NJBPU Approves One-Year Energy Efficiency Transition Plan to Lower Ratepayer Costs and Prepare for Smart Grid

For Immediate Release:	Contact: Alonza Robertson
Date: 07/15/2026	609-913-6237

TRENTON, N.J. – July 15, 2026 – Setting the stage for a major evolution in how New Jersey manages its electric grid, the New Jersey Board of Public Utilities (NJBPU) today approved a one-year transition plan that optimizes how utilities run energy efficiency programs to lower costs for everyday ratepayers. 

 

This transition period, running from July 1, 2027, through June 30, 2028, directs utilities to shift their efficiency focus toward smart, connected home technologies that empower residents to actively manage their energy use while keeping costs low. By updating administrative rules and utility rate of return calculations, the state is doing the preparatory work required to transition smoothly to a more modern smart grid system.

 

“As we build New Jersey's clean energy future, we are laser-focused on delivering maximum value to ratepayers by modernizing and streamlining our utility programs,” said NJBPU President Ben Hertz-Shargel. “By simplifying how we track energy savings and reducing administrative overhead, we are cutting utility program spending by 28 percent. This adjustment ensures every dollar is spent efficiently and preserve the essential programs that protect our most vulnerable communities.” 

 

Lowering Costs and Preparing for the Grid of the Future  

A small portion of monthly electric and gas bills funds statewide utility energy efficiency programs. Through today’s action, the NJBPU is ensuring energy efficiency programs are being administered efficiently, updating utility rate of return calculations and administrative structures ahead of the state's next major energy efficiency program cycle (Program Cycle 3, or PC3).

 

One of these mechanisms involves using a “gross savings” model, counting actual energy saved by new efficient appliances rather than compensating the utilities for expensive, complicated projections. By counting gross savings as the primary metric, energy reductions that satisfy the state’s clean energy goals can be achieved for an approximately 30 percent lower budget.  

 

Further, by trimming administrative overhead across millions of customers, New Jersey will save more than $531 million in avoided utility costs during the next ten years. 

  

Bridging the Gap to a “Virtual Power Plant” 

A core goal of this one-year transition is to prepare New Jersey for the 2027 launch of its first Virtual Power Plant (VPP) program. 

 

Instead of the traditional approach in which utilities ask customers to use less power, VPPs will connects smart, modern appliances together to balance the grid. Through VPPs, the state will direct utility rebates for customers with grid-connected devices, like smart thermostats, smart water heaters, electric vehicles, and heat pumps.

 

By optimizing the use of these interactive devices, residents will be empowered to actively participate in a smarter grid.

 

And by closely coordinating energy usage across thousands of homes, VPP can reduce the need for expensive infrastructure investments, prevents blackouts during extreme weather, and lowers energy prices for everyone. Income-eligible families will continue to receive robust energy efficiency services at no cost, and small businesses will also retain access to free energy assessments to help them lower their monthly operating bills.