 13 of P.L.2007, c.340 (C. 48:3-98.1) and section 4 of P.L.2005, c.215 (C. 48:2-95).

(5) The board shall, not later than December 1 of each year, transmit to the Joint Budget Oversight Committee, or its successor, a report detailing the amount of monies deposited in and allocated from the Retail Margin Fund during the preceding State fiscal year. The report shall include, but not be limited to, the number and description of each combined heat and power facility project funded from the Retail Margin Fund and the amount allocated to each project, and the number and description of any grants allocated for the alternative programs and measures provided for in paragraph (3) of this subsection. In addition to the report, the board shall also provide to the joint committee a copy of all board orders concerning the establishment or use of, or change in the amount of, the retail margin.

b. The board may allow an electric public utility to purchase power for basic generation service through a bilateral contract from a related competitive business segment of its public utility holding company only if:

(1) The related competitive business segment is not a related competitive business segment of the electric public utility; and

(2) The board determines that the procurement of power from the related competitive business segment of the public utility holding company is necessary in order to ensure the reliability of service to basic generation service customers or to address other extraordinary circumstances, and that the purchase price does not exceed the market price for such power or the power was procured through a competitive bid process subject to board review and approval. The board shall require that all net revenues derived from such sales, when the source of power is assets or contracts which costs are included in stranded costs recovery charges assessed pursuant to sections 13 and 14 of P.L.1999, c.23 (C. 48:3-61 and C. 48:3-62), shall be applied:

(a) To offset any market transition charge or equivalent rate mechanism assessed to customers pursuant to section 13 of P.L.1999, c.23 (C. 48:3-61); or

(b) If the electric public utility is not assessing a market transition charge, to offset the rates charged to customers for distribution service, except that such offset shall cease to be required after the term of the transition bond charge has expired as provided in paragraph (1) of subsection d. of section 14 of P.L.1999, c.23 (C. 48:3-62).

(3) The board may devise an alternative accounting or cost recovery process that permits an electric public utility to purchase power from a related competitive business segment of its public utility holding company, or otherwise, to provide basic generation service to its customers during the period that the electric public utility is providing for sustainable rate reductions pursuant to subsection j. of section 4 of P.L.1999, c.23 (C. 48:3-52) and subsection a. of this section, if the board determines that such process is necessary to mitigate the impacts of market price fluctuations and to sustain such rate reductions.

c. After the starting date of retail competition as provided in subsection a. of section 5 of P.L.1999, c.23 (C. 48:3-53), the board shall issue a decision as to whether to make available on a competitive basis the opportunity to provide basic generation service to any electric power supplier, any electric public utility, or both.

d. Power procured for basic generation service by an electric power supplier shall be purchased at prices consistent with market conditions. The charges assessed to customers for basic generation service shall be regulated by the board and shall be based on the reasonable and prudent cost to the supplier of providing such service, including the cost of power purchased at prices consistent with market conditions, by the supplier in the competitive wholesale marketplace and related ancillary and administrative costs, as determined by the board or shall be based upon the result of a competitive bid.

e. Each electric public utility or electric power supplier that provides basic generation service pursuant to subsection a., c. or d. of this section shall be permitted to recover in its basic generation charges on a full and timely basis all reasonable and prudently incurred costs incurred in the provision of basic generation services consistent with the provisions of this section, except to the extent that certain costs related to the provision of basic generation service are already being recovered in other elements of an electric public utility’s charges. The board may approve ratemaking and other pricing mechanisms that provide incentives, including financial risks and rewards, for the utility or electric power supplier to procure a portfolio of electric power supply that provides maximum benefit to basic generation service customers.

f. Each electric public utility shall submit a quarterly report to the board of generation contracts between the public utility and any related competitive business segment. A utility that submits a report pursuant to this subsection may petition the board for confidential treatment as trade secrets of any or all of the information provided.

g. Nothing in this section shall apply to any existing board approved bilateral power purchase contract by an electric public utility as of the effective date of P.L.1999, c.23 (C. 48:3-49 et al.).

L.1999, c.23, s.9; amended 2009, c.34, s.2.