New Jersey Legislature Taps BPU to Implement EV Incentives

Morgan Lewis

Morgan Lewis

New Jersey Governor Phil Murphy signed S. 2252 into law on January 17, 2020. The bill takes steps to advance electric vehicle (EV) goals proposed in the draft New Jersey Energy Master Plan (which was released in June 2019 but has not been posted in final form). By enacting this legislation, New Jersey joins several states, including Oregon and Colorado, that have taken action to encourage EV adoption in recent months.

The bill establishes statewide goals for EV growth in New Jersey and the development of statewide charging infrastructure, each of which will be supported by $300 million in state incentives over the next decade through programs to be established by the New Jersey Board of Public Utilities (BPU). The bill also advances electrification of the state’s transportation fleet by requiring state agencies to escalate purchases of EVs.

The EV goals adopted in the bill (which apply to plug-in electric passenger and light duty commercial vehicles) include raising the number of EVs in the state to 330,000 in 2025, to 2 million in 2035, and to 85% of all light duty vehicles sold in New Jersey in 2040. The bill also requires that 25% of state-owned non-emergency vehicles be EVs in 2025 and 100% by the end of 2035, and that 10% of new state buses be zero-emission busses in 2024, 50% in 2025, and 100% in 2032 and thereafter.

To support the desired growth in EVs, the bill establishes an incentive program that will be administered by the BPU. EV purchasers and lessors will be eligible to receive incentives up to $5,000 per vehicle (to be taken directly off of the purchase price) and an additional $500 incentive towards the installation of in-home charging equipment. Other states including California, Connecticut, Colorado, Delaware, Massachusetts, New York, and Pennsylvania also offer rebates in the range of $1,500 to $5,000 per vehicle.

New Jersey’s vehicle credit will be available to all plug-in electric vehicles until December 31, 2022, but will exclude plug-in hybrids for the remainder of the program. Both incentive programs are authorized to run for 10 years and will, collectively, receive $30 million per year from the state’s societal benefits charge (SBC), which is collected from utility ratepayers as an add-on to electric and gas public utility bills.

The bill directs the BPU to establish and implement the incentive programs within six months of the effective date of the bill, making it likely that the programs will come online in or around the summer of 2020. Additionally, the bill contemplates the installation of 400 fast chargers and 1,000 level two chargers by 2025 and the installation of EV chargers in at least 15% of the state’s residential multifamily properties and 20% of hotels by 2025, increasing to 30% of New Jersey’s multifamily units and 50% of New Jersey’s hotels by 2030.

However, the bill does not establish any specific incentives or programs to support the aspirational rollout of chargers. Moreover, while the bill authorizes the BPU to adopt regulations in furtherance of the EV goals contained therein, it does not prescribe any concrete actions that the BPU must take to effectuate those goals, other than the administration of the incentive programs and studying the growth of EVs in New Jersey. This contrasts with enacted legislation in Colorado and pending legislation in Pennsylvania (which has passed the Pennsylvania Senate) that require specific actions by the states’ utilities to invest in EV infrastructure, subject to approval of the respective utility commissions. The New Jersey bill also specifically states that charging from EV chargers should not be considered a sale of electricity for purposes of imposing board jurisdiction, and that ownership of EV charging equipment does not, on its own, make an entity a public utility.

The draft EMP may provide some insight on the BPU’s next steps. It directs utilities to implement revised rate designs to include mechanisms, such as time of use pricing, to establish pricing signals for EV charging so customers are incentivized to charge vehicles during non-peak hours or when there is abundant renewable energy. The draft EMP also directs utilities to establish integrated distribution plans (IDPs) within one year of issuance of the final EMP to address projected increased electric demand from, among other things, EVs and the growth in distributed energy resources (DER) such as renewables, storage, and microgrids, and to consider greater utilization of non-wires alternatives (NWA). Regulations proposed by the board as a result of the bill may address some or all of these issues.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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